Control Risk and Reporting: Nasdaq Risk Platform Takes Commodity Trading Week
At this year’s Commodity Trading Week, presented by Commodities People, ADM Investor Services’ Head of Technical Analysis Eddie Tofpik led a panel that explored the pertinent topic of control risk and reporting as well as best practices for mitigating risk.
The panel consisted of Nasdaq’s Risk Platform Product Manager Adrian Carr, Sucden Financial’s Head of Market & Liquidity Risk Mark Patterson, Theorem Technologies’ President & Co-Founder Paul Geiger, and ENI’s Head of Trade Control & Operational Risk Alessio Pecorella.
Although panelists came from firms with a wide range of needs and concerns, they identified several common risk management goals for 2021 and beyond:
- Increasing collaboration across business lines
- Mitigating operational risk
- Investing in a flexible and consolidated risk platform
Increase Collaboration
Collaboration has proven to be an effective and vital component of risk mitigation measures. The most effective risk management teams work in a more collaborative environment and seek out information from a wider range of sources.
When evaluating what makes a strong control framework, Nasdaq’s risk management expert, Adrian Carr, highlighted the importance of collaboration. He noted that having a risk system in which account managers, operations, traders, and other parts of the business are given access to a single-view platform creates a “golden source” of data and mitigates the potential for human error.
Mitigate Operational Risk
Although operational risk will always be a concern, technological support around critical points of vulnerability can greatly reduce its impacts. Firms have increased their focus on gathering data from various areas, which has made it essential to bolster risk operations with regard to fraud, data leakage, IT disruptions, and business continuity. One panelist noted that anytime you automate a process, “you’re going to reduce the human element of the risk and increase the IT element of that risk.”
Carr echoed this sentiment but maintained that firms can substantially reduce their operational risk by integrating flexible APIs, leveraging machine learning, and implementing a platform that is scalable and available through any medium.
Investment
Evidently, the ability to increase collaboration and mitigate operational risk is made significantly easier with investment in a flexible and comprehensive risk platform.
When asking the audience, “have you increased your risk control spending in the past 12 months?” 67% of respondents responded with “yes.”
This is indicative of a growing trend toward fortifying risk systems industry-wide. The COVID-19 pandemic undoubtedly accelerated this process, with many firms ill-prepared for the high trading volumes and volatile market conditions that defined 2020. Firms operating on an antiquated risk infrastructure struggled with issues such as liquidity, operational efficiency and even overfunding on IM requirements at a cost to return on equity.
Takeaways
To conclude the session, Tofpik asked each of the panelists to provide a statement in seven words or less to summarize the discussion. Carr stated, “Flexible systems accommodate new business growth.”
To learn more about how your firm can enhance its risk strategy, watch the session below or check out the Nasdaq Risk Platform.
Other Topics
Banking Brokers Commodities Energy Technology
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio