US banks under increasing scrutiny

New regulation continues to be a top priority for banks with the regulators both here and in the US placing increasing scrutiny on bank’s risk management policies in an effort to avoid another financial crisis. A recent article in the FT highlights how the US regulators are clamping down even further, making banks perform tougher "stress tests" of their financial health and being stricter as to what risky activity they are involved with. This comes shortly after the overhaul of US financial regulations last month by President Obama, which aimed to protect consumers by enforcing rules for banks on credit card and mortgage lending. This deeper level of analysis which is now being enforced serves to highlight the hurdle many banks still need to overcome in regards to their overall risk intelligence.

A fundamental problem banks have typically faced, particularly within the trading and capital markets arena, is a lack of vital and updated risk information, such as counterparty risk exposures, liquidity numbers and risk-based performance metrics, for intraday trading which hamper the ability to make informed decisions.

In order to ensure banks are in the best position to assess their risk exposure, risk managers need to have the appropriate tools in place to make informed decisions that are based on current metrics instead of making judgements based on out-of-date information. The key arguably lies in embracing solutions that enable real-time risk intelligence across the whole spectre of the company. While technology alone is not the solution to all the issues associated with risk management, it can ensure the decisions being made are well informed and  position financial institutions to better cope with the challenges of today’s volatile environment.