Having worked for 4 years as a rocket scientist in high finance myself (which apparently qualified me for my next job -- at NASA), I don't think that's how it works. The fact is, no one knows how to estimate those risks, even close. As most people know, probability applies to the real world only in special cases. The status of financial markets is constantly changing over time, in different statutory and regulatory and economic environments, most of which have never been seen before. Smart quants will make their best effort to model risks accurately, but no one really knows how to do it. The blame, IMHO, belongs to the people directly above them, who give them their marching orders and who are or should be well aware of the impossibilty of quantifying risk, or even quantifying the error in the best estimates of risk. --Dan << The math wizards of Wall Street are employed at enormous salaries to do "tail-stuffing", wherein all minor risks (i.e., those that might reduce their bonuses) are pushed down into the probability distribution "tail", where the probability remains low, but the expected value is significantly increased. Net result: nice (more-or-less) smooth privatized profits, with state-subsidized catastrophic losses. "I be gone, you be gone, we all be gone".

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