"... we find that the Bayesian approach outperforms the classical one in identifying whether a model is correctly specified which is the principal aim of any backtesting framework. The power of the methodology is due to its ability to test individual model parameters and hence identify which aspects of a model are misspecified as well as the degree of misspecification."
“... we provide evidence that setting the risk-weighted ratio at 15\% and the simple leverage ratio at 10% would significantly decrease the probability of default without hampering banks' activities.”
The study investigated how ChatGPT and Bard categorize investor risk profiles compared to financial advisors. While there were no significant differences in the risk scores assigned by the chatbots an
The paper suggests that companies developing high-risk AI systems should demonstrate their safety before deployment, arguing for proactive risk management. It proposes a risk management approach where