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Message: <blockquote data-quote="vertigo" data-source="post: 177284" data-attributes="member: 25883">you can tell the authors of the article are clueless after reading the first line, i think they are very confused. complicated risk software? that must be the biggest joke in the quant industry. it is well known that all banks have simplistic and crap risk software -  limited functionality, bugs, etc. i would call them 'bloated', not 'complex'. there is nothing complicated about a risk model.the authors then replace the phrase  'complex risk models' with 'complex internal models'. risk models are a subset of internal models, but the converse is not true: pricing models, for example, models that calculate the sensitivities (Delta, Vega, etc) internal models but not risk models. whilst this is a minor point, anyone who has worked in a bank would understand the difference between a risk model and an internal model. there are not even the same category.nor do they define which risk models (market risk, credit risk) will be impacted by new regulation. yes, moves in interest rates will be quantified as market risk, but loans could be credit risk too.it is very difficult to run a profitable business under a standardised approach. that is why banks apply for internal model approach. if the authors are trying to convince us that banks will just switch to a standardised approach and cut the budget for internal models, they are living in a fantasy land, where Elvis and Tupac are alive, because that will not happen - banks will push aggressively to keep permission for the internal model approach. there are big budgets allocated to enhance the internal models & standardised models to be consistent with new regulation.i dont think this will detract any PhD students or MFE students from joining banks to work as quants - nor will it lower the demand for banks to employ quantitative focused students. it simply means more work on regulatory aspects, which is a shame because the regulators are clueless.</blockquote>

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