Managing Risk Requires an Integrated Approach to Collateral

ID Number: G00171669

2 November 2009

Douglas McKibben

The use of collateral to mitigate credit risk has increased with the expansion of global financial activity. To obtain a reduction in counterparty risk, centralized, integrated collateral processes and more-timely management of exposures are required beyond typical overnight assessment and pricing.

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Table of Contents

Analysis

1.0

Introduction

2.0

Managing Collateral

2.1

Collateral Management Has Become an Essential Part of Enterprise Risk Management and Corporate Governance

2.2

Challenges

2.2.1		Lack of a Centralized View and Control
2.2.2		Volume of Time-Critical Data
2.2.3		Allocation of Data to Portfolios
2.2.4		Valuation and Pricing of Collateral
2.2.5		Market Differences

2.3

Regulatory Impact

3.0

Using Technology to Manage Collateral

3.1		Typical Functional Requirements for Collateral Management Software Systems
3.2		Collateral Management Software Vendors
3.3		Tri-party Collateral Management Services

4.0

Recommendations

List of Tables

	Table 1.	Market Scan of Collateral Management Software Vendor Profiles

Enterprise Risk Management
Banking Systems
Trading Technologies
Banking Business Strategies
Investment Services Business Strategies

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Resource Id: 1217803