Does Integrated Portfolio Management = Operational-Risk Management?

According to a recent report by TowerGroup Senior Analyst Gavin Little-Gill, vendors across the market are converging to create integrated decision-support tools.

The report stipulates that these tools promise to integrate portfolio-risk analytics with a portfolio-manager's desktop tools "by bringing together market data and portfolio data, then overlaying analytics."

Despite this bold attempt, the response from the industry has been luke warm. In his report, Little-Gill says this is because the solutions are new, incomplete and do not fit neatly into the solutions boxes used by the consulting firms supporting the asset-management market.

He also suggests that while these tools are positioned as support tools for portfolio-management decisions, the real benefit is that they will support operational- and portfolio-risk efforts.

"When portfolio analytics are layered into products that already exist on the desktop, risk metrics are introduced throughout the investment process. These solutions offer a platform to support common investment processes that facilitate the management of operational risk, portfolio risk and portfolio compliance," the report says.

This could be a plus for anyone looking for more IT dollars, as defining these tools under risk management may open up wallets from non-IT budgets.

Little-Gill concludes, "A solution that integrates portfolio data, analytics and market data holds the potential to serve as a platform to manage supervisory and regulatory oversight of the management process."