Risk management is a critical success factor for financial institutions, which in South Africa face some unique risks associated with emerging markets.

To meet the growing demand for risk management solutions and services, SAS Institute, the market leader in business intelligence software has recently partnered with professional service organisation, RiskWorX. Together, the companies provide customers with world class risk management solutions and services.

"We work with RiskWorX to implement full risk solutions for our major financial customers," says Kerry Evans, partner manager of SAS Institute.

"RiskWorX has highly specialised intellectual capital around risk, boasting expertise in IT as well as risk management," she says. "As SAS has moved from its traditional focus on tools to a solutions company, so partnerships have become more important. To offer and implement full risk solutions, we must partner with niche companies like RiskWorX."

"SAS has an excellent global brand, and with the development of its Risk Dimensions software and other data management solutions, is highly respected in the risk arena," says Walter Stevens, director of RiskWorX, which provides products and services to manage companies' risk - mostly market and credit risk. "Their response to the industry challenges presented by the proposed new Basel II Accord is particularly impressive. It is important for us to have skills in SAS technology, while SAS wants to be able to deliver solutions requiring risk expertise, so this arrangement is beneficial for both companies."

Stevens says that previously, companies working in the risk arena in SA tended not to be independent and were often international companies that lacked knowledge about local financial market conditions. The industry required an independent company that understood the risk issues and could provide tangible, client-centred solutions. RiskWorX was established in early 2000 to fill this gap.

"Major financial institutions have recently changed their thinking about risk management," says Stevens. "In the past, they struggled on by themselves, but are now beginning to realise the benefits of using external companies.

"The benefits include the ability for companies to selectively use specialised risk management skills that are very difficult to employ and retain, as well as the ability to call on specialists for project work that falls outside the business focus of the risk team. RiskWorX is focused on risk management and stays in the forefront of new international trends to ensure that we are able to provide the best level of advice and service to our clients," continues Stevens.

Stevens says that local companies face the same kinds of risks that financial institutions face in London or New York, but that they also face some very specific emerging markets’ issues, especially liquidity issues.

"The number of trades for some South African instruments is far less, for example, and companies holding big positions may find it hard to get rid of them," he says. "South African corporate credit risk is difficult to quantify, particularly because of the high numbers of unlisted companies with low levels of disclosure in corporate loan portfolios. The credit risk is also difficult to diversify, due to the small number of obligors of good credit quality and the regulatory barriers to country diversification."

RiskWorX is South African based and focused solely on risk management issues.

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