Probably the biggest barrier we see today is the preponderance of data and systems management problems. Existing credit systems and other financial system configurations do not often support the evolving business model. They generally fail to provide the portfolio-wide data views required for active portfolio management, and are inherently weak in the aggregation ability across applications due to poor data standards and weak controls over data quality. Introducing portfolio quantification and risk-based pricing models is only the first part of the battle. Most users of portfolio tools have yet to use the models to proactively manage their exposure, risk policy and targeting strategies.
Success demands cultural change.
Tactical improvements in process efficiency at the margin will not achieve the strategic alignment necessary to ensure consistency with the risk management policies and tools essential to deliver an integrated business generation model. A process model aligned to the emerging paradigm has to provide instant and easy electronic access to all customer-related data and automate core processes to the maximum degree possible. Change Management Implications Driving a new risk management philosophy down to the business-generating frontline is a very difficult process and has major change management implications. None of these issues is trivial. Financial institutions that manage to successfully realign themselves to the emerging model will be those that plan most diligently the course of their transition, remaining sensitive to opportunities that arise in new technology and risk management modelling.