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Risk Management in the Financial Services industry An Overview
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Executive Summary
Today financial services companies operate in increasingly complex, competitive and global markets. The
ability to manage risks across geographies, products, asset classes, customer segments and functional
departments is of paramount importance. The inability to manage these risks can cause irreparable
damage. Convergence, consolidation, globalization and shifting regulations have posed innumerable and
hitherto unprecedented challenges for the financial services industry.
A research report from Tower Group believes that the new standards will require sizable investments in
information technology. This will be particularly true of larger institutions that have complex organizations
and have shown a stronger appetite for risk. The report predicts that investment in comprehensive
technology developments for risk management in the financial services industry will outpace other
information technology spending and will amount to an estimated total of US$21 billion in 2005.In addition
to enhancing traditional risk management systems, FSIs will have to align their IT investments in a manner
that maximizes business value by reducing capital requirements and lowering the overall exposure.
The objective of this paper is to give an overview of risk management in the financial services industry. This
paper defines the major risks from the perspective of financial services industry, the components of
Enterprise wide risk management and the role of technology in risk management. This paper also looks at
the qualitative and quantitative sides of risk management and defines a risk management framework based
on both these aspects.
Arjun C Marphatia & Nishant Tiwari - Personal Name
NONE
Management
English
1-20
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