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GoldenSource Solutions for Risk Management

Providing risk applications with Trade, Position, Security Reference, Price and Counterparty data

Financial firms are under increasing pressure to provide accurate risk and regulatory reporting. A sound risk management framework depends on quality data management – one of the most important, and frequently underestimated, challenges of implementing a risk management application. Vendor or in-house solutions may offer leading edge analytics and risk monitoring, however the management of data is rarely a core competency of these systems. Poor data management is one of the most common causes of failure of risk application implementations. GoldenSource offers a complete solution to centralize and quality assure all risk-relevant data.

Risk Management Data Essentials:

Counterparty risk – transaction data management

The calculation of counterparty risk (i.e. Potential Future Exposure, Expected Positive Exposure and Credit Valuation Adjustment) require large quantities of transaction and related position data, especially when sophisticated methodologies such as Monte Carlo simulation are used or transactions are complex. Prior to passing to the counterparty analytics engine, transaction data needs to be extracted from underlying source systems and transformed into the right format. GoldenSource extracts and transforms transaction data from underlying systems into the format required, and covers all the data attributes commonly required for this task.

Market data management for market and counterparty risk

Market and counterparty risk calculations require a large volume of market data, for example yield curves, FX rates, equity prices and their respective volatilities. Demonstrating the quality and provenance of data and being able to provide a full audit trail is becoming increasingly important. the GoldenSource solution for risk management provides advanced and flexible tools for the extraction and verification of market data and provides full audit functionality. GoldenSource EDM has been configured for the market data commonly required in market and credit risk calculations, but the underlying data model is fully configurable to enable users to add additional data types.

Credit limit and hierarchies management

Financial institutions typically deal with each other in a complex web of trading entities – branches, subsidiaries and special purpose vehicles. Limits and exposure need to be assigned to the correct entity and the entities need to be linked in the credit risk management system to ensure that it aggregates to the right level and total exposure to each obligor can be ascertained. Using the GoldenSource data scrubbing component, GoldenSource enables limits and hierarchies to be flexibly managed with a fully configurable workflow process.

How can GoldenSource help?

By centralizing and optimizing financial data

  • Provides risk managers with confidence that the data used in risk calculations is accurate, consistent, approved and fully auditable.
  • Manages all data inputs required for risk calculations - transaction, position, market and reference data, as well as issuer and counterparty data.
  • Stores results of risk calculations in a centralized and optimized form to be exported to reporting tools and applications.

By providing mapping tools

  • Unique data integration capabilities can extend to specialized financial data scrubbing and golden copy facilities when required. This sets GoldenSource 360 EDM apart from generic ETL and warehouse tools which cannot match its built-in domain focus.
  • Maps transaction data within risk applications, including complex products in multiple underlying systems.
  • Data is mapped in a consistent and normalized manner from the representation in underlying systems to the format required by the risk applications. This means it can be accessed and used without having to interpret the data again based on the original source format.

By providing specialized consultancy services

  • GoldenSource has been specifically configured for use in risk applications.
  • It includes customization services to meet the needs of clients’ specific product range and system requirements.

Through proven experience with commercial risk systems

  • GoldenSource has a 25 year track record of integrating with leading risk applications for the provision of market, transaction and position level data.

Please contact us to find out more.

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"For firms to make effective business and risk management decisions, it is critical that they be able to aggregate timely and accurate data for reporting on credit, market, liquidity, and operational risks. As the financial and regulatory environment becomes increasingly complex, this capability within the firm is of paramount importance to senior decision makers. They need the proper information to make judgments about the strategic direction of their firms, to help set risk appetite, and to manage risk according to rapidly changing economic or market circumstances."

-"Observations on Developments in Risk Appetite Frameworks and IT Infrastructure" - The Senior Supervisors Group, 2010