Too Complex To Manage

There is some evidence that this is true for big banks - like here. Much has been written about too big to fail, even too big to jail, ...


Invested in so many diverse and immensely complex products, to manage their risk they do not need a few numbers but large cubes of risk information that cannot be "pressed" into Spread Sheets and it is even difficult to map them into relational data bases.

And not only that the instruments are complex the interplay becomes more important and the event stream essential. And this is where the headache begins.

Large units tend to fall into the tight-integration trap thinking only a highly integrated system can manage their complexity.

Are we falling into the same trap? I have announced recently that the we are packaging the UnRisk FACTORY, the VaR Universe and UnRisk-Q. Doesn't this increases complexity?

No, we have decided at the same time to keep the FACTORY free from tasks that are not devoted to its core business: portfolio-across-scenarion valuation and analytics for risk management.
We ourselves will implement the other tasks in UnRisk-Q that is linked to the FACTORY data base.
Tasks for further analytics, dynamic visualization, report building, ...

This will not only allow for different development paces, but also masters the system complexity. Consequently, if the deal volumes get larger and the interdependence gets more complex, the ability to risk-manage grows accordingly and there is enough time to react to unintended consequences of the total complexity.