2009-05-20

By Editor, CIR

Risk managers can take three basic steps to use IT for improved strategic decision making, says SunGard.

The software and IT services group recommends that they:
-use an integrated technology platform to achieve a holistic view of risk;
-conduct more detailed scenario risk analyses and stress testing to understand the circumstances behind potential losses; and
-calculation intensive applications should use cloud computing, grid computing and other advanced technology for improved firepower and accuracy.

Further recommendations for risk managers of financial institutions come from David Rowe, executive vice-president, risk management at SunGard Financial Systems.

"Risk analysis needs to be an integral part of strategic decision making, all the way up to the chief executive officer. To more accurately identify exposure to potential losses before they occur, financial institutions should adopt a macro-oriented approach to risk management," he says.

"At the same time, financial institutions should also focus on the details behind risk summaries and embrace stress testing."

SunGard, which says that in the past institutions relied too heavily on basic risk measures, such as value-at-risk, urges firms to create stress tests in the context of their risk system with worst case scenarios that reflect the firm's current positions.

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