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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Why Web 2.0 will find Financial modeling next
A recent piece in the National Journal by Tankersley and Hirsh, “Neo-Voodoo Economics”, encouraging American’s to think more boldly about new growth and markets, rather than simplistic rethreads, prompted me to think about a few new opportunities in this space. A plethora of industries have been radically transformed and reconfigured by the emergence of new business models made possible by web 2.0. Netizens (a term commonly used to describe people actively involved in online communities) have rocked the foundations, processes and relationships (and wallets) upon which they were built over the past 25 years – learning, working, media and everything in between. Inroads have begun into even the most sacred of sectors – such as religion, politics, property and professional services.
However, often these seismic transformations are as subtle, as they are gradual. A compelling case could be mounted that the financial modeling industry – part of the 700,000 firms in the $1 trillion+ professional services industry – may be next to be transformed by Web 2.0.
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