Modelling financial, insurance and scientific data
Scientists and engineers attempt to understand and define the functioning of systems over time, be it the stock market or an airplane. A mathematician might assign the system into one of two classes, deterministic or stochastic. A deterministic system, as its name implies, is one whose outputs can be determined completely by its initial state and its inputs. In other words, every time the system starts from a given state with given inputs, its output will be the same – there is nothing random about it. In contrast, a stochastic process is one that includes an element of randomness and thus involves chance or probability – even with the same initial state and inputs, the output might be different each time. Applications of deterministic and stochastic models are widespread in the fields of finance and insurance as well as in the natural sciences. In the former, one might wish to predict movements of the stock market or likeliness of developing a specific disease based on personal history. In the latter, one might wish to predict how contaminants are filtered from water under certain conditions. European scientists sought to bring together experts in the fields of deterministic and stochastic controlled systems to investigate problems arising from the interactions of various related competencies. They initiated the ‘Deterministic and stochastic controlled systems and applications’ (Controlled Systems) project to recruit new and experienced researchers to collaborate on finding novel solutions to existing problems. In addition, funding will enable network-wide training opportunities and participation in numerous workshops and conferences. To date, 19 early stage researchers and three visiting scientists have been recruited and 170 papers have been completed or are in progress. Completion of the project will no doubt have major impact on the fields of finance, insurance and the natural sciences as well as on the careers of the scientists supported by the grant.
