Mat Newman, head of product management for SunGard’s Adaptiv business unit, discusses the importance of focusing not only on the ‘here and now’ but also of looking at risk management requirements in the long term
With all that is going on in the risk world it is easy to get bogged down with the ‘here and now’: new regulations, business as usual, technology upgrades. But we also need to keep an eye on the longer term to ensure the systems we build today can evolve to meet tomorrow’s challenges. As a Risk25 Firm of the Future we ask ourselves: what will customers need in the years ahead and what foundations do we require to meet these needs?
One thing is clear: customers use every ounce of computing power we can supply. Over the past 10 years, we have seen advances in technology delivering increasing power to the end-user. Grids of servers are routinely deployed to run billions of risk calculations every minute. But this increase in power is more than matched by customers’ ‘algorithmic ambition’ to run increasingly sophisticated analyses: where once we used add-ons we now use simulations; rather than running calculations once a day, banks now require them pre-deal. Newer metrics such as credit valuation adjustment (CVA) are required and, on top of calculating this single number, banks want to understand the sensitivities of CVA to multiple underlying risk drivers.
These sophisticated risk calculations place demands on compute power, results storage, analysis and navigation. Static reports on standard views were once the accepted approach. Going forward, customers want access to unprecedented levels of detail married with greater clarity. They want to ask new questions they may not have thought of until the data directed them along a particular line of enquiry. This implies a greater need for intermediate results storage, analysis and retrieval with easy-to-use reporting tools.
Integration is one of the industry’s biggest costs. Each merger comes with new integration challenges. As the management of risk becomes more holistic – encompassing credit, market, liquidity, capital, and so forth – so the interconnectedness of systems grows. Managing these interconnections and the integrity of data flowing around such networks will remain a highly demanding task.
Demands for speed, deep analytics and robust interconnections are at the forefront of our thinking as we plan the risk systems of the future. By adopting open standards, extensible design philosophies and new technologies, we can ensure that the systems we provide today form the bedrock for the next advances, thereby protecting our customers’ investments and giving them a road map to the future.
SunGard’s Adaptiv is an award-winning risk solution that aggregates data from across the organisation to give firms a holistic view and achieve operational efficiencies.
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