Recession a good time to spend on risk management, Oracle says

Feb 11 2009 2:19 PM

Posted by: Shayna Garlick

Over recent months, U.S. banks and financial institutions have been exhausted of funds, faced with toxic assets and tremendous debt, and blamed for this seemingly insurmountable current economic crisis.

But this may be good news for Oracle.

We’ve already seen how the down economy has opened for doors for Oracle in terms of software-as-a-service (SaaS) and acquisitions, and now it seems like domination of another market — risk management — is in the software giant’s reach.

Following in SAP’s footsteps, Oracle announced Tuesday the release of two new risk management applications, Oracle Reveleus ICAAP Analytics and Oracle Reveleus ICAAP Assessments. According to Oracle’s press release, these tools will “help financial institutions comply with the Internal Capital Adequacy Assessment Process (ICAAP) requirements.”

According to S. Ramakrishnan, CEO of Oracle’s Reveleus and Mantas financial software units, the new applications will provide institutions with a “holistic, enterprise-wide view of risk and capital management while simultaneously helping to achieve mandated regulatory compliance.”

Oracle Reveleus ICAAP capabilities include capital planning, risk assessment and monitoring, and pre-configured and integrated economic capital models for credit, market and operational risks.

But do banks really want to spend on new technology when in so much debt?

This may be a special case where the answer is yes, at least according to Oracle executives. In the Insurance Networking News article, Ramakrishnan says that risk management is critical for survival in the market’s current state. Others also point out that banks are facing pressure from outside sources — such as shareholders, investors, boards and examiners — and risk management applications are necessary in providing these sources with the information they demand.

Oracle also has its own reasons for spending in a tough economy. ZDNet blogger Brian Sommer discusses a recent Oracle show he attended where the keynote speaker made a case for IT spending in a recession. However, Somner was wary of some of the speaker’s main points, such as how cutting an IT budget can have a small effect on a company’s total revenue, and investing during a recession can mean having an advantage when the recession is over.

Somner had another idea in mind:

“What I was really hoping for was that Oracle would have announced a different strategy for coping with a (big) recession: lower cost solutions from Oracle.”