Mathematical and quantitative sophistication provide financial institutions with scientific methods to price (over the counter) derivative products by the use of historical data and inputs. These inputs attempt to reflect the underlying reality within a company or economy quantitatively. This paper attempts to show how human perceptions based on input metrics that are used to help determine reality do not always offer reliable reflections of the underlying true picture. As a result of these misconceptions within derivative modelling we argue that risk managers must be able to overcome aspects of hidden risk in order to reduce large asymmetric losses within financial institutions.