Introducing market risk systems
Financial institutions are required to operate a market risk system which is adequate for their trading activities. d-fine supports its clients in introducing a market risk system as well as in reviewing and continuously improving their running systems.
Analysis
Prior to implementation the actual and the target situation are analyzed with focus on:
- the methodology of the risk model
- product coverage
- process flows
- data management (market, master and position data)
- system landscape
- technical performance
We support you in this analysis benefiting from our many years of project experience in market risk measurement. Based on the results of this analysis, we assist in defining the target design and a list of requirements to achieve your desired solution. All relevant functional and technical aspects are taken into account.
Selecting system components
The optimal system components for your institution are selected on the basis of the requirements for the market risk system. The optimal solution may include: specialised standard systems, enhancement of the components currently used or an in-house development. When choosing the right solution, we typically consider the following aspects:
- analysis of the systems already in use
- system selection, e.g. evaluating the systems available on the market and compiling a short list
- developing tender documents
- conducting tests and prototypical development of important functions
We can support you in a targeted manner in all system selection steps based on our experience with numerous market risk systems. This will enable you to make a sound decision on an optimal system solution in a short amount of time.
Implementation
Regardless of which solution you opt for, your requirements must be implemented in the form of faultless organisational and technical solutions that meet your demands and, of course, also those of the regulators. The complexity of this task can only be mastered with a structured approach based on work packages that are coordinated with each other. Critical work packages are:
- developing the requirements specification including interfaces and processes
- drafting the technical infrastructure
- developing a data processing concept for system parameterisation including system enhancements
- setting up the technical infrastructure
- system parameterisation and programming system enhancements and interfaces
- developing a test plan and test cases and performing the tests
We are familiar with the best practice solutions in the market and have been actively involved in implementing many risk models. Our consultants combine professional and technical know-how. This enables us to work in all stages of the implementation and, of course, also to provide resources for the project management.
Roll-out
The roll-out of the tested system for day-to-day operation is also a sophisticated task. Reliable and transparent operation from the very beginning is important for company-wide acceptance of the new market risk system. To achieve this, the foundation must be laid early. We believe the key factors are:
- involving the user in analysing the requirements and selecting the system
- holding presentations on the planned processes in all affected areas
- thorough user testing
- training all potential system users
- production-related system operation during pilot and parallel phases
- providing support in the initial weeks of operation with a project team made up of specialised and technical staff
We help you to optimally execute this key project phase.
Operation & support
As a result of the fast product cycles and numerous innovations in the finance business, as well as increasing regulatory requirements, a market risk system is never definitive. Thus, we also support you in activities beyond the system rollout, such as:
- product launches
- extension of the risk model
- providing data protection training
- expanding the reporting system
- validating the system
We find appropriate solutions for current problems in close cooperation with staff in day-to-day operations.