RiskTech Forum

Capital Management

Posted: 19 October 2012  |  Author: Shane Murray  |  Source: Chartis

As capital becomes scarcer and more expensive, firms need to reform their capital management functions to manage it more efficiently. Financial institutions are finding that the capital planning function needs to take greater priority, as capital management needs to become more strategic and more dynamic. At the same time, many firms want to introduce risk-adjusted performance metrics, which is leading to a greater alignment and integration of capital management, capital planning, and risk.

However, while many firms are attempting to make their capital management functions more strategic, dynamic, and risk aware, they are hampered by two things: regulation and inadequate technology systems. The requirements to submit more frequent and more detailed reports to regulators is forcing firms to do more with less and hampering their attempts to manage risk.

Equally, many firms are finding that silo-based technology systems are too slow and make data gathering too difficult for the new, more dynamic approach that is required for effective capital management. Firms are spending to meet these challenges: research carried out by Chartis earlier this year showed that more than 70% of firms expected their spending in this area to rise by 10% or more over 2012. Financial institutions need to ensure they invest wisely to deal with these issues: the challenges of capital management require an integrated technology solution with the flexibility to provide risk-based information at the moment of need.