RISK MODELLING LIFECYCLE: KICKSTARTING THE REAL DIGITAL REVOLUTION
R&C: Could you provide an overview of risk modelling within financial institutions (FIs)? What are the key aspects of the risk model lifecycle (RML)?
Rogers: Risk modelling is a fast-evolving discipline. The risk modelling function has mainly operated in silos within a business line but now is increasingly being industrialised across the risk model lifecycle (RML), delivered by a multidisciplinary team covering data management, modelling, operations and decisioning. Financial risk modelling has been with us for many years to assist financial institutions (FIs), impacting decisioning from trading strategies to customer experience optimisation and more. However, since 2008, risk modelling resources have been more focused on meeting regulatory needs, such as those outlined by the Bank for International Settlements (BIS) Basel committee guidelines. But now change is in the air. We are now seeing the arrival of new modelling technologies and platforms that can take advantage of opportunities offered through growing volumes of data available to banks. Armed with the right risk models, FIs can translate data into valuable insights and forecasts that drive faster, better decisions, customer experiences and more. For banks, the key to realising the full value of this data revolution is to be found through establishing a fully integrated RML.
Apr-Jun 2021 Issue
SAS