SunGard urges firms to adopt stress testing
The group says that risk managers can follow
three basic steps to improve accuracy
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 like 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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