not to change tack believing that to do so would have incurred additional cost and that there was an advantage in being early, with the opportunity to tune its solution prior to any revised deadline. Its central repository was built to cover the holding bank and all credit-relevant subsidiaries across the globe. As well as Basel II, that repository would drive all relevant forms of reporting, including all credit aspects of public disclosures and portfolio credit risk calculations. Again, it would integrate both risk and accounting data. ABSA Bank considered building a warehouse with IBM and Accenture prior to going the buy route (with SAP). While large banks opting for central data repositories are having to go for expensive, industry-strength warehouses from the likes of SAP and Oracle, smaller banks might find data warehouse and reporting tools within one suite. Many of the broader risk suites include their own data warehouse and data marts, so that a smaller bank might seek to take all or most of the solution from one vendor.


Dispersed data repositories


According to Gartner, the ‘federated organisation of data repositories’ is becoming increasingly common. With careful planning and coordination, and with ETL tools to link these, there is the foundation for consistent reporting. The bank needs to decide at what level it does the extraction and aggregation to meet its compliance needs. The architecture also needs to allow users to drill through the repositories for underlying information and queries. The sheer cost and scale of the single colossal data


warehouse is a key reason for some larger institutions going for a more dispersed data environment. Toronto Dominion Bank looked at SAP on Teradata but this was far more expensive than the other options, so was ruled out at an early stage in the selection. While the single repository is where it might head at some time in the future, it set about putting together separate data repositories for each of its three main business units. So, much of the architectural work is about consolidating risk management at an enterprise level, with data pulled into one place and used as the basis for the different forms of analysis. The volumes and siting of the repository/data mart, behind the transaction processing systems, means that,


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whether sub-ledger, warehouse or an enterprise risk system per se, it will be providing a view of risk at the start of each working day, with data transfers and reporting at the end-of- day batch run. One issue has typically been to reconcile the central


risk management figures with those produced by the front office systems. Each trading system has a risk management element to it but this situation can produce reconciliation issues: basically, the central risk calculations, where data is pulled to the centre and crunched for Value-at-Risk etc, do not tally with the front office ones. In effect, a bank’s Murex system (for instance) might say one thing, the P&L figures say another. Where a tier one bank has perhaps 30+ front office systems, that makes for an extremely fragmented picture, with siloed risk management mirroring the siloed trading. Given the ever more pressing need for risk management to influence trading decisions, rather than merely being used to satisfy the regulators, that situation becomes untenable. The fragmentation is worsened through mergers and acquisitions and, while there is a move to consolidate trading platforms in most organisations, the reality in many is far removed from a single cross-asset operation. The talk for trading risk is now of ‘distributed risk management’, with a horizontal layer across the trading platforms that takes the individual trading system data, stress tests it and aggregates it. This is then used across the trading operations and effectively constitutes an intraday risk layer. A number of tier one banks have been building such a solution over the last few years. The challenge with the intraday risk layer becomes information management rather than reconciliation. It feeds back to the trading desks and, where relevant, also feeds into the enterprise risk layer. An overhaul of its EDM at UBS in Switzerland is being done with iGate Corporation and Markit. This had passed the proof of concept stage by late 2014. The project is centred on a single security instrument reference data master for all areas of the Swiss bank, aside from asset management, with 14 legacy systems expected to be replaced by the end. The platform is hosted in India by iGate and underpinned by Markit’s EDM software. An interesting twist is the aim to use it as the basis for offering a hosted solution to other financial institutions.


Risk Management Systems & Suppliers Report | www.ibsintelligence.com


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