Financial Institution Advantage and the Optimization of Information Processing

227 Pages·2015·4.28 MB·English

by  Sean C. Keenan

Financial Institution
Advantage and the
Optimization of
Information Processing
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Financial
Institution
Advantage and
the Optimization
of Information
Processing
Sean C. Keenan
Coverimage:techbackground:©iStock.com/cherezoff,
socialimage:©iStock.com/Henrik5000
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LibraryofCongressCataloging-in-PublicationData:
Keenan,SeanC.,1961-
Financialinstitutionadvantage&theoptimizationofinformationprocessing/
SeanC.Keenan.
pagescm.–(Wiley&SASbusinessseries)
Includesbibliographicalreferencesandindex.
ISBN978-1-119-04417-8(cloth);ISBN978-1-119-05304-0(ebk);
ISBN978-1-119-05322-4(ebk)
1. Financialservicesindustry–Dataprocessing.2. Financialservicesindustry–
Informationtechnology.3. Financialinstitutions–Management.I.Title.II.Title:
Financialinstitutionadvantageandtheoptimizationofinformationprocessing.
HG173.K3972015
332.10285–dc23
2014041589
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
ForSage&Coleman.

Contents
Introduction ix
Acknowledgments xv
Chapter1 FinancialInstitutionsasInformation
Processors 1
̂
FinancialInstitutions’Raisond’Etre 1
CulturalIssues 6
ITLiteracyandtheSpreadsheetDeluge 13
OtherChallengestoEstablishinganIT-Savvy
Culture 19
Notes 25
Chapter2 StrategicHardwareandSoftware
Management 27
Overview 27
AnIntegratedDataArchitecture 41
InformationProcessingEfficiencyasan
InstitutionalObjective 52
ADigressiononUnstructuredData 58
Notes 60
Chapter3 Data,Models,andInformation 61
ModelRiskMania 61
DefinitionsandEpistemology 69
DataQuality 73
ModelsandTheirRole 79
RegulatoryRegimesandGuidance 88
Notes 99
Chapter4 ModelRiskMeasurement 101
ThreePhasesofModelManagement 102
ModelGovernance 103
DefiningModelRisk 105
ObjectifyingtheDownside 108
vii
viii CONTENTS
ModelRiskAttribution:AnInformation
EntropyApproach 121
Notes 126
Chapter5 TheReturnonAnalyticAssets 127
MeasuringtheProductivityofModels 128
ComplementarityofDataInflowwith
InformationProcessing 132
ADigressiononPriceTaking 134
Notes 135
Chapter6 DataRiskMeasurement 137
StrategicDataAcquisition 139
TheInformationConversionRate 140
OtherApproachesforDataRisk
Assessment 142
Notes 143
Chapter7 AHigherLevelofIntegration 145
AlternateViewsofIntegration 146
IdentifyingKeyInformationCycles 146
AnIntegratedPhysicalView 149
MultidimensionalInformationAsset
Management 151
Chapter8 AStrategyforOptimizingtheInformation
ProcessingComplex 155
Evaluation 156
APathtowardImprovement 160
Notes 167
Chapter9 CaseStudies 169
ThePricingofAutomobileInsurance 170
Moody’sKMV 174
TheLondonWhale 177
TheMortgage-BackedSecuritiesDisaster 178
TheValueofAnnuities 180
Notes 182
Chapter10 Conclusions 183
References 189
AbouttheAuthor 193
Index 195