Buy-Side Risk Analytics 2013

Buy-side firms face a rapidly changing operating environment. They need not only to comply with the regulations, but also to adapt to a new marketplace. The previous departmental and silo driven focus on managing individual risk classes is changing to a balance sheet and value-based risk management approach. The new goal is a performance-oriented trade and risk management execution strategy for asset allocation with a strong focus on stress-testing and scenario analysis.

For buy-side risk management solutions, this means the focus has to be redefined as either:

  • More data management and analytics-driven to build a foundation of efficient risk and financial management or;
  • Best-of-breed solution for specific, performance-oriented and value-based risk management requirements.

For both, the priority is to enable the firm to follow high standards on corporate governance and to facilitate the necessary tasks that come with it, including:

  • Data management, analysis, and reporting
  • Trade capture, complex/structured products, and hedging strategies
  • Pricing, valuation, risk measurement, regulation, and finance
  • Integrated risk management views across market, credit, and liquidity risk
  • Total return simulation and scenario management.

Market changes, the economic downturn, and increasing regulatory requirements are putting pressure on business operations to improve internal return on capital and have a much better understanding of trading risks. It is no longer sufficient to have a simple regulatory capital number at the end of the day. Firms need a solid understanding of their intra-day risk exposures across a wide range of measurements with a higher level of detail and transparency. Firms also need to understand enterprise risks and the threats from certain financial products, such as CDOs.

This report covers the solutions available to buy-side firms for adapting to the new market and regulatory environment and for managing risk. It covers the technology requirements and leading practices in the market and clarifies the competitive landscape.

This report uses Chartis’s RiskTech Quadrant® to explain the structure of the market. The RiskTech Quadrant® uses a comprehensive methodology of in-depth independent research and a clear scoring system to explain which technology solutions meet an organization’s needs. The RiskTech Quadrant® does not simply describe one technology solution as the best risk management solution for the buy-side; it has a sophisticated ranking methodology to explain which solutions would be best for buyers, depending on their implementation strategies.

This report covers the leading vendors offering risk analytics solutions for the buy-side, including BlackRock, Calypso, FinAnalytica, FINCAD, IBM, Imagine, Markit, Misys, MSCI, Murex, Numerix, Quantifi, SimCorp, StatPro, SunGard, SuperDerivatives, UBS Delta, and Xenomorph