System Requirements for Market Risk Management
The market risk control process consists of a complex cycle of continually compiling business-relevant data, and then interpreting these data, taking into account future developments (measuring, analyzing, and simulating risk). All of this is then used to make decisions regarding actual finance instruments. This process is inextricably linked with other Treasury and company-wide functions (financial accounting, controlling, payment transactions). The complexity of the control process and its interaction demands a sophisticated support tool.
The following are required of a system if it is to be used for controlling market risk:
Available information and data about underlying and hedging transactions from different business areas within one system
Possibility of making comprehensive position and risk valuations; constant situation and deviation analyses are necessary.
Possibility of selecting data according to different criteria, and representing the result both in a detailed as well as in a condensed way.