Model Risk Measurement - General Concept and Particular Models
Tremendous development of financial theory and computer technology has led to the substantial increase of potential application of very advanced models, based on mathematical tools, in financial practice. This means that it is very easy to apply these models, without paying attention to justifiability of application of particular model in specific practical problem. This brings the issue of the so-called model risk. In this paper we discuss this problem, by giving the proposals of how to measure model risk and to solve some particular models. We discuss the models used in finance. (fragment of text)
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