BI and Financial Risk Management

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I’m sure we’re all acutely aware of the current financial market problems as a result of sub-prime lending and the the down turn in the economies in many countries resulting in bad debt. We could look to better intelligence to predict the market down turns, to look for the early triggers in the economy to […]

I’m sure we’re all acutely aware of the current financial market problems as a result of sub-prime lending and the the down turn in the economies in many countries resulting in bad debt.
We could look to better intelligence to predict the market down turns, to look for the early triggers in the economy to help spot the warning signs and to help manage the situation. Complex mathematical models that give varying levels of probablistic outcome would have shown the shifting nature of the risk. We’ve also had increasing levels of legislation and regulation to identify individual risk and fraud and general improvements in risk determination at the Business to Consumer level. And yet after all these things we’ve seen a financial service market in near melt down.
What has surprised me most in this current period of crisis is the seeming lack of understanding of corporate exposure to risk through institution to institution trading. It appears that financial institutions may have been deeply concerned with the individual risk of a customer transaction, they’ve not had a suitable handle on the bigger and as events have transpired, potentially organisation crippling decisions they’ve been taking.
How many companies are looking back at their balanced scorecards and their array of metrics and rethinking which ones are really important to survival? I hope most of them.

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