Abstract
Overview
Introduction
This report provides detailed analysis into vendors specializing in a specific product/solution. Positioning analysis and a detailed product assessment sentiment, impact and technology are covered.
Scope
- Discussion of the impact of the sub prime crisis on risk management practices and solutions.
- Looks at the rate of technological change that is being driven by regulatory compliance measures
Highlights
The sub prime crisis has caused a fresh look to be taken at credit risk policies and practises. Organisations are revaluating the impact of a series of regulatory changes and endeavouring to leverage investment to enable a truly enterprise wide approach to risk management. The discipline of operational risk is beginning to mature.
Reasons to Purchase
- Gain insights into current risk management trends and practices.
- Assisting vendors in their go to market strategy
Table of Contents
- Overview
- Catalyst
- Summary
- Methodology
- Executive Summary
- Introduction
- The Evolution of Enterprise Risk Management (Market Focus)
- Enterprise Risk Management objectives and imperatives(Strategy Focus)
- Technology strategies in Enterprise Risk Management (Technology Focus)
- Key enterprise risk management investment areas (Databook)
- IT spending opportunities in retail banking and financial markets (Databook)
- Table of Contents
- Table of figures
- Table of tables
- The Evolution of Enterprise Risk Management (Market Focus)
- Summary
- Analysis
- Introduction
- Credit risk failures can precipitate liquidity risk, so model
assumptions need to be dynamic
- Sub-prime crisis background
- Credit risk challenges: leverage and modeling
- Credit risk challenges: ratings agencies
- Credit risk challenges: aggregation and integration
- Credit risk challenges: knock-on effects
- Implications for credit risk assessment and pricing
- Changes to ratings agency policy and practice
- Modeling
- Over-reliance on modeling and silo structures prevented the successful
aggregation of portfolio risk profiles.
- Modeling shortfalls
- Liquidity risk
- While credit and market risk have long driven investment, operational
risk is still evolving
- ORM process
- Communication is key.
- The growing convergence between IT and risk is being driven by
regulatory change
- Compliance as opportunity.
- MiFID and RegNMS update
- Conclusion
- Enterprise Risk Management objectives and imperatives(Strategy Focus)
- Summary
- Analysis
- Introduction
- Information risk management is the foundation of successful operational
risk frameworks.
- Fraud/AML detection and prevention an important entry point to ORM
- Risk based product pricing must reflect all risks to ensure the most
efficient use of capital.
- Risk based asset pricing.
- Efficient cost of capital: economic capital modeling
- Performance management
- Operational risk management (ORM) is maturing from historically tactical
solutions
- Considerations in establishing an ORM framework
- Operational risk loss databases.
- Conclusion
- Bank IT strategies in Enterprise Risk Management (Technology Focus)
- Summary
- Analysis
- Introduction
- Successful solutions will be those able to deliver the right metrics to
the right people in the right time.
- Automation opportunities continue to be found in credit risk
- Automation and its limited role in operational risk to date
- Flexibility is the key feature of operational risk solutions
- Industrializing computing scale by grid computing
- In operational risk, outsourcing opportunities at this point are limited.
- Outsourcing of regulatory compliance can bring benefits but strict governance is required
- External loss databases
- Vendor opportunity exists in flexible, customizable solutions
- Need for economic capital efficiency is driving development in
calculation engines and loss data utilization.
- Economic capital will be at the heart of overall risk management strategy in financial services
- Operational risk capital calculation methodologies are being refined
- Process review key to ongoing refinement
- Vendor opportunities
- Conclusion
- Key enterprise risk management investment areas (Databook)
- Introduction
- Risk spending is expected to remain largely unaffected due to operational and credit risk drivers.
- Operational risk will continue to grow at a faster pace in the search for performance based efficiencies
- IT spending opportunities in retail banking and financial markets
(Databook)
- Introduction
- Credit risk spending will lift in 2009 as further integration within enterprise risk becomes possible.
- Firms will seek to leverage prior investment internally in the drive to find efficiencies.
- APPENDIX
- Definitions
- Extended methodology
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Risk management technology expenditure by region
- Table 2: Risk management technology expenditure by risk type
- Table 3: Risk management technology expenditure by sector
- Table 4: Risk management technology expenditure by source
- List of Figures
- Figure 1: Enterprise risk management map
- Figure 2: The levels of ORM
- Figure 3: Investment drivers
- Figure 4: Barriers to integration
- Figure 5: Types of capital
- Figure 6: Risk based performance measurement
- Figure 7: Meeting Basel II AMA requirements
- Figure 8: Scenario analysis a powerful tool for ERM implementation
- Figure 9: Reporting and compliance is driving investment
- Figure 10: Encouragingly upgrading of risk frameworks is already underway
- Figure 11: Complexity of data types means progress in operational risk will be evolutionary
- Figure 12: The many impacts of economic capital
- Figure 13: Risk management technology expenditure by region
- Figure 14: Risk management technology expenditure by risk type
- Figure 15: Risk management technology expenditure by sector
- Figure 16: Risk management expenditure by source
