The problem
Financial institutions have consistently increased their spending on risk management technology over the last decade. The growth is being driven primarily by an increased emphasis on regulation. With the volume and complexity of regulation increasing, financial institutions around the world have found themselves in varying states of readiness for IFRS, Basel II / III, Solvency II or Dodd Frank. While compliance with the regulatory requirements takes a huge part of the risk expenditures, many financial institutions realize that compliance alone is not sufficient to combat risk effectively. On the other hand side, enhancing the compliance systems is an expensive adventure by many financial institutions. It requires typically the involvement of the the compliance system vendor, who may or may not have appropriate flexibility and readiness to support the risk management requirements of the financial institution. It involves additional costs on the IT side for integration, deployment, and maintenance.
Often, risk management solutions available from vendor providers are not flexible. They are running the proprietary code (in some cases even the proprietary model) of the software vendor. They do not allow for any meaningful adaptations of the approach to the specific situation and requirements of the financial institution. This is particularly problematic for the available web-based Software-as-a-Service solutions. These are frequently a technical migration of the traditional system offered by the vendor with further reduced configuration capabilities.
To avoid the huge costs and and to gain flexibility, very often financial institutions turn to in-house risk management projects. These systems run in parallel to the main risk management or compliance system. The approach provides the necessary flexibility but leads to a complex net of solutions, which are very difficult to use, maintain and enhance in the long-run. Furthermore, the functional know-how necessary to build a risk management solution might be, for a smaller institution, either not available or concentrated on a very limited group of people with scarce skills.
High costs, limited vendor flexibility, overemphasis on regulatory compliance as well as lack of know-how at some financial institutions have prevented the spread of risk management software systems which efficiently combat risk.
Open-source, web-based solution
A web-based Software-as-a-Service solution cuts down significant IT costs resulting from the integration, deployment and maintenance of traditional in-house installations. In fact, the area of risk management is quite suitable for this approach. At the end of the day, any risk management software is essentially a calculation service; it does not add or modify core business data, it does not produce or directly interact with business transactions.
An open-source calculation layer combines the advantages of in-house project development and vendor supported solution. Depending on the priorities and the availability of know-how, a financial institution may choose to change or adapt the risk management calculations and reports to the specific situation and requirements it has. These adaptations can be run in the same web-based application without additional costs. The software vendor plays, in this case, the role of a knowledge transfer facilitator.
universalowner.com provides a cost-effective web-based risk management solution for financial institutions. It helps the financial institutions to efficiently combat risk. The solution includes an open-source calculation layer allowing enormous flexibility. The calculation layer leverages upon R, the most powerful language for statistical computing.
Why is this relevant?
- Save money! A risk management application is a calculation service and does not create or modify core business data and transactions. It can be easily out-sourced to the web to reduce cost.
- Gain flexibility! An open-source calculation layer is ideal for financial institutions that want to adapt the risk management calculations and reports to their specific requirements
- Get external know-how at low cost! By choosing universalowner.com, you rely on a vendor who has the clear incentive to act as a risk management know-how transfer facilitator; not on a vendor who is pushing overpriced proprietary models on the market.
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