I read the following in the Economist;
Edmund Phelps, who won the Nobel prize for economics in 2006, is highly critical of today’s financial services.
"Risk-assessment and risk-management models were never well founded," he says. "There was a mystique to the idea that market participants knew the price to put on this or that risk.
But it is impossible to imagine that such a complex system could be understood in such detail and with such amazing correctness... the requirements for information... have gone beyond our abilities to gather it."
This is absolutely the problem I mentioned in Are the Questions Sound? and Wall Street Clowns and Their Models. Phelps could easily be describing information security models.
Richard Bejtlich is teaching new classes in DC and Europe in 2009. Register by 1 Jan and 1 Feb, respectively, for the best rates.