SAS, a business analytics software and services provider, and Coalition, a financial services business intelligence provider, have launched in the UK a new software offering to Capital Markets-Rapid Risk Profiling. The software enables financial services organisations to better align employee remuneration to the firms appetite for risk. By implementing Rapid Risk Profiling, risk can be managed more effectively across the enterprise whilst ensuring staff members are incentivized appropriately, according to the risk levels of their individual activity and in-line with the levels of risk accepted by the company.
The current regulatory environment increasingly focuses attention on the potential misalignment of staff remuneration with corporate and shareholder interests. Rapid Risk Profiling aims to help financial services organizations get ahead of regulatory requirements and turn current non-prescriptive regulatory suggestions into a concrete mechanism for safety, balanced risk aversion and transparency to stakeholders and regulators alike.
The software creates a direct correlation between the remuneration of each staff member and the financial risks associated to their activity, especially maturity, as recorded on the company's risk systems. It enables firms to profile those people across the organization who are responsible for taking or managing risk and creates a highly visible display that links them directly with the risks that they are taking, the methods they are using and the remuneration they are receiving. Rapid Risk Profiling, based on SAS' Enterprise Risk Management software and Coalition's DNA platform, provides companies with a fast and dependable approach to understanding what type of risk they are facing, where this risk lies, how credible their risk evaluations are, and most importantly, who is responsible for that risk.
"The current credit crisis is partly a result of irresponsible lending and borrowing and remuneration structures that rewarded extreme risk taking. What SAS is looking to provide is a connection between how much of a bonus is paid to individuals, based on how much risk they are having to manage, but also, this has to be in line with the level of risk the company is prepared to take on; discouraging the extreme risk taking that we've become accustomed to and behaviour that has led to our current economic situation," said Ian Manocha, managing director of SAS UK, in a press release.
Benjamin Schoff, CIO and co-founder of Coalition, described the partnership with SAS UK in a press release noting, "For over 6 years Coalition has been supporting financial services firms to profile their staff and performance by creating information-rich organizational models that can be analyzed using our DNA technology. Our partnership with SAS has allowed these maps to be enriched by including all important risk measures that alert management to enterprise risks and staff responsibilities."