The Reserve Bank of Australia assistant governor Guy Debelle points at mis-assessment as one of the key factors in the financial crisis.

In his speech at the Risk Assessment Conference Tuesday, Debelle said “Risk was mis-assessed by financial institutions, risk managers, investors and regulators.”

Too much reliance on a model-based approach, such as using the value-at-risk (VaR) models, was identified as the cause of the mis-assessment. The models, according to Debelle, streamlined businessmen to look at the risks alone. It presented investors from taking into account the uncertainties.

The assistant governor considered risk as measurable, while uncertainty is not. The future is one of the uncertainties businessmen have to face that he suggested for financial systems to be designed “as robust as possible to this uncertainty.”

One key element of his suggested financial system “is restraining leverage,” which, Debelle said “can limit the number of illnesses that turn into fatalities.” He mentioned dispersing risks around a financial system through a large number of derivative products.

The banks have so far increased interest rates on deposits in order to beef up it coffers for loans. The effects of the move, Debelle said, “will be an interesting research question in the years ahead.”