Risk & Compliance special report


September 2011 - sponsored by: NICE Actimize, Lab49, Sybase, Ullink

Click here to download the PDF

Preparing to Be Seduced

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.

Click here to download the PDF


  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a WatersTechnology account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: