Faced with the task of Basel II compliance, many large banks are craving systems to manage credit and market risk, even venturing into emerging field of operational risk management, says TowerGroup.
The research and consultant group estimates that third-party specialized solutions currently represent 60% of the total spending in risk management technologies to a total of $12 billion for 2005.
The technological complexity and accompanying investments demanded by Basel II have prompted some banks to voice concerns regarding the cost to comply with this and other regulatory mandates. TowerGroup argues that banks’ so-far ad hoc approach to compliance has created a fragmented, complex and expensive array of solutions.
TowerGroup’s findings come just as Computer Sciences Corporation kicked off a risk management solution for European-based financial services companies, which offers an enterprise-wide and fully integrated modular approach to risk management that predicts and identifies emerging risks before they become a big threat.
CSC’s Risk Constellation supports new standards, regulations and legislation facing the financial services sector, enabling companies to exceed compliance requirements.
“Many financial services companies tend to focus on the cost of avoiding fines rather than creating value through strategic risk management,” said Anita Bradshaw, a CSC financial services risk management expert. “Financial services organizations are increasingly concerned about their risk positions and are endeavouring to put effective risk management strategies in place.”