Sybase: The Changing Face of Risk Management in the New Regulatory Environment
Posted: 10 October 2010 | Source: Sybase
The recovery from the global recession has become especially precarious due to the Eurozone sovereign debt crisis and fiscal tightening in the western world, and as a result of which volatility in financial markets has risen sharply. Under these circumstances, it has become imperative for banks to strengthen their risk management frameworks so that they can meet both the current and impending wave of challenges successfully.
The central tenet of such a framework is an enterprise view of risk. Traditionally, teams for risk management have operated in disparate silos, which impedes collaboration, undermines their status in the organisational hierarchy and critically obscures the true risk profile of the bank. This siloed approach also extends to system development, leading to a plethora of systems within each risk department that can execute specific tasks
efficiently but cannot communicate seamlessly with each other. As a result, risk managers in individual departments can gain a false sense of security that belies a range of hazards that can afflict the business. Mitigating this situation requires an integrated infrastructure and data warehouses that provide services to all departments from a central point.
Even when this has been achieved, however, banks also need to ensure that prompt action can be taken whenever threats materialise. Towards this end, an integrated infrastructure alone is not sufficient; a proper mechanism for conducting up-to-date risk analysis should be instituted, the results of which should be available at all times to senior management. This can be achieved by interactive risk dashboards tailored to the individual requirements of each user, which allow on-demand risk analysis.