From Bust to Robust: How IT Solutions Will Help Companies Return from the Brink
The global financial crisis has had many effects, but most analysts agree that its roots are in the lack of understanding that financial executives had regarding their companies' exposure to mortgage-backed security risks. Knowledge Center contributor David Sherriff explains how the new breed of financial IT solutions integrate the best of business process management software with accounting, compliance and reporting applications to provide a complete picture of risk across the business.As recent history has taught us, companies that don't know what they don't know are at risk of failing spectacularly. To a large degree, executives over the past few years had been flying blind, even as their companies had been flying high on the wings of complicated debt instruments and complex derivatives. This is not to say that human beings are not responsible for the implosion of AIG, Lehman Brothers or, for that matter, the Icelandic national banking system. But most of the companies lacked the technology tools that could have helped them see the warning signs before it was too late. Most legacy accounting and risk management systems simply were not built to handle the current volume and level of complexity of data related to financial transactions to, from and within many investment and retail banks.
More importantly, the systems that could handle the information were not designed to make it make sense. In other words, some legacy financial IT (FIT) systems might have been able to process transaction-level financial data in the months before the crisis, but few could enable the kind of analysis and reporting that would have raised red flags signaling a change in strategy was urgently needed.