Beyond the Models

A great deal of the blame relating to the current financial crisis has been focused on the improper use of computer models in determining the amount of risk within a company's portfolio.  A recent article in Bank Systems & Technology Magazine discusses key considerations for employing models to determine accurate risk levels.   The article also notes that proper model usage alone is not the answer.  The author rightly states, 

"Although selecting the right modeling tools for risk management is essential, one further mistake companies commonly make doesn’t have anything to do with tools. It is essential to ensure that corporate culture avoids the typical silo approach to running a business. As we continue to follow news on the economy, it becomes clear that companies that conduct risk management in business silos expose their firms to unnecessary and avoidable risks. Tying true enterprise-wide risk management to business performance management, along with implementation of the right tools, is the only way for companies to ensure long-term success."

Having an appropriate risk framework and governance structure is critical to creating a strong culture focused on effectively managing risks.  Wheelhouse Advisors can provide cost-effective solutions to help companies break-down the silos and implement successful enterprise risk managemement programs.  Visit www.WheelhouseAdvisors.com to learn more.