Getting risk information right


   

This whitepaper summarises the results of our research into the priorities for risk management from an investment firm’s perspective. As politicians clamour for better risk management, the strain on firms’ current risk infrastructures will increase, especially when it comes to the provision of timely and accurate aggregated risk data. More than just an IT issue, this research is for all people that manage the many functions affected by the regulations.

The findings in this report provide a snapshot of what the firms believe their requirements to be before the competition for better capital ratios, risk management and winning investor confidence starts in earnest at the beginning of 2011. We have created a heatmap of the key issues and corresponding processes and/or data management capabilities required to meet the regulatory-driven risk management standards.

The 30,000 pages of global risk regulations released since the financial crisis have created a significant operational challenge.  Our survey of 24 financial services professionals, from 21 financial institutions and their suppliers, has shown that, whilst firms are aware of the implementation difficulty and are concerned about the possibility of new penalties, compliance is not straightforward.

This paper explores the most essential ingredients for successful risk managers: workable data sets that allow them to successfully create and control an integrated picture of the firm’s risk position. Contrary to conventional wisdom, we found risk data quality to be a huge issue as professionals struggle to make sense of the large volumes of complex information buried in the disparate sources where it was created for a variety of purposes.  In short, it has become increasingly difficult for those who are called upon to integrate and apply the information to understand what it means.

Priced at £795, discounts may apply to some organisations [free to LiRAN members, others contact us for details]

Recipients of this report will gain a broad understanding of:

►    The political and regulatory imperatives for fixing risk management

►    The current barriers to better risk management within financial firms

►    The ‘Know Your Exposure’ framework of capabilities and processes required to manage risk

►    Firms’ readiness to implement the new regulations and the approaches they have taken

►    The size of the transformational challenge for risk and where the resource gaps lie

►    The need for a fundamentally new approach to dealing with risk information, and how to fund it

►    The timescale for action. The competition for better capital ratios and risk management looks set to begin in the first quarter of 2011; they may prove critical for attracting future investors.

This report will help senior managers understand the risk infrastructure issues and aid with prioritisation of resource allocation.  The frameworks in the report can serve as a benchmarking tool to align practices and provide a greater understanding of your firm’s particular challenges.

 

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