
F(x)
ABOVE
AVERAGE
BELOW
AVERAGE
I0II0I00II
(723)
CHROMOSOMES
0***… 1***…
x
0II0I0IIII
(431)
198 Operational Risk Control
A method for extreme value identification in connection to genetic algorithms is hill
climbing, a term from John von Neumann’s automata theory. Considering process
values that progress in a continuous line, the genetic algorithm approach addresses
functions that fluctuate, such as:
䊏 Stock market values
䊏 Credit rating systems
䊏 Guaranteed fund approaches
䊏 Risk and return with derivatives
䊏 Operational risk controls.
When the value taken on by the population moves a little up or down, we talk of
creeping. A rigorous optimization study will go ...