Anatomy of a Risk System
What does a financial risk system look like and why are they so hard to migrate to the cloud?
Psst. Come closer. I’m going to tell you a secret from the world of financial services.
The first picture shows what anyone going into a cloud migration at an investment bank for the first time thinks what a risk system looks like. The second picture is what they’d draw after six months of missed spend targets, sleepless nights and face palms.
Ok it’s not really a secret. Anyone that’s worked in financial risk systems will tell you that, yet somehow it seems to get forgotten. Hope and cloud marketing always prove to be stronger than the reality of how long it can take to untangle complex enterprise systems.
The unfortunate trust however is that financial risk systems are horrifically complex aliens and migrating them anywhere least of all to cloud is a difficult endeavour even if you have a spaceship.
They’re not difficult to migrate because the math and code in calculating the risk is hard (though it is). They’re not difficult to migrate because they deal with enormous scale (though sometimes they do). They’re not even difficult to migrate because they’re written in highly complex tech stacks (quirky sometimes, complex not so much).
They/re complex due to handful of reasons that are often more to do with human behaviour and economics rather than anything technical. They’re difficult to migrate because like any large enterprise system they are a product not only of the technical choices of their creators but also of the org chart. They’re constrained by both technical and political decisions across the entire bank. And lately all of this gets done on a budget smaller than your average AI startup.
This is particularly problematic for a risk system due to the number of touch points or interfaces it has (both human and programmatic) with other parts of the bank. Slowly grown over a period of years these systems connect to multiple other applications in the bank but are usually the first to be targeted for cloud migration due their size and demand for compute. The result? A desperate call to Mario and Luigi to replumb everything to keep the risk flowing.
All this before anyone even says the word scheduler. Or orchestration.
