INTELLIGENT AGENTS and Financial Risk Monitoring Systems
Since we are witnessing many spectacular losses in the financial industry such as credit exposures that turned sour, interest rate positions taken, or derivative exposures that may or may not have been assumed to hedge balance sheet risks. We have seen a dramatic collapse in financial institutions such as Barings Brothers, a highly respected 230-year-old British merchant banking firm and the 130-year-old Wall Street firm, Kidder, Peabody & Co. went out of business after its chief trader covered up losses amounting to $100 million. Current financial monitoring systems needs heavy financial information involved. Due to the complexity and the myriad amount of this information, a serious challenge has been posed for financial monitoring systems to integrate an accurate and timely date on every financial transaction executed by an institution.
It is my belief that intelligent agents are well suited to dealing with the problem of monitoring vast volumes of dynamic information in a distributed way. In this way, they are able to detect hidden financial problems, such as financial fraud, unhedged risks, and other inconsistencies.
A lightweight, distributed, intelligent agent-based financial monitoring system can monitors and reports on transactions within an organization. The intelligent agents in our prototype system are assisted by a formal conceptual model that makes up an unambiguous understanding of the institution, the transactions, instruments involved, and the business processes.
The intelligent agents provides an effective means for systematic monitoring of financial transactions in the corporate world, to detect and report any abnormal financial transactions that may signify unhedged risks, fraud, and other financial inconsistencies.
- By ouns qureshi | Associated Content
- Naiomi Solomon
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