A curious client recently asked – “Couldn’t financial modeling risk be diminished by introducing a Quality Assurance Review Panel (“QARP”)?” It was a simple, pragmatic question that left me momentarily perplexed. I then enthusiastically responded “I’ll look into it – it could have legs”.
And so I researched further. A threshold question is the practicable trade-off between commercial efficiency and fastidious accuracy. Although most financial modelers aspire to believe they can always achieve both – the first spoke more of dollars, the second spoke more of risk management. I quickly realised that “efficiency” challenges could be largely overcome through further training (most financial modelers are self-taught), collaborative ways to share knowledge and hard-earned experience. Finding pragmatic ways to mitigate risk appeared to be path less considered – particularly providing a second-set-of-eyes to highly-complex, thought-intensive and “high stakes” financial models used extensively throughout professional services, industry, government and education.
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