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The most important lesson of the 2008 financial crisis for Wall Street was that risk models like VAR (value-at-risk) were basically flawed and created a situation comparable to children having fun with matches– in a fireworks factory.
They were flawed because they were improved the simple mathematical construct of conventional variance, which was designed to measure the variance in physical domains, like animal height and weight, and populations of information with predictable patterns and margins of mistake, like test ratings or Brexit polls.
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