But what is new is the vast range of opportunities that technology has delivered to unlock the strategic value in risk information. Far from being a function that is bolted onto the rest of the business for control purposes, risk management is becoming more and more a part of business decision-making and a potential source of competitive advantage. Such an approach rests on three fundamental principles. They are the principles of choice, flexibility and transparency. These principles have important implications for all aspects of risk management, but importantly for the frameworks and systems used to measure and manage risk.
Different users have different risk-management needs.
Even within a single organisation, the needs of, say, the treasury function are not the same as those of a risk-taking business unit. Users must choose the appropriate data, methods and tools in each case to make the risk analysis relevant and appropriate. This choice always involves a trade-off between completeness and simplicity. The more complete a risk analysis is, the more complex it becomes. Complexity is the price paid for increased sophistication, thoroughness and accuracy.