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Credit Risk Deterioration – Early Warning Indicators
The revolution of business information systems and their corresponding data stores has transformed how global organisations produce and use information. This has happened in three parallel realms: enterprise business applications, personal productivity and content applications, and the internet. With the emergence of holistic and semantic data integration technologies, innovative organisations have started to leverage the immediacy and relevance of unstructured and Web data. This has enabled the use of rich enterprise applications and processes, and in the reverse scenario, real-time data in edge-of-enterprise Web applications.
A loss of confidence in the Brazilian economy due to political upheaval in 2002 witnessed the withdrawal of operations in Brazil. Of late, however the trend has reversed. Brazil has remained largely untouched by the catastrophic events of the credit crisis felt by a great many economies globally. With an increasingly stable political foundation, the improvement of Financial regulation over the last half decade, accompanied with falling interest rates, The world’s leading investment banks are re-establishing a foothold in the Latin American nation.
In retrospect, financial institutions have realised the importance of high quality information and are embracing incumbent technology, serving as a means to get through the tumultuous problems banks face in high data volumes in risk management.
Whilst there is no doubt that there will always remain an element of unpredictability, and thereby a reactive component to business continuity facilitation and management, banks ought to minimise this uncertainty by developing more comprehensive processes and plans.
Research conducted by Lepus in mid 2008 discovered that the financial services industry was looking with great interest into the use of hardware accelerators, in a bid to handle the increased demand for computer power coming from the business. However, the economic downturn, combined with the maturity of the technology meant that it was not something that was expected to see great investment in the short-term future.
Establishing the optimal on-shore / off-shore balance and plan needs to be a key strategic priority, rather than a transient, temporary project related and/or specific issue. It is interesting to note that some banks do not necessarily treat off-shore locations and teams as ‘off-shore’ – and very much so consider these sites to be an extension of existing on-shore teams.
Traditionally, Investment Banks have taken a DIY approach to systems development. However, since being hit by the credit crunch, banks have been forced to reduce headcount and are faced with tighter IT budgets.
As the Front Office has always been, and will continue to be the revenue generator for every bank, there continues to be a greater focus on this area within most banks at present as they try and take advantage of a global economy slowly emerging out of a catastrophic downturn.
Whilst off the shelf solutions offer a number of packaged models, these are not seen as sophisticated enough for key market players. However, the process of integrating off the shelf packages with front office model libraries is a complex undertaking.