Beware the Illusion of Precision

Overconfidence in quantitative models can lead to disastrous outcomes, as seen during the 2007-2008 financial crisis. Initial probability assessments, while seemingly precise, are often flawed and can become overly manipulated through complex modeling processes. This can result in misleadingly low probabilities of default that ignore the true uncertainty of the underlying assumptions. Reliance on quantification, particularly when it becomes overly reliant on a single number, can overshadow the underlying realities and risks, ultimately putting major systems at jeopardy.