Anna Chernobai: Languages, Analytics and a Change of Plans that Led to Academia

Her students have heard Anna Chernobai say that her birth country has changed its name twice since she was born. They may know her native language is Russian, that she’s fluent in English and Japanese and also knows some Spanish and German.

With her background—born in the former Soviet Union, lived and studied in Japan and Germany, now a citizen of both Russia and the United States—she advocates for a global business perspective.

“In today’s global marketplace, knowing a foreign language and experiencing different cultures are an absolute must and a key to an exciting career,” says Chernobai, an associate professor of finance who joined the Whitman School of Management faculty in 2006, the same year she received a Ph.D. in statistics and applied probability from the University of California, Santa Barbara (U.C.S.B.).

“I always encourage my undergraduate students to take a semester off and go study abroad, and not just go to England, but go to France, Spain, Singapore, Japan—take the risk, have fun, see the world, experience a different culture,” she says. “You don’t know what you are missing until you go live abroad for a while.”

In 2010, Chernobai received a University-wide Meredith Teaching Recognition Award for junior faculty, and in 2012 Whitman presented her its Guttag Junior Faculty Award. An expert on operational risk in banking, she teaches business statistics (undergraduate), data analysis (MBA), and banking risk management (undergraduate and graduate); chairs the Whitman Teaching Committee; and serves on the committee developing a new undergraduate business analytics major.

“Studying a foreign language was never a burden for me. It was always fun,” Chernobai says.

She grew up speaking Russian in Sevastopol, the Crimean city where she was born. (When the USSR collapsed in 1991, Sevastopol became part of Ukraine. Russia annexed all of Crimea in 2014.) Her family also lived in the former Leningrad—now Saint Petersburg —and Moscow before moving to Japan when she was seven; her father was a diplomat at the Russian Embassy in Tokyo. When the family returned from Moscow to Tokyo when she was 15, she began to learn Japanese.

At 18, she entered Sophia University (Jouchi Daigaku) in Tokyo, where all instruction was in Japanese.

Chernobai faced a choice about a college major—art or economics —and made her decision based on her mother’s career. Growing up, she says painting was her hobby and she took art school classes in the evenings. (Those studies still pay off today. “I use lots of drawings when I teach statistics,” she says.)

Her mother worked as an economist for the Russian Central Bank, and since “my mother was my role model, I decided to follow her steps.”

With a B.A. in economics, Chernobai moved to England and obtained an MSc in economics and finance from Warwick Business School, writing a master’s thesis on the declining role of the main banks in Japan as a corporate governance tool. Her studies extended to a third continent when she moved to California to pursue a master’s in economics at U.C.S.B. Intending to find a finance job on Wall Street, she interviewed at some banks in the summer of 2001.

The terror attacks of 9/11 upended those plans. That day, she and her twin sister were supposed to fly to New York City for the first time—Anna from London and Katerina from California. Their flights were canceled,their tourist plans disrupted. Her parents encouraged Anna to come to Moscow for several weeks.

“I had a lot of time to do soul-searching. This became the turning point in my career plans. No more Wall Street for me, I thought,” Chernobai says. “And I decided to drastically change my path, pursue my Ph.D. and get an academic job. And here I am now, very happy with what I do. I love research, and teaching is my passion.”

With a new career goal, she switched to a Ph.D. program in statistics and applied probability. Since her Ph.D. advisor held a dual appointment with U.C.S.B. and the University of Karlsruhe in Germany, she spent six months in Germany to work on her dissertation and write and publish papers with his other doctoral students.

To Chernobai, speaking other languages unlocks a multitude of opportunities.

“To know that I can go to a different country and speak in the language that is spoken there has always felt amazing,” she says. “And it’s not just about the language. When you learn a foreign language, especially if you are physically in the country where the language is spoken, you get submerged in the culture, history. You don’t just learn the language. You live it.”

She’s enthusiastic about the many cultures represented at Whitman: “It is very inspiring for me to be surrounded here at Whitman by colleagues with very diverse international backgrounds.”

Today’s business students must learn how to deal with digital data’s demanding volume, Chernobai says.

“The pace at which industries are accumulating business data that they need to make sense of is faster than the pace at which we are teaching our students. Much of what we teach in business schools revolves around the theoretical understanding of why and how things work, but lesser attention is devoted to the experiential component. But when students graduate, companies expect students to be experts at it all: understanding the theory and knowing how to work with real data, fast, right away, today.”

In her statistics courses, she aims for a balance between statistical theory and practical applications, using Excel and real business data. The range of data sources is limitless, she says: Walmart’s historical sales, borrowers’ defaults, corporate bankruptcies, Beijing housing prices, air pollution in India, CEO salaries, marketing campaigns, historical gas prices, even political and Facebook data.

“Students need to learn that vast amounts of data are everywhere you look, and no matter their major, data analysis skills are a prerequisite for a successful career in the rapidly changing and highly competitive business world,” she says.

Enrollment in her MBA class, Data Analysis and Decision Making, reflects students’ interest. Several years ago, she says, it had about 40 students; this semester it has 150, more than half from outside Whitman.

With the school developing a new major in business analytics, she says, “I am hopeful that Whitman would be a pioneer in producing high-quality, cutting-edge experts in data analytics.”

Chernobai’s research examines determinants of operational risk events and what characteristics of banks or the macroeconomic environment might be driving those events. Such risk can include fraud, IT failures, flawed business practices or damage to physical assets.

She explains that the Basel Capital Accord subjects large banks to mandatory capital requirements for operational risk that can amount to several billion dollars a year for one bank. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, operational risk has been part of mandatory stress testing requirements. The Federal Reserve requires U.S. bank holding companies termed ‘‘systemically important’’ to hold a risk-based capital surcharge to increase their resilience in the case of a financial crisis, like the one 10 years ago.

Her recent research, she says, shows that business complexity is a key driver of operational risk in banks. Financial deregulation of the late 1990s permitted banks to expand into previously restricted nonbanking activities, such as insurance and securities underwriting.

“This allowed them to benefit from increased economies of scale and some productivity gains,” Chernobai says. “But my research has shown that such benefits come at the expense of weakened risk management and potentially greater systemic risk.”

This research attracts attention. She’s recently spoken at both the Federal Deposit Insurance Corp. and Federal Reserve Bank.