Risk-as-a-service: A solution for managing the risk frauds
- By Kuljit Singh and Durga Prasad Balmuri
In today's globalized economy, business environment is changing rapidly due to technological, political, social, and other factors which is exposing companies to greater risks. Risk not only brings regulations, but also the opportunity to those affected by risks.
This pursuit of servicing has led to a field called risk-as-a-service (RaaS). When it comes to financial services, managing risk is of paramount importance. RaaS in financial services industry is a cloud-based risk management solution catering to banks, hedge funds, pension funds, and other financial companies. Many firms, unable to create and manage complete in-house solutions, are embracing RaaS offerings, be it cloud solutions or Business Process outsourcing. By paying a regular monthly / quarterly / annual fixed subscription fees, these firms are able to enjoy the benefits of using risk management solutions without the need to develop and maintain costly in-house facilities.
RaaS solutions tend to address due diligence obligations, risk management, internal audit, change management, risk reporting, and more through advanced analytics, risk modeling, and customer reporting through dashboards. These solutions try to help companies by identifying inherent risks before they become major problems.
RaaS solutions come with many advantages, such as better staff augmentation by freeing up in-house staff to focus on higher level risk management activities, access to advanced security tools and contextual expertise by subscribing to solutions that are very critical or not easy to maintain in-house.
Consulting firms, seeing vast opportunity in cloud based offerings in risk management, are investing huge amounts to meet the growing demand. FIS, a global leader in banking and payments technology, has invested more than US dollars 200 million over the last three years in its RaaS division, which is focusing on developing risk and information security products and services for the financial industry.
RaaS solutions are being used in various spheres within financial services industry. For instance, they can be very helpful to fund managers in meeting regulatory requirements, making better investment decisions, and avoiding unintended sector-industry concentration. In the case of banks, they can help in creating automated risk models and mapping the client's income with expenditure, thus saving time and effort in gathering proof of an individual's financial situation.
For IT vendors, the main aim should be to help clients compress data architectures, which would help all the departments in a company to have same knowledge about risk as is known by department which manage risks. Opportunities offered by RaaS have been seized by many vendors in the form of cloud solutions and other BPO services. As the world is getting more complicated with explosion in data, more globalized world, increased technological innovations, it would be imperative for companies to look at risk more seriously and RaaS could be the ideal way forward.