As financial services firms come under increasing pressure to effectively quantify and manage the risk inherent in their businesses, there is a growing demand for professional risk management services to assist them.
That is the view of Walter Stevens, head of IQ Risk, a division of The IQ Business Group, which was recently established following the incorporation of risk management specialist firm Advanced Risk Technologies.
The analysis of risk is relevant across all industries as it relates to their finances, but specifically within the financial sector itself.
According to Stevens, companies no longer have the luxury of ignoring factors which may affect their bottom line, however indirectly, since stakeholders are now more educated than ever.
"Even if there is no requirement for all negative externalities to be accounted for now, companies in future will be asked whether or not they at least applied their best efforts to identify and if possible quantify the risks facing them. Many risks are moving targets, which means that to a large extent risk management isn`t about answering the questions, but about trying to work out what the questions are that should be asked," says Stevens.
"Companies need to have a clear understanding of the risks they are taking, in comparison with the anticipated return. Financial risk in particular is all about the variability of outcomes, and managing it is about applying a clear picture of how much an actual outcome might differ from the expected outcome," he says.
Though the variables governing such insights are numerous, there are also considerable variances in terms of how data needs to be reported. For instance, do you need to be able to get an insight into your changing risk assessment every 30 seconds, or do you need responses overnight? Is it better to be absolutely right occasionally, or roughly right all of the time?
Furthermore, there is a growing number of compliance and regulatory issues that companies operating in global markets have to conform to, such as Basel II, IFRS, Sarbanes-Oxley and the National Credit Bill.
To help companies to navigate these complex requirements, IQ Risk is applying significant expertise both in terms of human intelligence and in technology through bespoke risk management solutions.
"Companies need robust systems to manage the data. They need to know that the data, and the systems, are accurate. That is an inherently complex matter because of the vast number of variables that need to be applied," says Ina de Vry, financial risk specialist at IQ Risk.
"Risk compliance generates solutions which equates to operational efficiency. IQ Risk is able to deliver world-class solutions for various disciplines and industries. Our skills can be deployed to meet challenges from the management and quantification of risk on the balance sheet right through to compliance with the latest IFRS accounting statements, such as share scheme valuation," says De Vry.
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The IQ Business Group has significant long-term experience in effectively aligning people, technology and processes. The group understands business strategies and combines project management and process thinking to deliver pragmatic outcomes. With operations in South Africa, Australia, the United Kingdom and the United States, The IQ Business Group provides clients solutions that encompass process, project management, business analysis, enterprise content management, SAP, risk management and software development competencies.