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June 20, 2022

Stellenbosch undergrads given real life masterclass on avoiding financial crashes

Elenjical Solutions’ FinTech expert Robert Cronje has returned to his alma mater Stellenbosch University to deliver a lecture on the realities of the value-at-risk technology platforms.

Johannesburg-based technology consultancy Elenjical Solution’s fintech expert Robert Cronje delivered a lecture to undergraduates and masters’ students on the ‘Application of Value-at-Risk: Methods and Practice’ at his old university, Stellenbosch.

The speech’s content was delivered in two parts: an introduction to the concepts of value-at-risk and its three core challenges of efficiency, accuracy and aggregation. This was followed by a deep dive into how technology is becoming more effective in evaluating risk in even the most complex financial products. In the latter section, he focuses on the technologies and tools developed worldwide in response to the aftermath of previous economic catastrophes.

An understanding vital in avoiding future financial crises

He described how Value-at-Risk technology, such as the Murex platform, have grown in importance and sophistication since the Financial Crisis: not only can they make sense of thousands of diverse data points, but now they encompass holistic aspects of capital market trading accounting, back-office and risk areas. This type of tech is also particularly scalable and modular, allowing clients to implement it in a way that accommodates their needs and software – which consequently lowers the risk of future financial crises. Robert gave a deeper technical explanation of these attributes, walking the audience through various calculations and scenario generations.

The speech delivered a real-world understanding of the topic of evaluating complex financial risks, as he shed light on how the theory students learn is practically materialised. Robert comprehensively broke down how Value-at-Risk is used to evaluate what we stand to lose over a certain time period with a given probability, and how significant it is: providing detail on its attractive features, why it’s needed but also its limitations, he maintained a balanced discourse about the complex quantile risk metric.