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In the last years, there has been an increase of the use of technology. Different areas decided to use it for their own profit. One of them, could be the field of Finances. Especially, the area of Financial Risk Management. Yet, some companies might misuse said technology. There are several cases in which it has been exposed that organisations and business are not using the tools in a morally correct manner or even being illegal. The increase of technology might be an advantage for several aspects of daily life. Yet, it is important to learn how to use it. Do you want to know more? Then keep reading!

What is Financial Risk Management?

First, it is important to make clear what is Financial Risk Management and its main characteristics. Probably, you might have heard about it lately and you are not sure what is is. Or maybe, this is the first time you come up with this term.

The area of Finances had to develop along with the rest of the world. This involves creating new fields, more specialised. Moreover, they had to deal with the introduction of the new technologies of the market, previously mentioned.

One of those fields, is Financial Risk Management. In this area, the manager has to work with the amount of risk a company is willing to take in a business. They don’t want to erase the existent risks. Rather than that, they want to analyse the situation and to create an strategy to deal with it. In other words, they want to mitigate the financial risk. 

This way, the professional knows what risks the company is willing to take, which one they should avoid. Thus, they will have a path to follow. For a risk manager, it is important to have a plan of action.  But what is a plan of action? Well, a plan of action is a list of the different procedures the company use to make sure they don’t take more risks than necessary. Therefore, they will know what decisions need to be escalating and who has the responsibility in case there is a mistake.

Best softwares for Risk Management

The development of new technologies and softwares has reached every area of society. And Finances are no different. Professionals work with those applications in order to deal with financial risk in a business decision. This way, the company increases the chances of having a higher profit. If you are interested in the field or if you want to know, here you have some of the most important softwares of Financial Risk Management.

  • Numerix: This software permits the professional to choose from a wide variety of financial modelling techniques and risk management solutions. It’s highly flexible and also allows the companies to integrate it to their own models.
  • Artico: This software caught the attention of banks, multinationals and financial services. The built-in simulation environment is one of its unique features. It replicate the changes in rating models before they are applied to a real stock market.
  • Vertica: This software offers a wide range of tools to help everyone. Not only financial institutions but also online retailers. Thus, they will get profits from the vaste number of data.

As you can see, the variety of softwares that offer the market varies. Moreover, some of the tools might adapt to the needs of the company. Risk managers have higher possibilities of doing their job successfully and companies will have a profit. This area of technology can be helpful for the Finances field. We can’t wait to see what comes next.

The dangers of a misused technology

New applications might be useful for companies and users. Yet, there is a possibility that applications might be against customers and users. This was the case of CIBIL Watch. This software permitted lenders to know exactly when the borrowers decided to ask for a loan with another lender. The previous lender discovered it and called them, starting the harassment that continued for a time.

Lately, the customers discovered that the CIBIL Watch, a credit alert service, was the reason of this leaking of information. The COO of the company stated that the strategy followed by the system is completely legal. It is usual that lenders share their borrowers’ repayment tracks with credits bureaus. This way, they will know if they give the credit to the borrower or not. Furthermore, the bureau gives each lender information about any specific borrower’s repayment track with all the lenders.

Nevertheless, the use of applications such as CIBIL Watch has pointed out one of the main concerns of the use of technology. Privacy has always been one of the objetives in the use of softwares. However, the well intentioned applications and strategies might be misued by companies.

Instead of using the information and technology to increase the profits and create a relationship between the company and the customer, they started to harass them. Thus, there is an important lack of privacy and customers and clients might not feel save in the future. Therefore, it is important that a regulation exists in order to protect borrowers from the abuse of companies. We are talking about the misuse of personal data that is exchanged between lenders and credit bureaus without the consent necessary. Time will tell.

Do you want to become a risk manager?

If you ever wanted to be part of this field, this might be your opportunity. The University of Alcalá is offering a Master in Financial Risk Management in which the students will become experts of the field. The master has teachers that belong to the Finances field and are professionals of the area. Do you want to know more? Then you can’t miss this opportunity. Contact us for more information!

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