Risk Management

02:15 PM
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

Back Office Real-Time Risk Analysis in High Demand

Classic back office tools are starting to leverage real-time data functionality. Supportive data intensive applications are quickly becoming a necessity.

Two years ago at a client conference Eagle Investment Systems, wholly owned subsidiary of BNY and vendor of cloud-based portfolio management software, revealed a prototype of a real-time back-office risk analysis tool. The level of interest was tremendous. Understandably so, there is a large scale change happening with regard to the way risk analysis can be performed. In the last few years regulations mandating transparency have been placed on institutions, asking them to calculate forward looking risk, manage that risk, and execute on that risk, a grueling and calculation intensive task typically managed ad hoc by the front office. The switch to rigorous back office applications has been a welcome development.

These are elements of some key trends in the financial service markets and established infrastructure markets. The demand for access to data is ever increasing. New applications like risk applications are putting more demand on access to data, and the ability to do more work in real time. Instead of reports in days and weeks, for regulations and business purposes users want information on demand in their dashboard, immediately.

This is an epic challenge in itself, one that encompasses why real-time big data has been out of reach: Legacy databases aren't designed with this kind of data intensity. Most have a budget in the data access it provides. Perhaps it can provide 1 kilobits of data access per second, but once exceeded it can't satisfy other applications. A drastically larger budget of data access allows firms to write new, faster, data-intensive applications.

"We dug into what the requirements are," explained Marc Firenze, Eagle’s CTO. "It encompasses preliminary calculations and the speed in which we need to calculate them required us to look at in-memory databases, caching libraries, and more."

To create the risk solution Eagle's software developers turned to VoltDB as a foundation to build the application. VoltDB is a provider of an in-memory SQL database with the ability to ingest large amounts of fast-moving data, and then act on the data automatically in real-time.

"Real time risk analysis is finally becoming an affordable thing everyone can use,” says Ryan Betts, VoltDB's Field CTO. "It's interesting because risk calculations are very data intensive, different from other work the back office has traditionally done." VoltDB's real-time and data-centric applications are also used across industries including utilities and web media.

Eagle Investment Systems’ risk analysis tools are using VoltDB’s real-time database to offer products in the cloud. "I think that's the core message," adds Betts, "and why it's really interesting for the market: We've enabled Eagle to implement data intense applications into product lines in a cloud environment that legacy infrastructure would not allow."

"It's exciting. I can read about problems caused by unknown risk in financial investments, and know people are using VoltDB to make problems better. One year ago we started with this risk product but really the same motivations around risk is motivating them to integrate VoltDB more broadly throughout their platform." Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Becca L
50%
50%
Becca L,
User Rank: Author
1/7/2014 | 3:22:59 PM
re: Back Office Real-Time Risk Analysis in High Demand
A lot of great products are out there but considerations must be made for the ability to take in the information in real time. This trend may be steering a lot of budgets this year.
Byurcan
50%
50%
Byurcan,
User Rank: Author
1/6/2014 | 9:50:13 PM
re: Back Office Real-Time Risk Analysis in High Demand
The back office is definitely one place where efficiencies can be realized easily. I think most firms would probably admit their back office functions are not as robust as could be.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Inside Abel Noser's Trading Floor
Inside Abel Noser's Trading Floor
Advanced Trading takes you on an exclusive tour of Abel Noser's New York trading floor, where the agency broker known for transaction cost analysis, is customizing algorithms for the buy side, while growing its fixed income trading and transitions business.