How Much Is Risk Management Worth?
David Akin blogs that Fitch Ratings has purchased Toronto’s Algorithmics for $175M (the press release is datelined New York, so I’m guessing that’s a US dollar figure).
Algorithmics makes risk management software, focusing on market risks for banks, things like hedging strategies and BASEL II compliance (based on a quick read of their site.) So one answer is that better risk management is worth $175m.
But presume that you know a lot about other banks’ risk management strategy, because you make the software that drives it. Can you anticipate their actions and use that against them? (Fitch seems to be only in the ratings business, and so may not be positioned to do this.)