IBM has announced a definitive agreement to acquire Algorithmics, a financial risk analytics firm, for $387 million.
IBM's move to acquire Algorithmics comes one day after IBM signed an agreement to acquire i2, a provider of intelligence analytics. For its part, Algorithmics is a risk analytics firm with operations in Toronto. Algorithmics' risk analytics software, and content and advisory services are used by banking, investment and insurance businesses to help assess risk, address regulatory requirements and make more insightful business decisions. The company's offerings fit well with those of i2, IBM officials said. Algorithmics is a member of Fitch Group, which is majority-owned by Fimalac, a holding company based in Paris.
This acquisition expands IBM's business analytics capabilities in the financial services industry by helping clients quantify, manage and optimize their risk exposure across a range of financial risk domains, including market, liquidity, credit, operational and insurance, as well as economic and regulatory capital, IBM said.
According to a recent IBM Institute of Business Value survey of 1,900 global CFOs, nearly half indicated that their finance organizations are not effective in the areas of strategy, information integration, risk and opportunity management. The roles of financial officers across all industries are evolving -- drawing them into more frequent boardroom conversations about forecasts, profitability and exposure to risks. The survey reveals that the importance of integrating information has more than doubled, mirroring the exponential rise in information volume and velocity within businesses today. Financial officers are becoming more involved in mitigating corporate risk in all its many forms -- whether strategic, operational, legal or environmental, IBM said.
With the combination of IBM and Algorithmics analytics, companies can measure and assess operational risk associated with lending processes, and market and credit risk exposures. Having this type of transparency and granular insight of financial risk in advance can help organizations meet new regulatory requirements.
More than 350 clients, including 25 of the top 30 banks and more than two-thirds of the Chief Risk Officer Forum (CRO Forum) of leading insurers, use Algorithmics analytics software and advisory services, IBM officials said. Clients include The Allianz Group, BlueCrest, HSBC, Nedbank, Nomura, Societe Generale and Scotia Capital.
This article was originally published on 09-01-2011