QueBIT Blog: Finance Leaders and IBM Watson Team Up to Reduce Risk

Posted by: Jennifer Field

Nov 23, 2015 8:30:07 AM

IBM Watson has been getting a lot of publicity for helping organizations tackle real-world issues on a national and global scale.

Big Blue’s big problem-solver was recently featured in a commercial (you’ve probably seen it) with a seven-year-old girl named Annabelle who is fighting cancer. This ad is part of IBM’s “outthink cancer” promotional push, but the outthink motto has also been applied to other areas of focus, like outthinking retail trends, or outthinking the dropout rates of high school students.

For finance professionals, outthink risk has turned into a critical initiative for improving cognitive decision-making for wealth management, investment strategies, incentive planning, and other financial agendas.

The service IBM Watson delivers to bank analysts and wealth managers is called Tradeoff Analytics. Here’s how it works (in a nutshell).

Instead of spitting out a definitive answer to a query, Watson provides different options users can take to meet a very clear set of objectives. It’ll also offer up the tradeoffs you’d have to make to go through with a certain decision. The tradeoffs are important to help decision-makers narrow their choices.

For example, arriving at an investment decision may mean sacrificing long-term sustainability for a short-term gain. If short-term gain is a more important criteria than long-term gain, that’s the trade-off you’d have to consider.

As IBM described, “With Tradeoff Analytics, users can avoid lists of endless options and identify the right option by considering multiple objectives.”

Again, like any well-crafted multiple choice exam, there can be more than one “right” answer to a question. Watson helps you eliminate as many wrong choices as possible until you get to the most risk-averse decision. And being able to weed out risk from the decision-making process is of interest for the finance industry.

Jean Staten, IBM’s director of cross-company Linux usage explained: “The financial community is always interested in reducing risk and being more assured of their decisions. The analytics behind Watson can help with some of that.”

Watson can also help financial executives siphon various subjects and datasets that are tough to crunch through with mere mortal powers. Regardless of how many factors are thrown Watson’s way – new regulations, volatile markets, tax considerations – the super computer can handle any data analysis request.

IBM Watson and Thomson Reuters Team Up

In October, Thomson Reuters and IBM announced a joint venture that would enable the business information leader to deliver an even deeper layer of business intelligence to its different markets, including financial, tax, and accounting sectors.

Like the deal it struck with Johnson and Johnson to improve medical analytics, IBM’s partnership with Thomson Reuters should help unearth cognitive insights, and just as important, wade through their deep data reservoirs.

According to Mike Rhodin, senior vice president of IBM Watson, “Working with Thompson Reuters, and their vast trove of data, is an incredible opportunity to combine Watson’s cognitive capabilities with a global leader in decision making solutions across science, legal, tax, and finance.”[1]

What new endeavor will IBM Watson take on next?



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