Letters- Risk Management

This article talks about people's opinions on a Joe Nocera's, a columnist for New York Times, Column that talks about Risk at Value models. Risk at Value models can estimate loss of the worst situation.Mr. Venezia' opinion is that do not trust too much on Value at Risk models because it did not prevent Katrina. I do not think people should not trust on Risk at Value models because it did not prevent Katrina. I do not think Mr. Venezia suggested a good example because as we learn from today's lecture, disasters are very random, so it is hard risk managers to forecast and prevent those disasters. However, I agree with his next supporting ideas, even if Value at Risk models indicate 95 percent or higher of confidence level on certain events, at least 20 events in a year went opposite direction. Allan D. Grady, president of Financial InterGroup Advisors, mentioned that risk mangers focus too much on past losses to estimate future risk. I think the collecting the past data to predict future loss is the one way to reduce risks.This article is related to the article "Wall Street Lied to its computers,” and it focuses more on trust their risk management programs. However, this article "Letters- Risk Management" talks about although Value at Risk models is important models to manage risk you may not see a big picture of economic movements if you focus too much on numbers provided by Value at Risk models

http://www.nytimes.com/2009/01/18/magazine/18letters-t-.html?scp=1&sq=risk%20management&st=cse