Systems failure

Banks have long boasted about the power, speed and efficiency of their enterprise-wide risk management systems. But the recent crisis indicates many firms were putting too much reliance on model outputs, without challenging the data. What are banks and software vendors doing to strengthen risk processes? Clive Davidson reports


The finger of blame has pointed in many directions in the post mortem of the past year's subprime debacle and credit crisis. Over-optimistic rating agencies, lax regulators, negligent senior managers, ivory tower model makers, the models themselves, inadequate stress tests - the list of who or what might be culpable goes on and on. Risk management systems - the technology that is supposed to help banks identify their exposures and avoid losses - have not escaped the battery of accusations.


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