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  • Cited by 1
  • Print publication year: 2013
  • Online publication date: June 2013

31 - Requirements for Systemic Risk Management in the Financial Sector

from PART X - COMPUTATIONAL ISSUES AND REQUIREMENTS

Summary

Abstract This chapter discusses the information technology requirements of systemic risk management, from the point of view of a hypothetical regulator of an “originate-to-distribute” (O-D) financial supply chain. We take the view that, even though the mortgage sector remains seriously disabled following the World Financial Crisis of 2008, the information technology requirements for the collection and transmission of data, as well as the performance of various analytical operations, at each step of the O-D process are in fact generic to the development of scale efficiencies in funding consumer and small commercial loans. This chapter identifies requirements for the construction and use of scalable, data and compute intensive analytical solutions capable of meeting the challenge of decision support for institutions concerned with broad scope risk. Such considerations apply not just in the financial system, of course. But our discussion is particularly motivated by requirements for public regulators, financial services entities and other business entities with significant liquidity and financial management needs.

Introduction

The world financial crisis of 2008 was triggered by developments in the “originateto- distribute” (O-D) mortgage supply chain in the “shadow banking” system, which by 2006 had substantially replaced the role of regulated banks and government entities in originating and servicing mortgages in the United States. The O-D supply chain emerged as a more competitive solution, because it was able to partition the various roles into separately capitalized and larger-scale processing entities.

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