Add to those the voice of Forbes’ Tom Groenfeldt, author of a popular column for the magazine on the crossover between technology and finance. In his most recent article, Groenfeldt identifies some key implementation issues for banks looking at the Principles:
- IT budgets are running to keep up with regulatory demands. Failure to understand many of the requirements is preventing departments from winning the necessary funding for change, even while regulators are telling firms they need to make sure their risk data functions are sufficiently resourced;
- Few institutions are thinking outside the box. Many are expecting their legacy systems to catch-up with an increasingly complex marketplace and regulatory landscape. In fact, firms need to get ahead of the change and look at new architectures that will see them into the future;
- Firms are failing to achieve data alignment internally. Silos are still a reality of BAU. And point projects are only helping to embed them further. In this sense, firms need to stop looking at themselves as a collection of business lines and start thinking about the benefits that the ability to process high volumes of data can bring to the organisation as a whole.
PJ Di Giammarino, JWG’s CEO, had this to say: “Controlling a system as complex as the global financial markets requires the linkage of disparate and disconnected pools of information. Engineering an effective control framework, therefore, requires a complete rethink, redesign and retooling of the way the supervisors and industry manage and share their risk information. Out-dated information structures are being expected to monitor a complex, technologically advanced and continually growing marketplace. Simply put, the old risk management tools are not equipped to manage today’s global, system-level events, nor will they ever without material change.
A ‘new solution’ to replace macro models that are disconnected from firm-level measures will be neither simple nor cheap. The problems are fundamental, long-standing and many of them currently unowned. Without a new global control framework, the potential cost could run into tens, or even hundreds, of billions.”