Taking Risk Bonus: Hear our interview with "My Life as a Quant" author Emanuel Derman

The latest in our podcast series features Emanuel Derman, author of My Life As a Quant and formerly the head of the Quantitative Risk Strategies group at Goldman Sachs. In this interview, Derman discusses how financial models have been recently misused as well as his perspectives on how much to rely on models in your process.

Along with defending the use of risk models, Derman proposes possible solutions for restoring confidence in ratings agencies. Derman states that he is often asked how much a role financial engineering played in the crisis:

"It’s not black and white, but the Icelandic banks didn’t go under because their value-at-risk model was wrong or because of subprime CDOs, but they just rode a boom of borrowing short and leveraging themselves and lending lots of money, and one day they couldn’t borrow anymore."

To hear more from Emanuel Derman, listen to our entire interview on iTunes. You can also listen to the full audio online, or read a transcript of the interview. Part two of the interview will be released next week.