October 18, 2022 | Stamford, CT — A series of recent unprecedented events have disrupted traditional macroeconomic patterns used in bank risk modeling and left financial institutions wondering if the data and tools they use to measure market and credit risk are up to the task.
As market volatility spikes in a post-pandemic world characterized by surging inflation, rapidly rising interest rates and war, banks and bond dealers are scrutinizing their risk management processes. 
“Amid surging market complexity, some banks are discovering that their risk models have become less reliable and that counterparty credit systems are not robust enough to manage today’s enhanced risks,” says Audrey Blater, Senior Analyst for Coalition Greenwich Market Structure & Technology and author of Modernizing Risk Management Technology: Has the Game Changed?
In a series of qualitative interviews, Coalition Greenwich spoke with global risk professionals at banks and other sell-side institutions to explore how they are thinking about the impact of volatility, geopolitical conflict, the COVID aftermath, a changing rates and inflation regime, and other factors through the lens of market risk and credit risk tools. The findings highlight mixed experiences when it comes to data use, availability and the proper market risk and counterparty credit risk tools required to address marketplace risks faster.
Volatility in economic data has spiked at the same time many banks are transforming their data management strategies and implementing centralized data lakes. In addition, as banks amass huge volumes of new data and data sets, many are struggling to get the correct data into the right hands at the optimal time and in the most efficient format. 
“Banks are adopting faster modeling techniques that integrate more timely and market-based measures like CDS spreads,” says Audrey Blater. “This is opening a new dialogue in terms of what counterparty credit looks like and what banks are charging their customers. However, the cost of managing these risks is a big issue.”
Modernizing Risk Management Technology: Has the Game Changed? examines how increasing market complexity is challenging banks to rethink how the risk environment will evolve. The report identifies key risk management problems experienced by banks, and presents a series of tactics to bolster risk management processes and battle the onslaught of volatility in data tethered to economic releases and macro frictions.