Learning, Predicting and Conquering COVID-19: Finance Perspective

The Caixin Insight Group, Chinese Finance Association (TCFA) and the Modern Risk Society jointly hosted a webinar event titled “Learning, Predicting and Conquering COVID-19: a Finance Perspective” on Friday, April 24th, 2020. The Webinar was live streamed and is available for playback at Caixin.

The webinar was hosted by Dr. Chenyang Wei, the TCFA Chairman and Associate Dean of Tsinghua Institute of FinTech Research.

As the featured speaker, Dr. Jian Chen, the Founder and President of CreditWise Technology, also the Senior Advisor of Caixin Insight Group, shared his recent research and predictive analysis on the spread of COVID-19. Utilizing his expertise on state transition matrix modeling in the financial industry, Dr. Chen innovatively adapted the financial model to predict the peaks and patient distribution of the infectious COVID-19 outbreak.

More specifically, by using data from the National Health Commission of the People’s Republic of China as the training set, Dr. Chen illustrated how the state transition matrix model could be adapted to predict when the inflection peak time (the maximum open infection cases) in Hubei and other Provinces in China, i.e., to deduce the arrival of the peak infection time and the number of severe and critical cases in Wuhan on subsequent days, medical observation, discharge, infected, non-severe, infected and severe, cure and death data. In comparison to the other popular models such as the SIR, SEIR models from the epidemiology literature, Dr. Chen showed that the state transition matrix model have the benefit of being more robust and accurate. Dr. Chen also provided analysis on the COVID-19’s contagious spread in other countries including the US, Italy, South Korea, Iran, France, and Spain and discussed their implications.

In addition, Dr. Chen shed some lights on COVID-19’s the financial impact on consumer’s behavior. Through a unique dataset on Chinese ABS, Dr. Chen illustrated how COVID-19 had led to a rise in delinquency rates for different types of consumer loans, and its recent recovery due to the gradually reopened Chinese economy.

Following Dr. Chen’s presentation, three panelists joined the discussion, including Alex Yao, Joseph Qiu, and Tianyang Wang. Alex, an independent consultant and seasoned expert in financial risk management, discussed the challenges of prediction models, what predication models can and cannot do, and the differences among known unknows and unknown unknowns. Joseph, Board of Director of American Risk and Insurance Association, shared his insights in four aspects from the insurance perspective, which is timely given the COVID-19’s challenges on the insurance industry. Tianyang, Finance faculty at Colorado State University, further discussed the difference between risk and ambiguity as two different types of uncertainties, the analogy of Heisenberg's uncertainty principle in COVID-19 prediction, and the ambiguous area in rules and regulation.

The webinar host, Dr. Chenyang Wei also provided his valuable insights on COVID-19’s prediction model and its financial impact. Dr. Wei then led the discussion on several audience questions. It is a consensus from the panel that, while prediction models can never be perfect, people would benefit from such exercise to better assess trajectory and treatments of COVID-19, allocate medical resources, and combat this pandemic. Moreover, as a regular risk management practice, it is always beneficial to assess one’s own risk appetite, to diversify and cushion one’s investment assets.

About The Caixin Insight Group(Caixin Insight)

Caixin Insight (www.caixininsight.com ) is a premium, financial services platform that provides big-data analytical solutions, frontier research and consultancy and quantitative analysis to Chinese and foreign institutions. Since its founding in Aug.2015, Caixin Insight has consistently delivered first class service in research, data and index areas, with the vision to be the financial infrastructure builder of China in new economy era.

In April 2018, Caixin and Citic Capital jointly acquired the international business information unit of Britain's Euromoney, marking one of the biggest offshore purchases ever by a mainstream Chinese media company. The unit, Global Market Intelligence Division (GMID), was a provider of global financial information and data in over 15 languages, with a focus on emerging markets. GMID's two main units are CEIC and EMIS.

About The Chinese Finance Association (TCFA)

Founded in 1994 in the U.S., the Chinese Finance Association (TCFA, www.tcfaglobal.org ) is a government registered non-profit organization aimed at facilitating the exchange of ideas, knowledge and information on education, research and practice in finance and related areas between the US and China. Headquartered in New York City, TCFA has more than 15 regional chapters with +6000 members worldwide. Through its global network, TCFA organizes and sponsors a broad range of activities on a regular basis, including annual conferences, the Best Paper Awards, seminars and career development workshops.

About The Modern Risk Society (MRS)

The Modern Risk Society (MRS, https://cirforum.org/) proactively promotes research broadly related to financial risk management. It actively hosts research seminars and the annual China International Risk Forum (CIRF) with the affiliated universities. Researchers from both academic and industry who are interested in financial economics, risk management and related subjects exchange their thoughts about issues related to the financial market. Through these efforts, MRS aims to sharpen people's understanding in risk and uncertainty and to envision future risk management practice.

Speaker Biographies:

Jian Chen (featured speaker)

Dr. Jian Chen is the founder and CEO of CreditWise Technologies, Co. Ltd. He also serves as the senior advisor of MSCI’s China ABS business, and the senior advisor of Caixin Insight Group. He previously held the positions of Managing Partner of RQuest Financial Services Group, Managing Director in IFE Group, Risk Modeling Director in Freddie Mac, Director of Credit Risk Management in Fannie Mae.

