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It seems that risk management is never far from the minds of the boards of financial institutions at the moment, given the increase in regulatory and client scrutiny of this space in the post-financial crisis environment. In order to meet the slew of regulations on the horizon, firms are being compelled to invest in their risk management systems to keep on top of their exposures, be they credit, market or liquidity related.
Regulators such as the UK Financial Services Authority (FSA) are directly endeavouring to place more emphasis on firms’ risk management practices. As well as its liquidity risk reporting regime, the introduction of new remuneration guidelines are aimed at curbing reckless risk taking within financial institutions. All of these are a case in point for increasing the power of the risk function.
Accordingly, the profile of the risk function within financial institutions has gradually risen up the ranks in terms of priority and power, and many more firms are taking the decision to appoint a chief risk officer (CRO). The regulatory community has indicated that CROs should eventually have clear enterprise-wide authority and independence, with tenure and remuneration determined by the board.
The A-Team Group Liquidity Risk Management Directory is a new and first of its kind publication, focusing on the providers of solutions in the complex and demanding area of liquidity risk management. As financial institutions face extensive new requirements in the management of liquidity risk, the directory is intended to provide indispensable assistance in the assessment and selection of solution providers.
As financial institutions fight to survive in the post credit crunch climate, they are reviewing the serious challenges they face as they come to grips with new priorities in risk management across the enterprise. No longer just a middle office function, risk management is becoming the heart of financial institutions, driving business practices and governing the future direction of the industry.
Over the past couple of years, Complex Event Processing has emerged as a hot technology for the financial markets, and its flexibility has been leveraged in applications as diverse as market data cleansing, to algorithmic trading, to compliance monitoring, to risk management. CEP is a solution to many problems, which is one reason why the emerging marketplace is growing, with many vendor options to choose from.
The lack of a single, holistic view of enterprise risk among financial institutions has been identified as a key factor in the ongoing financial crisis. With data organized along business lines – largely on a silo basis – risk managers have been merely measuring the risk of firms’ vertical operations, rather than truly managing it. The result has been a lack of real information on holdings, exposures and counterparties, and an incomplete view of enterprise risk.
