Commentary

9 Ways Graphs Show Up in Data Science

9 Ways Graphs Show Up in Data Science

We explore a variety of distinct uses of graph structures in data science. We review various important graph types and sketch their linkages and relationships. The review provides an operational guide towards a better overall understanding of those powerful tools

Reading Time: 17 min.
Graphs seem to be everywhere in modern data science: Graphs (and the related concept of Networks) have emerged from a relative mathematical and physics niche to an ubiquitous model for describing and interpreting various phenomena. While the scholarly account of how this came about would probably need a dedicated book, there is no doubt that one of the key factors that increased the visibility of the graph concept is the near universal adoption of digital social networks.
Visual Overview of Built in Python Data Types

Visual Overview of Built in Python Data Types

We discuss the Python language built-in data types and a visualization that organizes them according to key attributes

Reading Time: 4 min.
Data Types are a fundamental building block of data science Data science is about data, but data are not simple and tame beasts. They have character and attitude, which can cause a lot of friction between them and the data scientist. There is a lot of sweat and tears involved when confronting data, but data scientists can do worse than know how to handle in particular Data Type quirks. Namaly a good fraction of data science involves not modelling data, not transforming data, not even cleaning data but simply goading data around the right containers, providing them with the right stage that fits their character.
Stress Testing of the Future - A view from 2031

Stress Testing of the Future - A view from 2031

What is the future of stress testing? We speculate on how stress testing might look like in 2031

Reading Time: 13 min.
What is the future of stress testing? To speculate on the future of Stress Testing we need first a basic definition what stress testing is. Broadly speaking, the goal of Stress Testing is to assess how a system would behave under adverse conditions that - while not the most likely outcome with the knowledge of today - are within the realm of the plausible. There are, broadly speaking, two types of stress testing: The Real stress testing version and Hypothetical stress testing version.
What do people talk about at FOSDEM 2021

What do people talk about at FOSDEM 2021

FOSDEM is the Free and Open Source Software Developers European Meeting.

Reading Time: 3 min.
Introduction: What is FOSDEM? FOSDEM is a non-commercial, volunteer-organized event centered on free and open-source software development (with a geographic focus on the European open source ecosystems / projects). FOSDEM is aimed at developers and anyone interested in the free and open-source software movement. It aims to enable developers to meet and to promote the awareness and use of free and open-source software. FOSDEM is held annually since 2001, usually during the first weekend of February, at the Université Libre de Bruxelles Solbosch campus in the southeast of Brussels, Belgium.
Taxonomy of Uncertainty

Taxonomy of Uncertainty

We review and synthesize into a taxonomy a number of related concepts and terms describing uncertainty, risk, randomness and model risk

Reading Time: 14 min.
Risk, Randomness, Uncertainty and other Ambiguous Terms Uncertainty versus Risk is a popular discussion topic among risk managers, especially after major risk management disasters. The debate can get really hairy and drift into deep philosophical areas about the nature of knowledge etc. Yet the significance of having an as clear as possible language toolkit around these terms should not be underestimated. Practical risk management typically shuns too deep excursions into the meaning of things, yet that is not quite compatible with the use of sophisticated methods and tools (such as a Risk Model ) that assumes an understanding of the scope and limitations of “knowledge”.
Is Global Debt Truly Astronomical?

Is Global Debt Truly Astronomical?

