Financial Risk Management Software

Trying to manually monitor risks and conduct risk analysis is a challenge, to say the least, as this process involves large volumes of data and complex calculations. This is why many financial analysts and institutions (such as banks, insurance firms, and asset management firms) use dedicated financial risk management software, which helps them manage their exposure to financial risks.

This type of software automates functions such as auditing, reporting, risk modeling, forecasting, and stress testing. It offers features that help conduct risk analysis, monitor risks, simulate scenarios, and formulate plans to address and mitigate risks.

We’ve prepared this guide to help you select the right financial risk management software for your business. Here’s what we’ll cover:

• What is financial risk management software?

• What are the deployment options for financial risk management software?

• What are some common features of financial risk management software?

What is financial risk management software?

Financial risk management software helps businesses manage credit and portfolio risks. It helps users manage the following aspects of the risk management process:

• Risk analysis: Identify and analyze areas that could negatively impact key business initiatives, decisions, or projects. 

• Reporting: Create standard and custom reports on relevant data, which can be downloaded in various formats (such as PDF, XML, CSV) or viewed through a dashboard.

• Data management: Import data from new or existing sources by uploading files or through APIs. Users can also aggregate data, store it, and view it within the system.

• Data audit: Record historical data in a step-by-step progression to track and assess the quality of data and detect any inconsistencies or missing data.

What are the deployment options for financial risk management software?

To select the right financial risk management software for your business, you need to understand the deployment options available.

Cloud-based deployment: Vendors host these solutions on their own or third-party servers, and they can be accessed through web browsers or mobile apps. Data storage, server maintenance, and periodic updates are the responsibility of vendors. Vendors usually offer a subscription-basa one-time, per-user license fee. Data storage, server maintenance, and periodic updates are also the user’s responsibility, and the total cost of ownership will include in-house server hardware and active IT support.

Key questions to ask your vendor before you buy: Are there any hidden costs or additional charges apart from the subscription or license fee?

What are some common features of financial risk management software?

Understanding the common features of financial risk management software will help you narrow down products to those that meet your requirements.

Here are the common features of financial risk management software:

Financial risk reporting: Use the software to create reports that help aggregate data and present information (e.g., credit and portfolio risks) in a concise and auditable manner to facilitate faster decision-making.

Risk reporting in Riskonnect

Scenario planning: Scenario planning refers to predicting and analyzing future events that may have a financial impact. When executing “what-if” scenarios, the software considers changes to inflation rates, operating costs, product prices, and interest rates for the business, industry, or economy.

What-if analysis in SABRE

Portfolio modeling: Portfolio modeling is used to determine the approximate risk in a financial portfolio by analyzing and forecasting possible losses incurred due to risks stemming from operational, liquidity, credit, and market conditions.

Forecasting in Clari

Audit trails: Keep track of financial transactions and ensure that transactions and changes are recorded for future verification. This helps users track general ledger account balances, purchase order history, applicable e-signatures, and more.

Audit trail in Netwrix Auditor 

Key question to ask your vendor before you buy: Are there other features in the software that might be useful to my specific business?

Back to financial risk management software directory

Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations, obtained from sources believed to be reliable at the time of publication.