The need for a new analytics paradigm in financial industries was a hot topic at the Global Association of Risk Professionals’ (GARP) 12th Annual Risk Management Convention. Venkat Mullur, Senior Director of Industry Solutions at TIBCO Spotfire, presented a session at the March 8-9 event titled “Post Financial Crisis: Evolving Regulatory Guidance”. Mullur discussed the need for financial organizations to change how they assess and manage risks, analyze adverse scenarios, and come up with relevant risk measures in today’s post-crisis regulatory environment. TIBCO Spotfire also exhibited its predictive analytics solutions for financial services at the event.
You can read my Q & A with Venkat below and if analytics in finance interests you, check out this interactive risk analysis demonstration using TIBCOSilver Spotfire.
Q: A new strategy called Global Limit Management is one way financial clients are using TIBCO Spotfire to quickly identify transactions, ratios or other actions that are beyond a safe limit set by top managers. Is managing by using “Outliers” – unusual activity – a new approach that means companies can respond more quickly to current events?
A: It is growing in popularity, definitely. Absolutely, detecting and the ability to visualize outliers is key to signaling unusual market activity or bad actors who are making unauthorized activities.
Q: Spotfire, and analytics more generally, also help companies “manage to the numbers” by seeing how they are doing up-to-the minute in meeting targets for sales/profits/actions. Does this result in greater financial success as companies adjust their sights and make better forecasts?
A: Yes, it does help with planning. But more importantly, analytics platforms mean that companies can test and forecast the impact of adverse scenarios before they happen, to see the potential impact and how it would affect the geographic market, the financial results and corporate bottom-line. This can take planning to a whole new level – from the micro (department level) all the way to a broader, complex partner and industry view for top executives.
Q: How is real-time analytics allowing finance and insurance companies to deal with global risk and changing regulatory and reporting? Is the whole enterprise risk portfolio more visible? One example is a reinsurance company that is constantly rebalancing its risks and markets, partners and customer portfolios.
A: One result we see is that Spotfire helps insurance companies price their products more efficiently. Many different facets can be balanced and recognized throughout the corporation – different geographies, markets, currencies, exposures and past performance can all be shared throughout the organization. That means managers can know the precise levels of financial impact with no surprises.
Q: How is analytics use by regulatory agencies affecting acceptance and uptake by finance companies?
A: I think the use of such tools by the Securities & Exchange Commission and other federal agencies will eventually spur financial services companies to use similar tools. The bar is being set quite high by regulatory agencies, and analytics tools are very much part of the new way to extract intelligence and insights from data. The combination of data visualization and analytics, controlled and accessed from the business user’s desktop, is a new development – for both regulators and companies.
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