While many of my colleagues were in Berlin, attending and presenting at the Premiere Business Leadership Conference, I had the privilege of speaking at Intel’s FasterRisk . It struck me as humbling, really: In Berlin, Dr. Jim Goodnight, SAS co-founder and CEO, was wowing an audience of several hundred senior executives with a multimedia display of the capabilities and benefits of high performance computing. And I was less than 600 miles away in London speaking to nearly one hundred and fifty senior risk and financial services experts - the guys who would be in the trenches with this solution – about the near real-time decision making capabilities of this new optimised risk management framework.

I became quite excited while preparing for the event. I was thinking of how far risk management had come in the 25 years of my career (covered in my event recap on Intel’s blog). Processes that were once unsolvable or took days and weeks can now be answered in minutes – near real time. This advantage, according to Tham Ming Soong, United Overseas Bank Chief Risk Officer, allows his firm to understand market changes before competitors. It will help UOB take products to market - or exit markets - sooner.

Some of the tangible benefits of a high performance computing risk process include:

1. A better ability to react to various market shock events with more precision, and potentially take advantage of the market shocks and look for better arbitrage opportunities.
2. Provision of a more structured decision capability that will allow a firm to more consistently evaluate its product structure and expected return against inflections in the market.
3. Offers the firm an analytical framework that will provide a consistent process for making decisions with the capital optimization/option analysis framework.
4. Expert judgment for principles is augmented by a very sophisticated and analytical view of business decisions across a very large combination of information.
5. A high performance risk management framework that will provide a complete picture of firmwide risk.

By implementing a change in risk reward methodology along with a high-performance computational environment, executive management can achieve a dynamic view of firmwide risk and a realistic measure of capital performance. Myron Scholes, PhD an Nobel Laureate, said, “Risk management is not just monitoring; it’s really optimization. It's figuring out how to allocate capital, how much capital to allocate to strategies, and determining the return on those strategies.” In a recent interview, he said capital optimization via a high performance risk management framework can create a competitive advantage for firms. Giving executives the ability to determine the exposures and potential impact to market conditions (based on current market conditions) is a competitive requirement. As we assess the impact of capital returning to the market, along with the constraints on accessing capital, leading firms will be looking for a high performance risk management framework to provide a complete picture of firmwide risk.

The framework is explained in detail in SAS’ white paper Evolving from Quantitative Risk Management to a High-Performance Risk Management Analytic Framework by Myron S. Scholes and Michael Stefanick, Leader of Global Risk Practice at SAS. To download the white paper and review other risk management topics, including the latest Economist Intelligence Unit Enterprise Risk Management research briefing and an article by Keith Collins, SAS Chief Technology Officer, covering the use of HPC technologies, please visit the SAS Risk Management Knowledge Exchange.

Thanks again to Nigel Woodward, Global Director Financial Services ESS of Intel and HP, for inviting me to speak at an excellent event and venue.