With the bank's vulnerabilities exposed, technologies for risk and fraud management just got a lot more popularThe investigation into how Jerome Kerviel, Société Générale (SOGN.PA)'s rogue trader, managed to lose $7.2 billion before being caught is beginning to reveal how he sidestepped the bank's many layers of fraud detection—and how cutting-edge technologies might have plugged some of the holes the Frenchman exploited.
Société Générale's rude awakening, combined with the U.S. mortgage meltdown and a global credit crunch, underscores just how vulnerable companies can be to market misjudgments and inadequate internal oversight. It's little surprise, then, that the financial industry's misery is becoming a boon for providers of risk and fraud detection technology. "Risk management software is a very hot area right now, it's one of the strongest growth areas in 2008," says Julio Gomez, analyst at researcher Financial Insights.
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