Spending on risk-management technology is expected to outpace spending growth in most other areas of technology for the financial-service industry, says a TowerGroup research report. Risk-technology investments by global financial-services firms are expected to reach $21 million by 2005, compared to $18 million spent in 2001. The report also concludes that the way financial institutions approach risk management will become increasingly important to their success of failure. According the report, sizeable investments will be needed to put in place the new integrated approach to risk management that is being adopted by the industry. The report, entitled "Automating the Crystal Ball: Risk Technology in the New Millennium," notes that this integrated approach is being driven by the increased volatility, complexity and interdependencies of today's financial marketplace.
Barra has launched an enhanced version of its Aegis System for investment managers. Version 3.3 of the Barra Aegis System includes access to daily updates of Barra's performance data and improved optimization functionality to help manage portfolio-level risk and optimize returns in equity portfolios. The new version also includes improved coverage of and modeling capabilities for exchange-traded funds, valuation data for returns, forecasting and improved single and multi-country performance analyses and coverage.
JPMorgan has deployed Application Networks' JRisk solution to develop its Credit Market risk-management system. The JRisk application provides credit and interest-rate sensitivities, scenario analysis and interactive slicing and dicing of aggregated risk for the global credit-derivatives book in JPMorgan's Credit Derivatives business. The JRisk Application Framework provides the components, tools and services infrastructure for building applications, covering all types of asset classes and financial instruments.
Financial Engineering Associates has released VaRworks Version 4.1, its value-at-risk package for market-risk management. VaRworks 4.1 includes support for convertible bonds, expanded credit-curve capabilities and optimization to cut down on calculation times.