- Regulations, percolated data and the emergence of digital risk are contributing to the evolution of risk management systems
- Risk management systems of the future will be driven by sophisticated back-ends
LONDON – 12 December 2016 – A new report from GreySpark Partners, a leading global capital markets consulting firm, assesses seven technology vendor solutions that address market risk, credit risk, liquidity risk and counterparty risk in the capital markets space. The vendors reviewed in the report are: Calypso, Imagine Software, Murex, MSCI, Orchestrade, Prime Analytics and The Technancial Company.
The report, Buyer’s Guide: Risk Management Solutions, sets out the depth and breadth of functional coverage of the seven surveyed vendors rather than undertaking a comparative analysis to determine the quality or rank of each solution across functional areas. Functional coverage converged on at-trade market risk functionality, with pre- and post-trade liquidity risk and credit risk functions receiving marginal coverage.
GreySpark believes that EU, US and global financial markets regulations are driving risk management systems to become more advanced and integrated into business, IT and operational processes. This allows the generation of a more holistic view of an institution’s risk exposure. This is observed in local, regional and international regulations. In particular, and of significant importance to the strategic agendas of many business and IT heads, are the Basel Committee on Banking Supervision’s (BCBS) Fundamental Review of the Trading Book (FRTB) proposals, which are set to come into effect in January 2019, as well as BCBS 239 – which addresses risk and aggregation reporting – and BCBS 261, which sets new collateral and margining requirements for non-centrally cleared OTC derivatives. The significance of these regulations is reflected in efforts by a number of the surveyed vendors to incorporate the FRTB and BCBS 239 compliance functionality into their systems.
GreySpark believes that the risk management systems of the future will be driven by increasing sophistication within the back-end. The report identifies the identify the following as key functional areas of interest for risk management vendors in the coming three to five years:
- cloud-based risk and solutions;
- compliance-as-a-service;
- Big Data and non-relational database technologies;
- advanced machine learning;
- tool-kit based solutions targeting end-users bypassing internal IT departments and reducing time-to-compliance;
- managed service offerings and utility based offerings through strategic partnerships;
- open-sourced technology stacks; and
- agile architectures.
Charles Mo, GreySpark lead consultant and report co-author, said: “Merger and acquisition activity among risk management solution providers will slow down over the coming three years as the industry comes to the end of a period of consolidation and rationalisation.”
Saoirse Kennedy, GreySpark senior consultant and lead author of the report, added: “Participants in the space will invest in system functionality and gaining competitive edge, most likely by looking at cloud-based solutions and agile architectures that allow institutions scalability and flexibility in a data-oriented environment.”
For further information and to purchase copies of GreySpark’s research, please e-mail: research.reports@greyspark.com
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Notes to Editors
About GreySpark Partners
GreySpark Partners is a business, management and technology consultancy specialising in capital markets. GreySpark Partners works with investment banks, hedge funds and asset management firms to deliver solutions that work across all asset classes, with a particular focus on risk management and electronic trading. For further information, please visit: www.greyspark.com
