Where is Risk Headed?

Last year, we issued a report on trends in commodity risk. This year, I seem to have talked to no end of risk vendors and risk managers as well, culminating in a RadarRadar webinar that I participated in as a panelist last week. As it should be, risk management is high on the agenda. I thought then that I might take a few minutes to outline some risk trends we see from a systems perspective… Everything needs to be more timely. As we saw in our report, obtaining risk reports the morning after is now just not good enough. Markets and events move fast and there is more data. People want to know the impacts on position immediately and so ‘real-time’ risk is emerging as a requirement. Of course, there is no such thing as real-time – just near real-time and, running complex mathematics on an entire corporate portfolio is time-consuming and expensive, which is why event-driven recalculation is one option that some desire. Others look for automated re-calculations every few minutes. More stress testing and simulation. Today, markets are as often moved by geopolitical events as they are by the forces of supply and demand. Historical trends in some markets… continue reading

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