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A new paradigm in risk management,
mainstreaming risk thinking throughout the organization. In
the wake of the ongoing financial crisis, institutions are
under pressure from regulators to quantify their exposures
with greater accuracy. In response to these needs, Vesta was
developed with several modules that enable financial
institutions to overcome some of the deficiencies in risk
management highlighted by the recent financial crisis.
Vesta
Components:
Vesta is built upon a set of
components which offers comprehensive functionality that
covers data management, scenario generation, market, credit
and operational risk analytics and reporting. All components
share a common data model, which maintains consistency among
applications.
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Vesta Risk
Monitor: The Vesta Risk Monitor module allows
aggregated risk information to be meaningfully accessed at
all levels of the organization. It is an easy to use,
graphically rich interface. Users are able to view position
and exposure data at any level of generality or specificity.
Results can be broken down by any metric such as region,
industry, trader, liquidity score, or numerous others
factors in order to identify any unwanted concentrations of
exposure. The Risk Monitor module also provides Time Series
Reporting enabling information to be contextualized.
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Vesta Risk
Manager: The Vesta Risk Manager module provides a
more comprehensive and forward looking approach to
quantifying aggregate exposures using a proprietary beta and
index correlation based risk methodology. This approach
resolves the problem with traditional risk methodologies
which leave substantial portions of risk uncaptured and
unrecognized. Many currently traded instruments simply do
not aggregate well into risk approaches based on interest
rate and spread sensitivities. The Vesta approach allows
risk managers to look at risk the same way the front office
does.
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Vesta
Capital Allocator: The Vesta Capital Allocator
uses information captured from Vesta Risk Monitor and Vesta
Risk Manager, to make risk-adjusted capital allocation
recommendations. The traders and desks providing the
greatest market insights should receive more capital than
those providing the least. This can be evaluated by, among
other approaches, comparing trader betas and expected
returns, with realized betas and actual returns. |
What is
unique about Vesta?
Vesta enables risk information to be “mainstreamed” to
traders, portfolio managers, and business management
professionals at all levels of the organization. During the
recent crisis, risk information was compartmentalized,
accessible only to a few technical and quantitative risk
managers which led to misinformed risk allocation decisions.
By disseminating the risk information more broadly
throughout the organization, Vesta will allow organizations
to make better risk and capital allocation decisions. Vesta
is also designed to respond to rapidly changing market
conditions.
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