A-Team event – Data Management for Risk, Analytics and Valuations
October 18, 2011
My colleagues Joanna Tydeman and Matthew Skinner attended the A-Team Group's Data Management for Risk, Analytics and Valuations event today in London. Here are some of Joanna's notes from the day:
Andrew Delaney, Amir Halton (Oracle)
Drivers of the data management problem – regulation and performance.
Key challenges that are faced – the complexity of the instruments is growing, managing data across different geographies, increase in M&As because of volatile market, broader distribution of data and analytics required etc. It’s a work in progress but there is appetite for change. A lot of emphasis is now on OTC derivatives (this was echoed at a CityIQ event earlier this month as well).
Having an LEI is becoming standard, but has its problems (e.g. China has already said it wants its own LEI which defeats the object). This was picked up as one of the main topics by a number of people in discussions after the event, seeming to justify some of the journalistic over-exposure to LEI as the "silver bullet" to solve everyone's counterparty risk problems.
Expressed the need for real time data warehousing and integrated analytics (a familiar topic for Xenomorph!) – analytics now need to reflect reality and to be updated as the data is running – coined as ‘analytics at the speed of thought’ by Amir. Hadoop was mentioned quite a lot during the conference, also NoSQL which is unsurprising from Oracle given their recent move into this tech (see post – a very interesting move given Oracle's relational foundations and history)
Impact of regulations on Enterprise Data Management requirements
Virginie O’Shea, Selwyn Blair-Ford (FRS Global), Matthew Cox (BNY Melon), Irving Henry (BBA), Chris Johnson (HSBC SS)
Discussed the new regulations, how there is now a need to change practice as regulators want to see your positions immediately. Pricing accuracy was mentioned as very important so that valuations are accurate.
Again, said how important it is to establish which areas need to be worked on and make the changes. Firms are still working on a micro level, need a macro level. It was discussed that good reasons are required to persuade management to allocate a budget for infrastructure change. This takes preparation and involving the right people.
Items that panellists considered should be on the priority list for next year were:
· Reporting – needs to be reliable and meaningful
· Long term forecasts – organisations should look ahead and anticipate where future problems could crop up.
· Engage more closely with Europe (I guess we all want the sovereign crisis behind us!)
· Commitment of firm to put enough resource into data access and reporting including on an ad hoc basis (the need for ad hoc was mentioned in another session as well).
Technology challenges of building an enterprise management infrastructure
Virginie O’Shea, Colin Gibson (RBS), Sally Hinds (Reuters), Chris Thompson (Mizuho), Victoria Stahley (RBC)
Coverage and reporting were mentioned as the biggest challenges.
Front office used to be more real time, back office used to handle the reference data, now the two must meet. There is a real requirement for consistency, front office and risk need the same data so that they arrive to the same conclusions.
Money needs to be spent in the right way and fims need to build for the future. There is real pressure for cost efficiency and for doing more for less. Discussed that timelines should perhaps be longer so that a good job can be done, but there should be shorter milestones to keep business happy.
Panellists described the next pain points/challenges that firms are likely to face as:
· Consistency of data including transaction data.
· Data coverage.
· Bringing together data silos, knowing where data is from and how to fix it.
· Getting someone to manage the project and uncover problems (which may be a bit scary, but problems are required in order to get funding).
· Don’t underestimate the challenges of using new systems.
Better business agility through data-driven analytics
Stuart Grant, Sybase
Discussed Event Stream Processing, that now analytics need to be carried out whilst data is running, not when it is standing still. This was also mentioned during other sessions, so seems to be a hot topic.
Mentioned that the buy side’s challenge is that their core competency is not IT. Now with cloud computing they are more easily able to outsource. He mentioned that buy side shouldn’t necessarily build in order to come up with a different, original solution.
Data collection, normalisation and orchestration for risk management
Andrew Delaney, Valerie Bannert-Thurner (FTEN), Michael Coleman (Hyper Rig), David Priestley (CubeLogic), Simon Tweddle (Mizuho)
Complexity of the problem is the main hindrance. When problems are small, it is hard for them to get budget so they have to wait for problems to get big – which is obviously not the best place to start from.
There is now a change in behaviour of senior front office management – now they want reports, they want a global view. Front office do in fact care about risk because they don’t want to lose money. Now we need an open dialogue between front office and risk as to what is required.
Integrating data for high compute enterprise analytics
Andrew Delaney, Stuart Grant (Sybase), Paul Johnstone (independent), Colin Rickard (DataFlux)
The need for granularity and transparency are only just being recognised by regulators. The amount of data is an overwhelming problem for regulators, not just financial institutions.
Discussed how OTCs should be treated more like exchange-traded instruments – need to look at them as structured data.