Kristin Moyer

David Furlonger here again.  Harvey Pitt is now throwing his input into the ring and calling for more transparency. What does this mean for IT professionals at trading houses?

• Risk management methodologies, frameworks, processes and systems must go through an immediate review with the goal of creating a more holistic and less latent picture of the risks firms are running.
• There needs to be a separation of the fox and the hen house with more focus on decision making about risk appetite being under the control of independent and objective executives within the firm which means they need better information displayed in a manner appropriate to their level of knowledge and expertise
• Business process remediation is essential – IT needs to focus not just on the STP aspects of trading, but on the peripheral processes essential to the sound and efficient operations of the firm eg data management, customer management, risk management, reporting, etc.
• CIOs and business leaders need to urgently look into the efficacy of allowing user defined applications to have such a preeminent role in trading operations such that they are outside the enterprise IT landscape and the Excel macros, pricing, data etc is separated from the core organization. The current risk in terms of opacity around positions priced and managed using UDAs is enormous and exacerbated by the current market turmoil.

Bottom Line – Don’t let the auditors and CFO come to you demanding IT remediation (within existing budget constraints).  Be proactive and have plans ready/submitted to preempt regulatory action.