Capturing the Elusive Promise of Big Data for Risk Management

by Cubillas Ding, November 20, 2014
Industry Trends


Celent shares perspectives and tactical ideas to exploit emerging Big Data technologies for liquidity risk and operational risk management.

Risk management is no stranger to the utilization of sophisticated analytics and large data sets, but with the advent of what the IT industry calls Big Data, financial firms must start rethinking how things can be done differently, rather than “more of the same but bigger and faster.”

In the report Capturing the Elusive Promise of Big Data for Risk Management, Celent explores two key questions.

  • First, if we instill Big Data thinking into risk management, how would it look like to execute risk practices differently?
  • Second, if we adopt Big Data paradigms, to what degree can the Risk function add value and deliver timely intelligence to the business (e.g., pertaining to macro risks, liquidity, operational risks, reputational risks, and counterparties)?

“The hype and notions around Big Data are already in danger of being overused and overpromised, while real breakthroughs and compelling results are still few and far between,” says Cubillas Ding, research director in Celent’s Securities & Investments practice and author of the report. “Realizing the promise of Big Data will not merely be a matter of utilizing more data to do the same analytics. Firms need to shift their paradigms in the use of data in risk, financial management, and customer operations to drive well-informed business decisions.”

Looking forward, the best opportunities are yet to come, but there is work to do. Many financial firms can say that data matters for their business and risk operations to thrive, but day-to-day operations do not necessarily reflect this ambition. Now is the time to be serious about using risk data strategically, moving beyond lip service, and making it fit for purpose.

The real story of Big Data is in the shift in how data in utilized, not the technology. Financial firms need to get beyond industry hype and see how employing data strategically might improve how risk is managed in practice.

In this report, Celent shares perspectives and tactical ideas to exploit the application of emerging technologies within liquidity risk and operational risk management, both of which have high degrees of system heterogeneity, large data sets, and rapidly changing information flows — all areas where Big Data paradigms and technologies can add value.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary


Embracing Big Data Paradigms for Managing Risk



Liquidity Risk Management



Action Points



Operational Risk and Compliance Management



Action Points


Imperatives for Success


Looking Forward


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


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