Portfolio and Risk Management Systems: Trends, Priorities, and Technology Strategies
Celent urges trading and investment firms to make smart investments towards superior market risk capabilities and systems to navigate the stormy conditions ahead. Reliance on bare standards from regulation is not sufficient.
The persistently fragile state of the banking system since the crisis and the trading environment in many developed markets have profoundly changed risk management operations. The practice continues to evolve, at the desk and enterprise levels. Current implementation efforts are designed to properly address the failures uncovered by the crisis, cater to emerging regulations, and strengthen risk management practices on the front line.
Markets remain volatile (despite riding higher), and sustainable growth remains uncertain. Forward-looking firms are driving both offensive and defensive efforts to streamline core business/IT and front- to middle-office risk management processes to achieve timely, data-driven, and risk-aligned decisions. This has resulted in the need to enhance and, in some instances, rearchitect next-generation risk technologies. Accordingly, technology vendors are refining their products.
In this report series, Portfolio and Risk Management Systems, Celent examines how market risk and trading functions continue to evolve, as well as what solutions and capabilities financial firms are moving towards.
“Despite the progress, what we have observed is that many of the responses to improve market risk processes, IT, governance, and controls have fallen prey to delivering short-term, often tactical priorities involving existing systems and their limitations,” says Cubillas Ding, Research Director at Celent and author of the report.
“Firms would do well to avoid falling prey to delivering what is ‘pragmatic and achievable’ as a knee-jerk reaction and instead, weigh best practice, longer-term priorities for the future,” he adds.
This multi-part series is a resource for firms delivering to requirements for regulatory change and market risk improvement programmes in the broader context of trading and investment risk. It should also aid firms selecting, implementing, or building out their trading risk applications and market risk systems. This report examines strategic perspectives related to technology architecture and application gaps and improvement areas. Finally, the report provides insights into solution dynamics and their impact on firms that select third party solutions.
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 subsidiary of Marsh & McLennan Companies [NYSE: MMC].
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Table of Contents
Not for the Faint of Heart: Market, Business, and Technology Realities
Drivers, Dynamics, and Market Trends
The Delicate Discipline of Balancing Priorities
Trends and Impact on Trading Risk Management IT and Operations
Organizational and Technology Sticking Points
Vendor and Solution Landscape:
Impact to Risk Management Requirements
Vendor Positioning and Demand/Supply Characteristics
Vendor Outlook in a Post-Crisis World: What This Means for Financial Institutions
Portfolio and Risk Management: Technology Spending
Rearchitecting Strategic Levers to Manage
Appendix A: Product Coverage
Appendix B: Retooling and Requirements for Next-Generation Capabilities
Leveraging Celent’s Expertise
Support for Financial Institutions
Support for Vendors
Related Celent Research