Flight to qualitative

Some bankers are strongly advocating a back-to-basics approach for both regulation and risk management. Rather than relying on quantitative modelling techniques, some are calling for a simpler, qualitative approach. Is this realistic or has the market changed too much? By Duncan Wood

Quants working in risk management need to watch their backs. According to one narrative now being used to explain the industry's collective failure to spot the dangers lurking in credit markets, bank risk functions had been taken captive by statisticians, mathematicians and modellers. With the quants at the controls, there was an unhealthy obsession with risk measurement, while the nuts and bolts of risk management - limits, controls, governance, reporting and good old-fashioned common sense and