Wednesday, January 23, 2008

Risk management - Reuters Help

Trade & Risk Management
Reuters provides the enterprise with a range of products to help manage order flow, make trade decisions and control risk. We have built on our strength in the front office to address risk and trade management through the back office.

This includes advanced middle-office functionality for market and credit risk and comprehensive features for settlement, clearing, the generation of accounting entries and cash management.

Risk management is becoming an increasingly important issue for investment banks and other financial institutions in the face of mounting regulation and the introduction of new capital adequacy standards, such as the Basel II..

Investment banks need to identify and disclose their major sources of risk and the market factors behind them. They need timely and consistent credit and limit information. Investment banks also need real-time systems that ensure their requirements for global control and monitoring are fully met.

The investment bank middle office monitors and manages the bank's risk exposures. In order to manage global market and credit risk, the middle office liaises closely with the front office responsible for trading operations and also with the back office which handles the administration associated with the settlement of trades.

Increases in cross-border trading, credit defaults, bankruptcies and globalisation have made credit management a much more demanding and complex task for the investment bank middle office. Maintaining and monitoring essential credit and market data risk in one place is a major challenge facing the investment bank middle office. The most important element for an investment bank middle office is data collection and consolidation from both the trading and banking books.

In order to produce enterprise-wide risk information on all an investment bank's activities, the middle office needs a system that delivers analysis for both market and credit risk while integrating seamlessly with the front office's position keeping.

Value at Risk, a category of risk measures, is widely used by the middle offices of investment banks and other financial firms to assess the risk of a trading portfolio. Any system designed to enable an investment bank middle office to calculate Value at Risk must provide multiple risk methodologies with comprehensive pricing functions and analytical tools. The middle office also needs to be able to back-test its risk models to comply with regulations.

Reuters has more than 20 years' experience in helping its customers successfully monitor and control risk. Reuters risk and trade management solutions are designed to provide the best fit with customers' business requirements. They enable investment banks and other financial institutions to address global risk and trade management across the whole enterprise from the trading floor through to the middle and back office.

Input to the business process
Pools of liquidity including:
Front office
Pre-trade analytics
Limit checking
Deal Capture
Real-time position keeping
Pricing analytics
Tactical risk management
Profit and Loss
Trade management

Reuters Kondor+
Reuters JRisk
Limit management

Reuters Kondor Global Risk
Middle office
Limits Management
Market risk management
Credit risk management
Back testing
Enterprise-wide risk management
Regulatory reporting
Double validation
Market conformity check

Limit management

Reuters Kondor Global Risk
Credit & market risk management

Reuters Kondor Value at Risk

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