Researchers working to prevent financial crises

Computers and statistics will help evaluate loan and investment risk

Danish researchers have embarked on an ambitious attempt to avoid future financial crises by using computers and statistics to evaluate and manage loan and investment risk.

Researchers from the University of Copenhagen's departments of mathematics and computer science and the Niels Bohr Institute teamed up in 2010 to form the HIPERFIT (Functional High Performance Computing for Financial Information Technology) project, which is now at its half-way point.

“We have already developed some coding that is much, much quicker – all the way up to 500 times quicker – using standard graphics cards found in common computers used for gaming,” Fritz Henglein, the lead researcher for HIPERFIT, told science website, Videskab.dk.

READ MORE: New government IT disaster raises old questions

Open for the public
The research group is working in close co-operation with a number of banks, including Danske Bank, Nordea and Nykredit, in order to create higher calculation speeds for the project and help develop a new programming language that will improve risk calculation for the banks in future.

But their research is open to the public and Henglein hopes that it won’t just be the banks that reap the benefits from the results.

“It’s terrible how people have bought into structured high-risk products because the product designers know much more about it than the bank advisors and investors,” Henglein said.

“There is an inequality in who has access to the information – something that we hope to help change.”

In 2010, HIPERFIT was funded by the Danish Council for Strategic Research with 31.4 million kroner for six years of research.





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