Beyond Basel II: Evaluating the Financial and Credit Risk Solution Vendors 2008
AbstractLondon, United Kingdom 14 April 2008
The pressure to adhere to aggressive Basel II deadlines for many first-wave institutions has meant that additional business benefits such as better management of risk/returns, enhanced pricing, and more sophisticated risk management practices have largely been left by the wayside. Celent urges firms to look beyond regulatory basics to systematically realise value from their risk management initiatives.
Basel II implementations have been progressing for the past five years within first-wave institutions. This momentum has reached significant milestones in Europe and, to varying degrees, in the Asia-Pacific region and elsewhere. The past few years have seen large-scale, resource-intensive projects deliver the new Basel framework, with firms spending on average between $50-$100million (or 3-7bps of assets) on their Basel II programmes. However, despite good progress towards deadlines this year for first-wave institutions, many firms have focused on completing the regulatory aspects of Basel II.
In a new report, Beyond Basel II: Evaluating the Financial and Credit Risk Solution Vendors, Celent assesses offerings from ten vendors. The report examines the state of the market for risk management solutions and the innovative vendors that are helping institutions transition beyond regulatory basics.
"Looking forward, as Asian, Eastern European, Middle Eastern and most recently, US institutions begin their initiatives in earnest, there are lessons to be learned from first-wave projects. From an IT perspective, data quality issues, technology integration challenges, and adaptability of risk management systems are often cited as concerns in realising the full benefits of risk initiatives," says Cubillas Ding, Celent senior analyst and author of the report. "Technology considerations and the solutions adopted stand as major underpinnings in realising success."
This report uncovers market trends in risk management, as well as broader capital planning and financial analysis practices. It also examines the solution aspects of financial and credit risks, as well as implementation lessons in the context of Basel II related initiatives. This report is intended to be a guide for institutions who are planning their risk initiatives, implementing risk management solutions, or migrating their businesses to the new Basel II regime.
The 75-page report contains 21 figures and 20 tables. The vendors analysed in detail include: Algorithmics, Fermat, Financial Architects, IRIS, Oracle/Reveleus, Misys Almonde, QRM, SAP, SAS, and SunGard. A table of contents is available online.
Members of Celent's Retail Banking, Wholesale Banking, Retail Securities & Investments, and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left. Non-members should contact firstname.lastname@example.org for more information.
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].
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Table of ContentsLondon, United Kingdom 14 April 2008
|Business and Technology Drivers||09|
|First-Wave Basel II Institutions Pressured to Demonstrate Tangible Business Benefits||09|
|Evolving Risk Management Practices Beyond Basel II||11|
|Expanding Adoption of Economic Capital Frameworks||15|
|Economic Capital Management and Basel's Pillar 2||16|
|Redefining Finance and Risk Activities||18|
|Implications from the Market Crisis||21|
|Financial and Credit Risk Management||25|
|Architecture System Overview||25|
|Criteria For Inclusion||27|
|Scope of Offering||30|
|IRIS Integrated Risk Management||39|
|Celent's ABCD Vendor Analysis||58|
|Overall Vendor Rankings||60|
|ABCD Ranking Breakdowns||60|
|Advanced Features and Functionality||61|
|Breadth of Functionality||62|
|Depth of Client Services||64|
|Solution Strategies and Implementation Lessons||65|
|Conclusions -- Looking Forward||71|
|Risk Management Ecosystem -- Primary Components||73|
|Peripheral Applications and Ecosystem Linkages||74|
|Technology Platform Overview||76|
|Maintenance and Support||79|