The Pursuit of Predictability

Using bits and bytes to prevent bank failures


The financial crisis has taken a devastating toll on the global economy and on the financial services sector. The number of failed financial institutions has exceeded 250, with many more still expected. An increased scrutiny on regulators has prompted the enactment of extensive regulatory reform to keep up with the complexities of the financial products that are continuously introduced into the system, and with the dramatically increasing volume and velocity of transaction through the system.

There is a growing consensus among the regulators and the regulated that intelligent analytics are needed to monitor risk in today’s increasingly complex and volatile financial landscape. There are several different models and techniques that can enable regulators to monitor systemic risk, detect fraud, and correlate a rich set of electronic information. These models have the potential to provide an early warning for emerging challenges that could pose a threat to the stability of the world’s economy.

By laying out the steps and disciplines necessary to develop an enterprise-wide analytics program, this paper provides practical insight into key considerations that should precede any investment into information analytics.