Dr. Chen holds the academic position of adjunct professor at Shanghai Institute of Advanced Finance (SAIF). He also serves as the visiting professor of PKU-Fordham joint PhD program. He previously served as an adjunct professor at Johns Hopkins Carey Business School, where he taught MBA-level finance courses. Dr. Chen’s academic research interests include discrete event modeling, real estate finance and economics, fixed income securities pricing & hedging, consumer behavior modeling, and quantitative risk management.

Dr. Chen writes column articles for several prominent Chinese newspaper and periodicals, including Wenhui Bao, South Reviews Magazine, CAIXIN Media.

Dr. Chen has his BS in EE from Xi’an Jiaotong University, his MS in EE from Shanghai Jiaotong Unviersity, and his Ph.D. in Computational Finance from Robert H. Smith School of Business, University of Maryland at College Park.

Chenyang Wei (moderator)

Chenyang (Jason) Wei is Associate Dean of Tsinghua Institute of FinTech Research, and Director of China Insurance and Pension Research Center at Tsinghua PBC School of Finance (PBCSF). Based in New York, He is also responsible for PBCSF’s global partnership initiatives, including policy/industry research cooperation, oversea executive training development, and international conference collaboration.

He is Senior Advisor and former founding GM of Zenity Holdings New York, a global industrial investment group headquartered in China. Prior to Zenity, he was Head of Credit Research at American International Group (AIG), reporting to AIG’s Chief Credit Officer with research covering total AUM of $300bn in AIG Investments. Before AIG, he was Senior Economist at the Federal Reserve Bank of Philadelphia, and earlier Economist at the Federal Reserve Bank of New York. He is also a Research Fellow at Wharton Financial Institutions Center.

He is currently Chairman of Board of The Chinese Finance Association (TCFA), the largest global association of Chinese finance professionals with 6000+ members worldwide. He is former TCFA President (2014) and is founding Chair of TCFA Best Paper Symposium.

He holds a Ph.D. in Finance from Stern School of Business at New York University, a M.S. in Economics from University of Texas at Austin, and a B.A. (Finance) from Tsinghua SEM.

Yi Yao

Alex Yao has over 16-year experience in the field of financial risk management. Currently an independent consultant focused on corporate risk management, he has rich experience in risk modelling and Basel Accord implementation. Prior to this position, he was the CEO of risk consulting of Shanghai Amarsoft Information Technology Co. Ltd., and the senior manager of Asset-Liability Management Group of the Bank of Communications. After earning the Financial Risk Manager designation in 2008, Alex has been actively involved in financial risk management education. Alex received his bachelor and master degrees in mathematics from Shanghai Jiao Tong University.

Joseph Qiu

Joseph Qiu is Senior Vice President of Global Strategic Advisory at Marsh & McLennan. He specializes in advising insurers, reinsurers and risk pools on profitable growth, portfolio optimization, underwriting excellence, risk transfer and specialty risk management.

Prior to Marsh & McLennan, Joseph was Head of Catastrophe Modeling for JLT’s Americas region. Before that, he served as Senior Portfolio Manager at AIG, responsible for managing the catastrophe risk of AIG’s commercial property portfolio, the world’s largest property insurance portfolio. His global responsibilities required him to set standards and oversee the practice of all the regions (North America, Latin America, Europe, Asia-Pacific, Middle East and Africa).

Coming from academia, Joseph is currently a Board of Director of the American Risk and Insurance Association (ARIA). He used to serve as the Assistant Editor of Risk Management and Insurance Review from 2005 to 2008. His publications appear in both academic and industry journals, including Journal of Risk and Insurance, North American Actuarial Journal, China & World Economy, Journal of Financial Transformation, Journal of Financial Perspectives, Journal of Reinsurance and Emphasis. Two of his articles were invited for reprint. Joseph also spoke at various academic and industry conferences.

Joseph obtained his Ph.D. in Risk Management and Insurance from Temple University and Bachelor in Finance from Tsinghua University. He is a certified Financial Risk Manager (FRM).

Tianyang Wang

Tianyang Wang (Tian) is an Associate Professor in the Department of Finance and Real Estate at Colorado State University. Tian earned his Ph.D. from the University of Texas at Austin. He is also a Chartered Financial Analyst (CFA), a Financial Risk Manager (FRM) — Certified by the Global Association of Risk Professionals, and an Associate of the Society of Actuaries (ASA).

Tian’s research spans both theoretical developments and empirical applications primarily in asset pricing, behavior finance, derivatives, and financial risk management. His work has been published in journals such as Operations Research, Risk Analysis, Quantitative Finance, Journal of Empirical Finance, Journal of Risk and Insurance, Journal of Futures Markets, Energy Economics, and Financial Review among others. Tian's research has been supported by several research grants including grants from the Natural Science Foundation (NSF) of China, the Society of Actuaries (SOA), the Casualty Actuarial Society (CAS), and the Enterprise Research Program. He is grateful for numerous best paper awards and honors including the Academic Research Colloquium Best Paper Award by CFP Board Center for Financial Planning and Dean’s Scholars.

Tian has been an invited speaker, session chair and discussant at international and regional conferences. He has actively served on several research and program committees of major academic and professional societies including the Financial Management Association, Southern Finance Association, American Risk and Insurance Association, J.P. Morgan International Commodities Symposium, and Society of Actuaries to assist the development of an active and productive research community. Tian also serves in the leadership group of Modern Risk Society and on the Editorial Advisory Board of China Finance Review International.