Thinking outside the cloud

We're hosting a webcast on Finextra right now looking at everyone's favourite tech trend - cloud computing. 

However, before any IT head worth his iPad case starts dreaming about the processing power, flexibility and resiliency cloud computing can offer - his or her thoughts inevitability turn to security.

In the webcast Adeel Saeed, head of Corporate Technology Services at the London Stock Exchange puts risk management square at the front of cloud adoption for financial firms.

'If your risk appetite is low, go for the cloud, there is nothing better than the cloud. If your risk appetite is very high, you need to go for the systematic application approach.'

What is the 'systematic application approach?' According to Saeed that means looking at which applications can go into the cloud and examining the risk associated with each one. Low risk data apps, such as email storage? - cloud. High risk data apps, such as client account data (which may be covered by regulations restricting the storage and location of that data)? - in-house.

Of course email is the application that often comes up first when discussing cloud adoption. It's not sexy, but the data management aspects of it are unwieldy and expansive. Cloud seems the obvious choice for management apps such as filtering spam.

But what about 'other' applications? Where would your mind go when looking and examining which apps might find a place in the cloud? I liked where Andrew Yeomans', board member of the Jericho Forum (who does actually work for an investment bank as well) mind was going in this webcast.

'Financial institutions are really going to need that protection [in the form of increased security and regulations] before they're going to trust their data in the cloud, fully. But in the short term, there are other aspects where data isn't that confidential, Monte Carlo simulations, for example.'

Risk data?! Internal, proprietary, loaded with information about trade fails and modelling insecurities - reside that in .... the cloud? I think it's a great idea.

Monte Carlo simulations are, as every risk manager knows, a huge, data-intensive, computer-processing-sucking, weeks, months (years!)-long mathematical calculation. It's the great blue whale to VaR's chirpy harbour dolphin. Which makes it a perfect application to sit in the cloud - where flexibility and resiliency and on demand growth are the biggest selling points and storage isn't even a word your vocabulary

According to Yeomans, if anyone were to get at the data residing in a Monte Carlo simulation, it would be meaningless to them anyway - risk and security covered by the nature of the beast.

So, I expect to see a slew of big banks running their massive risk calculations in the cloud from now on. Hey, they probably already are.

(If so, you can call me at Finextra anytime :-)

Register to watch the webcast now, on demand.