2013: The Tipping Point for Integrated Risk and Finance?

1048553_578239005561996_2102653624_oIf you’ve worked in retail, commercial or investment banking over the past 10 years, risk and finance integration won’t be a new topic to you. The global banking crisis and wave of financial regulation that followed shined a spotlight on the goal of an integrated enterprise view of risk and this got louder every time news broke of a scandal or crisis in the financial services sector.  The benefits of the goal of integration were, and remain, appealing.

Not only can integration of risk and finance help institutions meet the increasing data demands from their stakeholders, it can also deliver streamlined reporting and compliance. A report from Chartis Research shows that 88% of risk and finance practitioners in banks see the integration of their functions as a major priority. However, more than half have yet to implement an enterprise-level plan to achieve this integration despite clear business drivers.

I believe 2013 is a tipping point that will see the most forward thinking financial institutions start their journey to integrate their risk and finance functions for the following reasons:

  • The pressure to manage and foresee risk has never been greater from within and outside an organization. Since the credit crisis in 2007/08, firms have retrenched to understand the short falls and make changes to policy, culture, and process to adapt to the new market dynamics. Thus, in the way that we use Google to search for information and get a response on demand, we need a similar ability with risk and finance data if we are to respond to regulation, meet customer needs, and defeat the competition. Download this eBook: Optimizing Risk and Finance in Banking for additional information.
  • We have the ability to meet this need. Implementation capabilities and intellectual property combined with advances in technology, especially in-memory technology and cloud computing, mean that previous IT models predicated on compute intensive, data center-reliant risk modeling are now a thing of the past. Hear more examples of how technologies can support risk management in this 3-minute video by Michael Adam’s, Global Head Risk and Compliance Solutions, SAP.
  • Modern methodologies don’t require a rip and replace approach when building an enterprise-wide platform for risk and finance integration. Furthermore, the capability can be developed over a period of time using an agile approach that addresses short and longer term needs.

Am I right about this? Do you see other reasons why 2013 will be or will NOT be the tipping point for integrated risk and finance?

Stuart Grant, Capital Markets Solution Manager, Risk Management Global Banking IBU

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Finextra will host an upcoming webinar on July 16, 2013 @ 14:00 GMT featuring a panel of risk experts to discuss the findings of the Chartis Research report “Aligning Risk and Finance in Banks: From Theory to Practice”, and reflect on the practical approaches to integrating risk and finance.

Register for this complimentary webcast featuring:

  • Paul Beach, Technical Specialist – Risk Specialist Division, Prudential Regulation Authority (PRA), Bank of England
  • Peyman Mestchian, Managing Partner, Chartis Research
  • Gareth Evans, Director, Financial Services, Deloitte
  • Stuart Grant, Solution Manager, Risk Management in Capital Markets, SAP

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