Blog article
See all stories ยป

Stop Press - Risk manager dismissed for managing risk

The latest twists in the Paul Moore story (fascinating memo in full on FT site) are extraordinary - and reinforces that risk management is central to one of the Great Credit Crunch Conundrums.

What were all the risk managers doing while all around them the Romans were piling up the firewood?

The recent KPMG survey highlights that they spent most of their time being frustrated at the lack of incentives, proper governance, risk culture and adequate tools to do their job.

Now that short-term survival is the order of the day, and firms are focused on spending less on anything and everything, or focused on new risk models and new regulation, one of the fundamentals of good risk management - a clean and consolidated underlying data infrastructure - is in danger of being - once again - the bridesmaid never the bride.

Any risk management system is only going to be as good as the data feeding it. Without the right data, you are driving blindfolded or using the rear-view mirror.

Basic banking disciplines such as liquidity and risk management should be based on real-time consolidation of current and projected positions, and integrated with right-here right-now market and counterparty risk data. In order to be trusted, risk-relevant data needs to be updated with new transactions, market data feeds and customer/counterparty updates without manual intervention or batch processing.

We need to accept that this is a hard thing to do right - a lot of time and resource is required. But right now, starting in an area where there is so much immediate pain - areas such as counterparty risk or liquidity management - must be the right thing to do.

Time for a favourite Dr Johnson quote surely - "Men are generally idle, and ready to satisfy themselves, and intimidate the industry of others by calling that impossible which is only difficult."



Comments: (2)

Ed Daniel
Ed Daniel - - Europe 13 February, 2009, 04:21Be the first to give this comment the thumbs up 0 likes

Here's me thinking there was something useful here having been caught out by the headline, now of course it will appear I sound like a troll but for heaven's sake - Paul left in 2004 so "Stop Press" is a crap headline to use - I thought you were going to tell us another Risk chap was whistle-blowing.

Nice quote at the end though.

Ed Daniel
Ed Daniel - - Europe 13 February, 2009, 04:30Be the first to give this comment the thumbs up 0 likes

I should add... I'm looking forward to watching Michael Moore's new film :-)

Now hiring