Conclusion
According to Cordium’s McGibney, many firms underestimate the amount of work that will be required to satisfy the regulator.
“A lot of people look at what is the easiest way to resolve this and part of the problem is you need to do a lot of work to demonstrate what you’re doing is sufficient to cover the risk. In order to determine that what you’re doing is sufficient, you have to justify why you’re not doing other things.
“Firms can’t just say that this policy or procedure is standard. And I think part of the reason why the regulator didn't put in place a more prescriptive regulatory framework is because they didn’t want to give an impression that following a specific number of steps means that you will have solved your risk,” he said.
Firms need to ensure they carry out risk assessments in order to justify the processes they have in place, and also those they have chosen not to adopt. Bloomberg’s solutions for risk management and compliance not only provide firms access to wide-ranging data and analytics tools, but also the flexibility to add or remove inputs for analytics that are most relevant to their business and risk profiles.
The regulatory trend is towards greater data requests from regulators. Firms will need to capture, analyse and structure larger amounts of data to satisfy regulatory requirements. Quantitative processes are the best and most efficient means to manage liquidity risk, demonstrate best execution, and provide sound pricing to clients. Through better and larger data sets, Bloomberg’s solutions help firms carry out holistic risk analyses under numerous scenarios in a way that is transparent and easy to validate and defend.