The Digitalization of Sell-Side Risk Management

The world has changed suddenly and significantly, and the field of risk management is once again challenged with the most impactful event the industry has faced since the financial crisis over a decade ago. The novel coronavirus has resulted in mayhem as market volatility and uncertainty surges. This environment has brought the need for digitalization of risk technology front and center to monitor this global event.

Up until this point, much of the pace of change has been driven by an onslaught of stringent regulations aimed at improving transparency, capital adequacy, and practices of sell-side institutions. Against this backdrop, the boundaries of technology are being tested by the need for rigorous calculations as well as data management and consumption. The costs associated with buying or building new tech and hiring additional expertise, and the price tags linked to reporting and compliance, are challenging many institutions at a time when balance sheets continue to shrink and risk is on the rise.

This white paper describes a series of trends in risk management being shaped by the recent wave of volatility, onslaught of regulatory requirements, ever-increasing data, and market structure changes impacting sell-side institutions. Among them, the focus on risk system upgrades and requirements necessary to weather the latest global crisis and remain compliant is key. The use of advanced tech, such as artificial intelligence (AI) and machine learning (ML), is imminent and will influence changes within organizational structures necessary to achieve scale while reducing total cost of ownership (TCO).