Expanding Risk Management....With Accurate Data

Looking at the themes for next week’s GARP conference, how can anyone be anything but rallied by this year’s bold theme, “Transforming Risk in a new world order”, and the acknowledgement that the financial crisis has highlighted the need for “an expanded and improved risk management function”.

So what shape will this new and improved risk management take? The big difference we have seen over the past year is a willingness in financial institutions to reassess the systems and core infrastructure supporting risk management applications from the ground up. There is now wider acceptance that you reap what you sow when it comes to core IT systems - and that the best risk management system in the world is going to only be as good as the data filtering into it. 

So no more hiding from the obvious. Risk management needs to be based on real-time consolidation of current and projected positions, and integrated with right-here, right-now market and counterparty risk data. Risk-relevant data needs to be updated with new transactions, market data feeds and customer/counterparty updates without manual intervention or batch processing.

With the role of the CRO or risk professional significantly elevated post-crisis, these projects now have the pre-eminence and senior backing they always deserved. This is a unique opportunity, so let’s hope the key people have the fortitude and conviction to get it right this time. This is their time in the sun – but they mustn’t fall asleep.