Market Volatility and the Impact on Performance Measurement

Hang On!

The post-election market volatility has been substantial, and it is reasonable to expect it will continue.

The impact on financial services Operations teams is often overlooked, as many assume security processing is completely automated.  In most firms those teams are already stretched, and now must contend with the higher volume and increased trade processing risk and effort.

Since Performance measurement reporting is downstream, those teams also feel the impact of volume, but must content also with volatility.

Poor tools equal wasted time

Performance measurement operations teams pend substantial time reviewing returns.  In periods of market volatility these false positives increase dramatically, and performance operations should expect an increased workload in their daily or monthly processes.

Most operations teams rely on segment-level benchmark comparison to identify questionable returns.  Studies conducted by Enosys have shown this method creates an 80%+ false positive rate, resulting in a 50 – 60% waste in manpower.

Improving tools

Advances in processing speed facilitate increased automation, and “smart” analysis of the periodic return.  These checks not only streamline Performance Operations and eliminate false positives, but can improve account status reporting to downstream internal dashboards.

A little creative thinking about how reconciliation is done can go a long way toward increasing productivity.