Model building is not a straightforward or routine technical process. The experience and judgment of CT RISK , as much as its technical knowledge, greatly influence the appropriate selection of inputs and processing components. Models are employed in real-world markets and events and therefore should be tailored for specific applications and informed by business uses. The building process is often a multidisciplinary activity drawing on economics, finance, statistics, mathematics and other fields. In particular, the process is quantitatively supported by:

• Monte Carlo simulation;
• Factor model risk simulations;
• Market factor risk simulations;
• Linear risk modelling;
• Simulation-based risk modelling of non-linear assets;
• Multiple distribution assumptions; and
• Independent settings for correlation and volatility estimation.