WHY QUANTITATIVE MODELLING IS IMPORTANT FOR RESEARCH AND FINANCIAL SECTOR?

·         WHY QUANTITATIVE MODELLING IS IMPORTANT FOR RESEARCH AND FINANCIAL SECTOR?

·         Market competition and recent progress in data collection and data storage techniques have increased the importance of quantitative modelling. Modelling has become an important part of research and development across many fields of study, having evolved from a tool to a discipline in less than two decades. There is the need to give an overview of quantitative analysis methods and models, as quantitative modelling enables banks and insurance companies to devise their own specific risk models. It facilitates them to model changing economic and regulatory landscapes quickly and economically. Recently, quantitative modelling has received a lot of attention in the financial sector. Modelling framework and software tools enhance the performance of business. Quantitative models provide diagramming techniques to document business process for growth.

·         Most people are not experts in predicting the outcomes of the systems governed by stochastic process and quantitative modelling. Although many software tools exist to model such processes, hardly any attention is paid to the analysis of quantitative aspects to support or optimise the outcomes.

·         A substantial number of users don`t have confidence in the assumptions of the models. High quality solutions are often misused and may create other problems (e.g. making the organisation more resistant to the introduction of future changes).

·         In the current era, when new financial modelling and mathematical finance techniques appear, one of the first questions inevitably is: why one more and which one quantitative model in particular? The answer springs directly from job experience of mathematicians working as quantitative analysts in financial institutions. Indeed, one of the major challenges any financial engineer has to cope with is the practical implementation of mathematical models for pricing derivative securities.

·         The method “Monte Carlo Simulation” calculates the value that is at risk of being lost from a change in interest rates using Monte Carlo simulations. This method enables financial institutions to compute the sensitivity of a single instrument or an entire portfolio to any number of interest rate changes.

·         One of the most important quantitative models is “Interest Rate Modelling”. This enables the financial market practitioners, academics and research students to develop their own interest rate models to price bonds and derivatives using existing models, and to design generic pricing frameworks.

·         OptiRisk Systems, in collaboration with Fraunhofer ITWM & CARISMA, organises training workshops to provide the deep knowledge on Monte Carlo Methods and Interest Rate Modelling, which is required by financial consultants as well as academics.

·         - See more at: http://www.optirisk-systems.com/blog/index.php/importance-of-quantitative-modelling/#sthash.WT488gDc.dpuf