The ability to monitor and manage the impact of market shocks is becoming an increasingly critical factor influencing the degree of a bank's success. High performance, near-real-time risk aggregation and monitoring prevents over-selling or over-hedging, increasing a bank's competitive advantage.
In a more encompassing vision, a firm would obtain a real-time view of its risk exposures on a cross-asset, cross-trader and institution-wide basis, combined with profit and loss. This would be coupled with the computerised ability to swiftly identify the events that might introduce risk, then instantly analyse those events against a variety of risk models and, if necessary, take appropriate risk-mitigating actions – all in the blink of an eye. Yet real-time risk management, in its most holistic sense, remains more hope than reality, especially in view of the compartmentalised structures in which individual business, customarily manage risk on their own.
Our white paper on near real-time risk explores the following topics:
- Inadequacies Associated with the Current Approach
- Risk appetite frameworks
- The Move To Near-Real Time
- Benefits & Challenges
- The Ideal Near-Real-Time Risk Management Solution
For this research, Lepus interviewed senior representatives from four global banks based in North America, Europe and Asia and a consultant with extensive past experience working for several major banks in Risk. In addition, Lepus interviewed a consultant who has extensive experience of risk management at several tier-1 and tier-2 banks across the world. Supplemented by secondary research, this paper explores current practices at these prominent banks and their expectations for the future.
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