Financial Risk and Financial Risk Management Technology (Rmt): Issues and Advances

36 Pages Posted: 31 Oct 2008

See all articles by Arun Bansal

Arun Bansal

affiliation not provided to SSRN

Robert J. Kauffman

Singapore Management University; Singapore Management University - School of Information Systems

Robert M. Mark

affiliation not provided to SSRN

Edward Peters

affiliation not provided to SSRN

Date Written: September 1991

Abstract

Methods for sound risk management are of increasing interest among Wall Street investment banking andbrokerage firms in the aftermath of the October 1987 crash of the stock market. We present an overview of thebasic definitions and issues related to risk, and the management of financial risk and financial risk managementtechnology (RMT) for information systems (IS) technology professionals. We discuss of the content of riskmanagement technology, including the models, the software and hardware, and the market data required to trackrisk. We also discuss the identification of risky events, alternative approaches to the measurement of risk, andhow investment firms go about formulating strategies to control financial risk.We next show how changes in the information technologies supporting these tasks have led to improvements inthe control of risk and in the design of products which involve financial risk. Advances in five areas that areof interest are: communications software, object-oriented programming, the use of parallel processors andsupercomputers, and the application of artificial intelligence and neural nets. Although these new informationtechnologies create significant opportunities to improve global and departmental risk management, a basicquestion that must be addressed involves the costs associated with their implementation. Thus, a thirdcontribution of this paper is to analyze the extent to which the implementation of these technologies will affectfirm costs. To this end, we evaluate the components of the cost function for risk management, and considersome ways that the new technologies can be applied to reduce overall costs.

Suggested Citation

Bansal, Arun and Kauffman, Robert J. and Mark, Robert M. and Peters, Edward, Financial Risk and Financial Risk Management Technology (Rmt): Issues and Advances (September 1991). NYU Working Paper No. IS-91-23, Available at SSRN: https://ssrn.com/abstract=1289046

Arun Bansal

affiliation not provided to SSRN

Robert J. Kauffman

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore
65-6828-929 (Phone)

Singapore Management University - School of Information Systems ( email )

80 Stamford Road
Singapore, 178902
Singapore

Robert M. Mark

affiliation not provided to SSRN

Edward Peters

affiliation not provided to SSRN

No Address Available

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