DZone Database: Neo4j Graph Technology – Effective Solution to Internal Risk Models for FRTB Compliance

Risk modeling is a key component of FRTB compliance. Neo4j can make this implementation easier than an ordinary RDBMs.

Relational database technology can’t handle what is coming in banking and risk modeling. By the 2020s, Accenture predicts current banking business models will be swept away by a tide of ever-evolving technology and other rapidly occurring changes.

The right foundation for building compliance solutions is graph database technology. Neo4j answers the demands of Fundamental Review of the Trading Book (FRTB) regulations while building a foundation for future investment and risk compliance applications. Neo4j is the world’s leading graph database platform and the ideal solution for tracking investment data lineage.

Modern Graph Technology Is the Answer

The right foundation for building compliance solutions is graph database technology. A native graph database stores, accesses, and processes information not in tables, but as directly connected data, which is the precise way that data must be managed to build efficient, reliable risk models.

Neo4j: The World’s Leading Graph Platform

As the world’s leading native graph database platform, Neo4j is the ideal solution for effectively capturing investment data lineage across internal and external applications and data sources. Due to its ability to store this lineage as a graph of connected data, Neo4j traverses the connections in real time to assess risk factors and compute capital requirements across all positions and trading desks.

Additionally, the Neo4j graph platform has data visualization tools that enable analysts, supervisors and regulators to visualize the lineage of risk factors to create compliance models, and later, to run what-if scenarios to test and improve them.

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Keywords:  frtb compliance • neo4j • risk factors