September 2011 - sponsored by: NICE Actimize, Lab49, Sybase, Ullink
I reckon almost everyone with a risk-related role in a buy-side or sell-side firm is fed up to the hind teeth with hearing how poorly prepared they were when it came to dealing with the unprecedented challenges thrown up by the credit crunch and the ensuing financial crisis.
I guess our industry has more than its fair share of Monday-morning quarterbacks, although you'll be pleased to hear that I have little interest in joining their ranks-the speed and severity of the financial crisis caught everyone unaware and even the self proclaimed soothsayers of Wall Street weren't sure which way was up during the height of the crisis.
But what, as an industry, have we learned through the tumult? Sure, counterparty risk is now a term that applies as much to the sell side as it always has to the buy side, and modeling liquidity risk-arguably the greatest threat to any financial services organization because of the speed at which it can hit-is about as easy as herding cats.
But what about other day-to-day risks that need to be managed in parallel with firms' trading practices? This is the realm of real-time risk management, a concept sure to seduce even the most battle-hardened risk manager, made possible by recent advances in computing hardware and data management practices.
But is putting a dollars-and-cents figure on your risk exposure, on an ongoing intraday basis, something that Value at Risk (VaR) calculations attempt to do, all that it's cracked up to be? And perhaps more pertinently, now that we're on the cusp of realizing this ideal, is there a genuine business need for carrying out close-to-real-time VaR calculations? For the time being, the jury's out.
More from Waters
Updating your subscription status
Work with us on your Integrated Marketing Campaigns
WatersTechnology offers a full range of custom research, surveys, webcasts, video and whitepapers for firms looking to demonstrate thought-leadership through their marketing campaigns and generate sales leads.
16 Sep 2014
07 Oct 2014
14 Oct 2014
14 Oct 2014
20 Oct 2014
03 Nov 2014
The over-the-counter (OTC) derivatives market is in the midst of a global regulatory restructure. Authorities in Europe, Asia and the US are currently...
A fast, flexible and reliable investment decision-making process must be based on access to accurate and consistent information throughout an organization....