Financial Risk Management
A Reuters guide to Financial Risk Management
Find out about how Reuters can help you
Risk management is an important issue for the financial services industry. Financial institutions have to control their global market, credit and operational risks to perform effectively. They face a range of challenges from growing regulation and new capital adequacy standards to a competitive marketplace and a demand for complex financial products. They need powerful risk management tools to achieve their financial and compliance objectives.
Financial institutions look for solutions that integrate the various risk management products used across the enterprise. They want a seamless flow of transactions from the trading room to the back office, the ability to consolidate and share information in real time within risk management applications, and functionality to generate customised risk reports.
They need real-time position-keeping systems in the trading room to monitor their global positions, analyse their risk exposure and attribute risk to its sources - by trading entity or portfolio, for example. These systems must incorporate features that help price financial instruments, including complex derivatives, and capture deals to automate trade management.
Increases in cross-border trading, credit defaults and bankruptcies have made credit risk management more demanding. Financial institutions need risk management tools that enable them to calculate credit limits and measure credit risk. They also want to monitor credit limits in real time, measure their exposures and identify limit breaches.
To measure and analyse market risk, financial institutions look for products that incorporate multiple methodologies. They need to be able to attribute market risk to sources, such as interest rates, currencies and volatility.
Financial institutions seek solutions that automate trade management as straight-through-processing reduces operational risk as well as costs. Duplication at each step of the trade management cycle is eliminated. And because such solutions reduce the need for manual intervention, they lower the risk of fraud, error and transaction failure. Effective trade management solutions help financial institutions achieve efficiencies by streamlining back-office tasks, such as settlement, clearing, regulatory compliance, accounting and cash management.
Reuters has more than 20 years experience in helping financial institutions monitor and control risk. Reuters has built on its strengths in the trading room to address the risk and trade management needs of the whole financial enterprise. Reuters integrated solutions provide seamless risk and trade management from the trading floor to the middle and back office.
