Partners Microsoft, Numerix and Thomson Reuters teamed up for an engaging panel discussion about how organizations are striking a balance between innovation and transparency--in both the data management and analytic models areas--to embed risk management effectiveness into their companies' culture.
Information has outpaced our ability to understand and manage it. Even before the financial crisis, enterprise-wide risk management was among the next big initiatives for Financial Services firms.
According to Panel Moderator, Ben Narey, Managing Director, Banking and Capital Markets at Microsoft companies are finding major challenges in the areas of data management and analytics modeling. The lack of relevant and/or timely data, coupled with greater demand for complex analysis scenarios, such as VaR and counterparty risk, hampers today's organizations' ability to deliver a holistic and, in some instances, real-time view of their firms' risk profile.
Risk Management Thought Leader's Panelists
Photo from Left to Right: Panel Moderator: Ben Narey, Managing Director, Banking and Capital Markets, Microsoft; Panelists: Ted Pendleton, SVP, Global Business Development, Numerix and Tim Lind, Global Head of Strategy, Enterprise Content, Thomson Reuters
Tim Lind, Global Head of Strategy, Enterprise Content at Thomson Reuters, underscored how regulatory pressures exacerbate the data management challenge. "We need to gear-up for massive regulatory reform," he added. Mr. Lind also passionately warned about the 'demonization' of Wall Street and the potentially adverse impact of over-regulation, stating that politicians, "never waste a good crisis."
"It's going to be a Renaissance from an analytics perspective"—Tim Lind, Global Head of Strategy, Enterprise Content, Thomson Reuters
On the horizon, all the panelists agreed that the regulatory impact for the OTC industry needs to be seriously evaluated by financial institutions, in relation to the following:
Speaking out on Industry Best Practices
"Americans know the price of everything and the value of nothing"-- Oscar Wilde
As the panel discussion continued, Ted Pendleton, SVP, Global Business Development at Numerix cleverly referenced Oscar Wilde and the parallels on the OTC derivatives market and lack of understanding behind OTC valuation practices.
Mr. Pendleton also addressed the following challenges when it comes to developing risk management best practices for OTC Derivatives and Structured Products:
When it comes to risk management and consistent valuations, "…we are grappling with legacy technology," added Mr. Pendleton. "What's needed is a single version of the truth when it comes to OTC valuation—enterprise-wide from front-to-back-office, and we are seeing an uptick in model validation and advanced modeling for risk."
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