Following its acquisition of Sophis, which was finalised in March this year, Misys has been focused on allowing clients to “leverage the combination” of both vendors’ component parts (as explained by CEO Mike Lawrie back in March). The first fruit of the combined vendor’s labours is today’s release of its new enterprise market risk solution, Misys Risk, which brings together Misys’ risk management framework approach with Sophis’ front office technology capabilities. Karim Blanc, head of risk management solutions at Misys (and ex-Sophis employee), explains the details to Reference Data Review.
The creation of the new solution is a response to the continued evolution of the risk management function and the desire to meet clients’ requirements for a more enterprise-wide approach to risk data, as noted by Blanc’s colleague Denny Dewnarain last month. Blanc, who was previously a risk manager himself at several large French financial institutions, explains that the vendor’s client base is keen to benefit from a more efficient, integrated and streamlined approach to risk.
“While I was a risk manager, it was a real challenge to aggregate the successive layers of risk data from across the firm and then normalise that data for analytics purposes to be fed into global reporting systems,” he says. This data aggregation process therefore adds cost, latency and complexity into the risk report production process and it is here that vendors such as Misys are looking to make a difference.
Internally, most firms either go down the enterprise risk management (ERM) route with a, generally in-house, centrally built risk data infrastructure that sits away from the front office systems, or they manage risk on a tactical level within downstream front office systems and aggregate that data for reporting purposes (as described by Blanc). However, due to its acquisition of the Sophis portfolio and the technology capabilities therein, Misys is keen to provide both a single risk framework across a firm and downstream risk functionality at the front office level via Misys Risk.
“The solution is able to work with the systems already in place and stay in close contact with the front office, but also provide one place for the communication of trading risk data between multiple systems and across multiple asset classes,” explains Blanc. To this end, Misys Risk is merely the first step in a multi-phase project to create a unified enterprise solution to address market, credit and liquidity risk in a single consistent framework. The first phase may focus on market risk, but the vendor is already looking at other risk areas.
For now, the solution is targeted at both buy and sell side customers and incorporates analytics, drilldown capabilities, limit and alert management and reporting functionality to meet the requirements of risk managers looking at trading activity and market risk. It therefore allows for the sharing of risk data between the relevant functions such as trading and pricing and valuations teams, at whom Sophis’ traditional solution set up Value and Risque have been targeted.
Indeed, Value and Risque functionality was the starting point for the evolution of Misys Risk into s multi-system architecture. This development process took a matter of months, explains Blanc, and the vendor is continuing to invest and add on new functions, the biggest of which will be the addition of liquidity and credit risk capabilities.
Although the vendor cannot name them, it already has a number of early adopters of the solution that helped to shape it during the development process. Blanc notes that many existing clients have expressed an interest thus far and a number of new clients are also in the pipeline.