The events surrounding 2008 helped the concept of model risk management gain widespread acceptance as a key area of investment and attention. With the Fed’s SR 11-7 providing firms with few specifics for compliance, Greenwich Associates research found a surprising lack of business process management software, with approvals between model owners and approvers often being noted manually. Greenwich Associates believes a software solution that can streamline and simplify the model risk management process at the enterprise level could greatly improve model risk management practices, and as such, prove hugely successful as market participants move past the post-crisis scramble to improve operations and into the current deep focus on creating solutions for the long term.
Methodology
The research is based on conversations with heads of model management at first and second-tier investment banks, asset managers and insurance companies conducted in the first quarter of 2015. Also included in this research is data based on the 172 conversations with institutional investors trading structured-derivatives products, and 1,008 investors trading investment-grade credit products globally as part of our 2014 Global Fixed-Income Investors Study.
The data reported in this document reflect solely the views reported to Greenwich Associates by the research participants. Interviewees may be asked about their use of and demand for financial products and services and about investment practices in relevant financial markets. Greenwich Associates compiles the data received, conducts statistical analysis and reviews for presentation purposes in order to produce the final results. Unless otherwise indicated, any opinions or market observations made are strictly our own.
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