Time to rethink risk management?

The financial turmoil has left formerly triple-A rated companies stripped of their pristine credit ratings. Accordingly, the devastating events leading to these downgrades have forced global investment companies to question their approach to risk management. With the financial crisis demonstrating how insufficient support of IT systems has lead to severe failure among the largest financial institutions, industry executives must reconsider the trend towards outsourcing and need to refocus their attention on IT architecture. They must rethink risk management and ask themselves: “Does our enterprise architecture provide the necessary information to manage investments and associated risk in a timely manner?”

SimCorp Dimension - designed for risk mitigation

SimCorp Dimension provides organisations with a complete front-to-back enterprise investment management solution which offers a centralised and transparent view of information which is essential for effective risk management.

SimCorp Dimension's effectiveness in the management of risk exposure is provided by an advanced and flexible single database architecture solution. This solution offers a broad and comprehensive instrument coverage which extends through the whole investment management process, through the front, middle and back office.

The single database framework ensures that all the organisation’s business functions work on the same underlying data. This way, calculations of exposures and key risk ratios can be used consistently across the enterprise which solves many of the most challenging risk management problems otherwise encountered. Problems which findings of a recent report link directly to financial loss.

Timely information, data quality, consistency and transparency

Effective assessment and management of financial risk exposure requires an enterprise-wide solution that offers complete transparency. To cater for this, SimCorp Dimension’s architecture has been designed to offer what is required for risk management in terms of timely information and details level, data consolidation and consistency as well as quality and transparency.

SimCorp Dimension offers its integrated functionality with straight-through-processing (STP) support through front, middle and back office within an integrated ‘Extended Enterprise Data Management’ concept with high levels of internal and external security.

Overview of current and potential future risk exposures

SimCorp Dimension enables organisations to gain a full overview of current and potential future risk exposures which makes it an ideal risk mitigating solution. The extended enterprise data management framework and the associated business logic ensure full transparency of risk exposures from trade execution to compliance, performance risk measures and settlement. Since all data is in the same database, there is only ‘one version of the truth’ and thereby no risk of ambiguity between data used throughout the organisation as it allows errors stemming from transferring data from one system to another to be eliminated.

Governance, risk management and compliance

With regard to governance, risk management and compliance, SimCorp Dimension has a number of competitive advantages when it comes to addressing risk as it offers automated workflows, data quality, consistency and transparency. With regard to risk types, SimCorp Dimension enables organisations to mitigate a number of risk types, for instance market risk, credit risk, operational risk, IT risk, systemic risk and liquidity risk. To learn more about this from a mapping of the risk coverage throughout the SimCorp Dimension see illustration below:

Click on image to enlarge.

Prepare for the future

Not only does SimCorp Dimension offer a broad risk coverage, the system’s flexibility also allows organisations to innovate and to grow. Recognising that successful businesses need to react fast to constraints as well as opportunities, SimCorp Dimension's inbuilt flexibility and modularity offer organisations the ability to adapt rapidly and effectively to changes in the business environment.