New York City, NY (PRWEB) June 30, 2011
Marcus Cree (http://twitter.com/MarcusCreeRisk), vice president of risk solutions for SunGard’s Adaptiv business unit, said, “Financial services firms have recognized that they need to manage collateral, market risk and credit risk on an enterprise-wide basis. They will adhere to that principle while launching projects to strengthen their control over credit, trading and counterparty exposure and comply with regulatory requirements such as Dodd-Frank and Basel III.”
SunGard’s ten trends shaping credit risk management are:
1. A need for a better understanding and ability to control credit risk, driven by regulatory and market pressure, is causing wholesale banks to create a real-time, single view of counterparty exposure across all risk-taking activities, on and off balance sheet.
2. To help improve control of counterparty risk, banks need pre-deal global limit checks, supported by efficient processes to manage policy breaches.
3. For a more accurate view of risk, mid-tier banks will need to see market and credit risk exposures leveraging common trade data, market data and risk calculations.
4. New capital adequacy regulations will lead banks to upgrade their counterparty exposure calculation capabilities, notably in areas such as stress testing, back testing, wrong-way risk and credit valuation adjustments (CVA).
5. CVA will become an important calculation as banks strive to quickly understand their risk numbers in order to compute prices before a deal is completed.
6. Banks will upgrade stress testing for credit exposure in response to Basel III’s recommendations on improving stress testing regimes.
7. Banks will need credit systems that can record exposures to central counterparties and/or their clearing members, which will help them monitor capital charges.
8. The move to central counterparty clearing will increase the demand for collateral assets because central counterparties will require initial and variation margin for all deals.
9. Financial institutions continue to look for an enterprise-wide view of collateral in order to help avoid missed collateral calls and reduce the cost of funding and manual processing.
10. Cross-silo collateral optimization will help improve profitability for many institutions by helping them reduce both direct and opportunity costs associated with posting collateral assets.
“Financial institutions are faced with the challenges of meeting many new risk-based regulations and running economically viable credit businesses. Many have started to rebuild their risk technology strategies and move towards integrated risk management. Being able to achieve integration while keeping pace with evolving regulations will be key for financial institutions active in this market segment,” said Peyman Mestchian, managing partner at Chartis Research.
About SunGard’s Adaptiv
SunGard’s Adaptiv provides enterprise-wide credit and market risk management and operations solutions for financial services institutions. Adaptiv assists institutions of varying size and complexity to deploy technology to meet both internal and regulatory requirements for risk management and operational control. Adaptiv helps financial services institutions from the banking, hedge fund, asset management, insurance and corporate sectors with its deep understanding of risk management and operational processes. For more information, visit http://www.sungard.com/enterpriserisk.
SunGard is one of the world's leading software and technology services companies. SunGard has more than 20,000 employees and serves 25,000 customers in 70 countries. SunGard provides software and processing solutions for financial services, higher education and the public sector. SunGard also provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software. With annual revenue of about $5 billion, SunGard is ranked 434 on the Fortune 500 and is the largest privately held business software and IT services company. Look for us wherever the mission is critical. For more information, visit http://www.sungard.com.
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