People frequently use the term 'astronomical' to describe global debt levels, but is this factually true? In this commentary we discuss whether that is really true

Reading Time: 11 min.
Is the size of global debt truly “astronomical”? The notion of astronomical numbers and figures is quite frequently seeping in everyday language when large quantities of something are encountered in “normal” life. The strict definition of astronomical is obviously something of, or relating to, astronomy and astronomical observations but in common usage it also denotes something enormously or inconceivably large. This is, of course, because astronomical figures are inconceivably large!
Monte Carlo Simulation of the US Electoral College

Monte Carlo Simulation of the US Electoral College

Using a simplified version of the rules of the US Electoral College system we illustrate how the use of Monte Carlo techniques allows exploring systems that show combinatorial explosion

Reading Time: 9 min.
The role of simulation in risk management and decision support A Simulation is a simplified imitation of a process or system that represents with some fidelity its operation over time. In the context of risk management and decision support simulation can be a very powerful tool as it allows us to assess potential outcomes in a systematic way and explore what-if questions in ways that might otherwise be not feasible. Simulation is used when the underlying model is too complex to yield explicit analytic models (An analytic model is one can be “solved” exactly or with standard numerical methods, for example resulting in a formula).
Risk Compensation: From Face Masks to Credit, Market and Systemic Risk

Risk Compensation: From Face Masks to Credit, Market and Systemic Risk

Reading Time: 7 min.
What is Risk Compensation? Risk Compensation is a behavioral model of human attitudes towards risk which suggests that people might adjust their behavior in response to the perceived level of risk. It follows that, depending on the strength of the effect, that it might counteract and even annul the impact of risk mitigation, if the updated attitude and behavior modifies the actual underlying risk Examples of potential risk compensation effects abound A prominent example of potential risk compensation in recent times that established the concept in more formal terms in public policy debates concerned the beneficial role of safety belts in automobiles.
The Game of Life With Macroeconomic Stimulus

The Game of Life With Macroeconomic Stimulus

Agent-based models is a major class of simulation models, with many potential applications in economics and finance

Reading Time: 7 min.
Agent-Based Models: The origins and early years According to Wikipedia an agent-based model (ABM) is ABM: class of computational models for simulating the actions and interactions of autonomous agents (both individual or collective entities such as organizations or groups) with a view to assessing their effects on the system as a whole. A cellular automaton is a particular class of ABM. It is a discrete dynamical model used and studied in a variety of fields: computer science, mathematics, physics, complexity science, theoretical biology among others.
Why is risk so poorly defined?

Why is risk so poorly defined?

Why is risk so poorly defined?

Reading Time: 5 min.
A survey of existing definitions of risk: When looking up the meaning of Risk we are confronted with a surprising situation. There is no satisfying and authoritative general purpose one-line definition that we can adopt without second thoughts. Let us start with the standard dictionary definitions: The online Merriam Webster Dictionary defines risk as the possibility of loss or injury The online Cambridge Dictionary opines that risk means the possibility of something bad happening The Oxford English (Concise, Hardcover!
What do people talk about at FOSDEM 2020

What do people talk about at FOSDEM 2020

FOSDEM means Free and Open Source Software Developers European Meeting

Reading Time: 4 min.
Introduction: FOSDEM is a non-commercial, volunteer-organized European event centered on free and open-source software development. It is aimed at developers and anyone interested in the free and open-source software movement. It aims to enable developers to meet and to promote the awareness and use of free and open-source software. FOSDEM is held annually since 2001, usually during the first weekend of February, at the Université Libre de Bruxelles Solbosch campus in the southeast of Brussels, Belgium.
IFRS 9 Expected Credit Loss and Risk Capital

IFRS 9 Expected Credit Loss and Risk Capital

Reading Time: 5 min.
The new IFRS 9 financial reporting standard: IFRS 9 (and the closely related CECL) is a brand new financial reporting standard developed and approved by the International Accounting Standards Board (IASB). Strictly speaking IFRS 9 concerns only the accounting and reporting of financial instruments (e.g. bank loans and similar credit products). Yet the introduction of the IFRS 9 standard has significant repercussions beyond financial reporting, and touches e.g., bank risk management as well.
A Risk Agnostic Approach to European Safe Bonds (ESBies) Tranching

