Intra-day risk management needs clear data, conference hears

Risk decisions and data volume means data needs to be understood across organisations

Effective intra-day risk management relies on every facet of an organisation understanding its data, panellists at the North American Trading Architecture Summit in New York told delegates last week.

Ulku Rowe, managing director of credit risk technology at JP Morgan, told the conference that banks need to put more effort into making their huge and growing flows of data available and comprehensible for everyone who needed it – not just risk or credit analysts.

"Sophisticated PhDs are comfortable staring at code or spreadsheets, but now everyone needs to look at these numbers," she said. "So it's important to be able to synthesise data for different users in ways that matter to them – whether looking at capital or margining impact. One tool isn't enough."

Traders in particular now need access to far more types of data than in the past, David Sharratt, managing director, trading and operational risk at RBS, told delegates. In an environment where interest rates are unlikely to rise any time soon, he argued that traders need the ability to understand the details of funding – which he described as "an enigma" – and the speed at which a price is going through a swap execution facility or multiple platforms.

They also need to understand core information about a counterparty, such as whether they are a US person or not, and also how the trade is routed.

"We're not banks any more, we are software houses," he said. "So the ability to have that information to pass on to the customer is absolutely key."

In addition, he said, banks face far greater requirements for data retention, governance and accuracy. "The challenge is absolutely monumental for this industry. And at the same time you're doing this in an environment where your cost pressures are significantly higher than they ever have been, revenue pressures are significantly higher than they ever have been and your bid/offer is significantly tighter than it ever has been."