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“BANKS HAVE TO GET MORE GRANULAR. SO FAR MOST OF WHAT’S HAPPENED HAS HAPPENED AT THE TOP LEVEL”
Hopkins. “Risk analytics depend on someone with the skill set to build it, deploy it and create meaningful metrics. That is a complex process which creates many challenges and often stalls build efforts. Our clients are also often seeking analytics that cut across different systems or processes, and assembling that data in a single, meaningful database presents many complexities. Overall, developing analytics that are meaningful and useful requires specific expertise and gaining the right resources is often a challenge.”
The research supports anecdotal evidence that these people are not always easy to find. According to Accenture’s 2015 Global Risk Management Study, 42% of capital markets leaders have data analysis skills within their risk function, 38% have data management skills and 37% have modelling skills.
Undoubtedly, third party suppliers can help plug a gap, albeit temporarily. Guner says that her work with clients involves a transfer of knowledge to build up the firm’s in-house reserves. “When we work with clients they’re obviously outsourcing that talent but there’s also a lot of training of the internal staff. It’s a big mix of both. We really focus on transferring those skills sets and knowledge so that clients don’t always have to depend on us.”
But even before access to talent is considered, banks need to be considering if manual intervention is really necessary, says Guner. “The first question way before the resource question is how much of this can be automated? There are elements you really need to think about in terms of how much manual intervention you’re doing on models and data, and try to reduce that complexity. Banks need to ask that question.”
Although a comprehensive risk analytics framework is going to require substantial investment, the experts say it’s worth taking a punt as there are myriad benefits to the business. “Right now, some of our clients are very focused on activities such as structuring their operating activities around balance sheet management,” says Hopkins. “To perform that process successfully requires a comprehensive ability to analyse trade flows, review all business activities and understand the financial risks. Analytics are essential to that process because they help organisations reveal potential flaws, identify trends or uncover opportunities which will increase the probability of successful business execution.”
“You’ve got to change people’s mindset. It’s like a speed limit. If you think of a driving speed limit, if the only reason I stay inside the speed limit is so I don’t get a speed ticket, that’s typically how risk was treated,”
www.ibsintelligence.com © IBS Intelligence 2016
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