Authors
Lisa Warenski
CUNY Graduate Center
Abstract
This article examines the epistemology of risk assessment in the context of financial modelling for the purposes of making loan underwriting decisions. A financing request for a company in the paper and pulp industry is considered in some detail. The paper and pulp industry was chosen because it is subject to some specific risks that have been identified and studied by bankers, investors and managers of paper and pulp companies and certain features of the industry enable analysts to quantify the impact of specific risk events of a given dimension on a company's future financial performance. While companies in other industries may be subject to similar risk factors, the impact of risk events may be more difficult to gauge in those industries. The ability of financial analysts to model the impact of a risk event, and hence quantify a credit risk, increases the predictive accuracy of the model. I argue that bankers and regulators should recognise the uncertainty associated with unquantifiable credit risk in financial models, and they should view this uncertainty as a credit risk factor in and of itself. Evaluating the relative degree to which credit risk is quantifiable in financial models is a potentially significant yet largely unrecognised tool for credit risk management. I consider some possible applications of this assessment tool for managing risk within the banking industry
Keywords epistemology  uncertainty  credit risk  banking industry
Categories (categorize this paper)
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 70,214
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

No references found.

Add more references

Citations of this work BETA

A Survey of Business Intelligence Solutions in Banking Industry and Big Data Applications.Elaheh Radmehr & Mohammad Bazmara - 2017 - International Journal of Mechatronics, Electrical and Computer Technology 7 (23):3280-3298.

Add more citations

Similar books and articles

Varieties of Risk Representations.John Kadvany - 1997 - Journal of Social Philosophy 28 (3):123-143.
Economic (Ir)Rationality in Risk Analysis.Sven Ove Hansson - 2006 - Economics and Philosophy 22 (2):231-241.
Against Beck: In Defence of Risk Analysis.Scott Campbell & Greg Currie - 2006 - Philosophy of the Social Sciences 36 (2):149-172.
Risk Management as a Tool for Sustainability.Frank C. Krysiak - 2009 - Journal of Business Ethics 85 (S3):483 - 492.
Quantification, Regulation, and Risk Assessment.Douglas MacLean - 1982 - PSA: Proceedings of the Biennial Meeting of the Philosophy of Science Association 1982:243 - 260.
BSE in the UK: Why the Risk Communication Strategy Failed. [REVIEW]Karsten Klint Jensen - 2004 - Journal of Agricultural and Environmental Ethics 17 (4-5):405-423.
Reiterating Experimentation: Inventing New Possibilities of Life.Thomas Bay & Per Bäckius - 1999 - Emergence: Complexity and Organization 1 (3):71-83.

Analytics

Added to PP index
2012-09-04

Total views
71 ( #162,105 of 2,507,562 )

Recent downloads (6 months)
1 ( #416,983 of 2,507,562 )

How can I increase my downloads?

Downloads

My notes