Financial risk management software helps banks and other lending institutions identify and measure their exposure to different types of risk, including operational risk, credit risk, market risk, legal risk, and so on.
If your firm is financing a home, car, or startup venture, there are a wide range of factors that will determine whether or not the borrower defaults on their loan—from credit history to inflation rate, to developing trends in the market.
Financial risk management tools—which connect to public records and other data sources—allow you to collect, segment, and analyze critical information in a centralized location, resulting in stronger predictability and more profitable lending outcomes.
With that said, some financial risk management solutions will be a better fit for your business than others, and implementing the wrong product into your existing processes and technological infrastructure can lead to complex, unscalable workflows—and ultimately an unsatisfactory ROI.
There are many financial risk management software companies on the market today, and they all claim to be the best. But which one is right for your organization?
In this article, we explore the top five financial risk management solutions as of 2022. So if you’re looking to integrate this technology into your business’ ecosystem, keep reading to learn about the most innovative solution providers in the industry today.
The role of AI in financial risk management
Before we get to our list, let’s discuss how financial risk management has changed over the past few years. Due to the advancement of artificial intelligence (AI) and machine learning (ML), financial risk management tools have gotten faster, smarter, and easier to use through automation.
In the old days, underwriters were the sole determinant for approving or rejecting loans. They calculated credit scores—based on income, monthly expenses, outstanding debt, and a handful of other factors—to determine an applicant’s risk level. Now, using AI- and ML-based tools, lenders can include hundreds, even thousands of variables in their calculations for evaluating risk.
For instance, let’s say someone applies for a car loan. In addition to basic information like the applicant’s FICO score, sophisticated financial risk management tools will automatically pull other useful—but perhaps not as accessible—data, such as the applicant’s driving record, employment history, and digital footprint, as well as the vehicle’s make, model, and so on.
Simply put, with more data available, you can gain a clearer picture of the loan’s riskiness and profitability. And rather than having to manually collect this data from a range of disparate sources, AI and ML algorithms do the work for you. So all you have to do is review the information via robust reporting, evaluate the risk tolerance, and decide on next steps.
Top 5 financial risk management software companies
There’s no one-size-fits-all solution to financial risk management, so picking the right tools will depend on the unique goals and requirements of your organization. To help you get started, here are the top five financial risk management software companies:
FactSet
The FactSet platform allows financial professionals—specifically investment advisors—to effortlessly import, manage, and report on a wide range of data. As an end-to-end solution, this tool offers a centralized hub for advanced portfolio analytics, quantitative research, and performance measurement—in addition to standard risk analytics. The platform is fast, secure, and easy to use. Plus, it can be integrated seamlessly with most CRM solutions.
DB Credit
B Credit is a cloud-based platform designed to help facilitate diverse finance strategies and approaches. Its most well-known features include intuitive credit reporting, portfolio segmentation, and alert tracking. Perhaps the best aspect of this platform is the fact that it’s highly flexible and customizable. It supports multiple languages and currencies, and also provides various tagging options and reporting views.
MetricStream
A leader in the risk management space, MetricStream software leverages AI and ML to provide users with speed and efficiency when governing risk. The system can fit into almost any risk management framework, and runs on AWS—ensuring optimal scalability and security. And with the Smart Policy Search feature, users can quickly pull up relevant policy information for specific accounts, without having to go find it themselves by manually scanning pages and pages of documents.
SmartRisk
The SmartRisk platform is designed for investment advisors looking to update and optimize their clients’ financial portfolios. With intuitive reporting and modeling capabilities, users can effectively communicate risks, opportunities, and expectations, thereby avoiding reckless—or overly conservative—investment decisions. The platform has gained a lot of popularity among investment professionals over the past few years, mainly because of its ease of use and competitive pricing.
Kyriba
Leveraged by thousands of financial institutions across the globe, Kyriba provides many customizable features, reliable security, and smooth connectivity with third-party apps—from ERP systems to investment trading platforms. The software supports many different languages and currencies. And in addition to managing financial risk for investments, it is also used for fraud detection, treasury management, and supply chain finance.
Here are a few honorable mentions worth checking out as well:
Experian Credit Risk
FinScan
Reval
Calypso
GTreasury
Implementing financial risk management software for your business
Identifying, integrating, and managing the right financial risk management solution for your business can be a long and complicated process. The software must connect seamlessly with the other technologies in your ecosystem, without disrupting the customer experience or complicating internal workflows. That’s where Codal comes in.
Our award-winning team has over a decade of experience building, launching, optimizing, and maintaining cutting-edge digital solutions for financial institutions. We start by learning the ins and outs of your organization, from its technology stack to its customer base and surrounding market. Then, we identify the best financial risk management tools—along with any other innovative solutions that will enhance your business—and execute an implementation plan for your timeline and budget.
As your long-term web design and development partner, Codal will continue optimizing your firm’s technologies and processes to ensure maximum efficiency and a powerful customer experience.
