Risk Management: how to prevent £1.3bn bank losses

Risk management is one of the highest topics on every investment bank’s agenda, and probably even more so following the news that a rogue trader has been detained on suspicion of losing UBS around £1.3 ($2) billion. But how can banks ensure that their risk management is watertight?

Well from a voice communications point of view the voice recording of phone calls has been around for a number of years, but the key to using such a tool successfully is being able to search for parts of conversations which are non-compliant, and when you consider how many calls are handled during one day of trading, fast search and retrieval is paramount.

Coming into effect in November, certain mobile phone calls must also be recorded to be compliant with new FSA regulations which should help plug the hole of rogue traders using work mobile phones rather than landlines.

Perhaps more exciting though is the rise of advanced live speech analytics solutions which can pinpoint key phrases and words said during a phone conversation and flag the compliance officer to take immediate action to manage the risk. Unlike bulk analysis on voice recordings which can take hours and is usually only undertaken on a sample of calls, live speech analysis can monitor every word of every call as it is happening.

Technology is great and is advancing at a great rate but at the end of the day it is still down to human inquisitiveness and perception to identify rogue traders. It’s just that he tools are getting better and are making this job even easier, so hopefully we will see fewer headlines about banks losing £1.3 billion to rogue trading.

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