tag:blogger.com,1999:blog-4088979.post5706921773552404604..comments2023-10-16T06:06:25.012-04:00Comments on TaoSecurity Blog: Wall Street Clowns and Their ModelsRichard Bejtlichhttp://www.blogger.com/profile/13512184196416665417noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-4088979.post-52355813977800252592007-09-03T17:33:00.000-04:002007-09-03T17:33:00.000-04:00Sorry, maybe I am over simplifying the whole sub-p...Sorry, maybe I am over simplifying the whole sub-prime mess... but it doesn't take a computer scientist to figure out that poor people with crappy credit buying houses that they shouldn't would cause a crash. There was too much liquid and too many carpetbagger lenders for this not to go south.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4088979.post-5434301563079416142007-09-01T15:16:00.000-04:002007-09-01T15:16:00.000-04:00Businesses seek to model their markets and process...Businesses seek to model their markets and processes to make money and give themselves an edge. The best people who are good at these jobs learn through an interative process of trial and error we call experience. They know what they are doing, but they can't always describe how they do it because likely some of the analysis is subconscious. Given enough time and resources, you can build an expert system to mimic a human expert, but it will be brittle. The expert program will only be good at what it was trained to do. Clearly the expert programs this article is talking about weren't vetted enough. Either the process they were modeling wasn't fully understood, they didn't talk to enough experts, or as the article states, they didn't test their software against real data to verify its results against reality. They also didn't test the software against one of their own expert's results it sounds like. The latter is a QA problem. They skipped a crucial step in software development, and being penny wise and pound foolish, they paid for it. Or again, perhaps the software has the same success rate as human lenders. After all, there is no historical performance for adjustable rate mortgage loans. They could have used an expert program that was modeled on fixed rate loans and assumed that it could do the job. The French made a similar mistake when they used the Ariane 4 flight guidance software to fly the Ariane 5 booster rocket. They lost the Ariane 5 booster and the payload using that software because the rocket had different flight characteristics that the software couldn't handle. The software did what it was designed to do which was guide an Ariane 4 rocket, it shut down causing a launch abort during flight. We'll likely find out what went wrong 6 months or more from now when a computer scientist dissects the program.jbmoorehttps://www.blogger.com/profile/09751110750712243573noreply@blogger.comtag:blogger.com,1999:blog-4088979.post-68667315401517876352007-09-01T09:26:00.000-04:002007-09-01T09:26:00.000-04:00So Richard, you were a consultant, and presumably ...So Richard, you were a consultant, and presumably in your new job you answer someone - when asked to make a recommendation about two different risk reducing efforts, how do you answer the question? What criteria do you choose?Unknownhttps://www.blogger.com/profile/13259421662913673571noreply@blogger.com