A Risk Agnostic Approach to European Safe Bonds (ESBies) Tranching

Reading Time: 7 min.
What are European Safe Bonds? While the creation of the eurozone was a landmark of the European integration process, the financial crisis highlighted that the eurozone remains an incomplete design which can lead to unpredictable and adverse situations in the event of a (the) next major crisis. One of the key such incompleteness features of the current eurozone architecture is that it does not have a truly risk-free (safe) euro debt instrument: one that continues being serviced (avoids a default event) at virtually any point in time and state of the world, no matter how severe.
Data Scientists Have No Future

Data Scientists Have No Future

Reading Time: 1 min.
Data Scientists Have No Future: The working definition of a Data Scientist seems to be in the current overheated environment: doing whatever it takes to get the job done in a digital #tech domain that we have long neglected but which is now coming back to haunt us! That is nice urgency while it lasts, but it is not a serious job description for the future. You will always find entrepreneurial institutions to offer degrees and certifications on the latest trending hashtag.
Four individuals that can look straight into your eyes

Four individuals that can look straight into your eyes

Reading Time: 1 min.
Four individuals that can look straight into your eyes: Here are four individuals that can look straight into your eyes Torvalds developed the #linux operating system, the software engine now powering anything from the tiniest #raspberrypi to the scariest supercomputer. Humanity’s best guarantee that the digital era remains an equal playing field Mullenweg developed the #wordpress blogging platform. Gave voice and content ownership to millions of digital authors making him the closest to the Gutenberg of our era Dougiamas developed #moodle, the world’s digital Academy.
Machine Learning Ballyhoo

Machine Learning Ballyhoo

Reading Time: 1 min.
Machine Learning Ballyhoo: Are you getting a bit tired with all the machine learning ballyhoo? You can blame it all on a German mathematician(*), Carl Friedrich Gauss, who started the futuristic mega-trend back in 1809: He showed us how to train a straight line to pass nicely through a cloud of unruly, scattered data points. To find, in effect, a path of least embarrassment. Two+ centuries later it is still a profitable enterprise to invent elaborate variations of that theme, now going under the more exalted name of supervised learning, which may or may not include deep learning.

If programming languages were human languages which one would be which?

Reading Time: 2 min.
If programming languages were human languages which one would be which? Most developers know (or get to know quickly once they join a team) that programming languages are as much about communicating with other developers as they are about instructing the computer. Which raises the interesting question: If programming languages were human languages which one would be which? Here is a (tonque-in-cheek mind you!) compilation of a mapping between programming languages and human languages.
The Zen of IFRS 9 Modeling

The Zen of IFRS 9 Modeling

Reading Time: 6 min.
The Zen of IFRS 9 Modeling: At Open Risk we are firm believers in balancing art and science when developing quantitative risk tools. The introduction of the IFRS 9 and CECL accounting frameworks for reporting credit sensitive financial instruments is a massive new worldwide initiative that relies in no small part on quantitative models. The scope and depth of the program in comparison with previous similar efforts (e.g. Basel II) suggests that much can go wrong and it will take considerable time, iterations, communication and training to develop a mature toolkit that is fit-for-purpose.
Guiding principles for a viable open source operational risk model

Guiding principles for a viable open source operational risk model

Reading Time: 1 min.
Guiding principles for a viable open source operational risk model (OSORM): Such a framework: Must avoid formulaic inclusion of meaningless risk event types (e.g., legal risk created by the firm’s own management decisions) or any risks where the nature and state of current knowledge does not support any meaningful quantification. Such potential risks would be managed outside the framework Must employ a bottom-up design that addresses the risk characteristics of simpler business units first and (if needed) creates a combined profile for a more complex business in a building block fashion.
Privacy-at-Risk

Privacy-at-Risk

Reading Time: 5 min.
The data privacy genie is out of the bottle: From Yahoo’s massive email data leaks, to Equifax’s exposing of sensitive data for a large segment of the US population, to Apple’s resisting the bypassing the security features of the iPhone, not a week goes by without some alarming piece of news around data privacy. The ramifications for the legal use of private digital data by companies and government and the consequences of illegal or unintended use are huge.