The rise of computing power, advanced analytics and big data qualifying companies to get valuable insights from data. Machine learning, the internet of things, drones and artificial intelligence are just a few contemporary tools now applicable to help organizations gain a more outright view of their businesses and make better decisions.
For risk managers, using risk analytics and big data affords an extraordinary capacity to measure, identify and mitigate risk.
Adequate Risk Analytics requires a lot of data
To get an authentic picture of risk, Risk Analytics solutions must analyze and aggregate both external and internal data. Entrusting on internal information alone avoids all of the factors that jolt a business beyond it’s four walls.
For example, farming – The value of crops is dogged by external factors like competitive pricing, market shifts, weather, geopolitics. However internal factors like fertilizers, seeds, transportation costs, pesticides, water are also important.
Farmers need to figure out all this data to effectively understand the risks correlated with the crops.
Benefits from Risk Analytics
Analyzing and tracking risk factors in real time give huge benefits because you know instantly when deviations occur and can immediately react to make changes to mitigate risk.
Applying advanced analytics, you can:
1) Set up alerts to check for outliers and deviations in real time and know immediately when problems arise. The quicker you know where problems are, the shorter you can fix them.
2) Evaluate performance across key parameters and utilize real-time portfolio monitoring. Evaluating performance in real time permits you to instantly adjust the portfolio to boost performance when necessary.
3) Use machine learning algorithms to analyze high risk customers and curtail charge-off losses by screening for tricky deals.
4) Mimic portfolios and classify the hidden impacts of disruptions, possible trades and events and create the envelope that meets goals for risk and profits.
5) Record trade aperture in near real time and evaluate risk limit aperture by traders, trading desk level and profit center.
Big Data is growing the way organizations are run, sanctioning organizations to classify gigantic amounts of information about operations in real time.
Risk Analytics permits you to take the data to understand and reduce risk.