Managing market volatility and geopolitical uncertainty

It has been a tumultuous year for the global financial markets and there’s no end in sight to the geopolitical uncertainty. The second wave of COVID-19 is sweeping much of the world. The disputed US presidential election has created upheaval and the threat of a no-deal Brexit looms large. 

Seismic events of this nature often add intense volatility to global markets, creating extreme market turbulence, fluctuating asset prices, and significant volume spikes.

Look at how large-scale events such as the Global Financial Crisis of 2008, the Arab Spring in 2011, and the Brexit vote in 2016 rocked markets. On June 24, 2016 — the day after the UK voted to leave the EU — global panic wiped $2 trillion off world markets. This single day was one of the most dramatic and volatile trading sessions since the financial crisis.

Against the backdrop of an uncertain global landscape, how can asset managers prepare their technology and systems to manage extreme market volatility and simultaneously generate alpha? The following are six proactive strategies asset managers should consider to ensure their systems are capable, scalable, resilient, and ready to handle the volatility ahead. 

The global pandemic and resulting market volatility have accelerated trends already in motion, as more asset managers migrated to the cloud and engaged with an outsourced services partner. Looking towards 2021, asset managers will continue to invest in these two areas to strengthen their system integrity and maintain operational resilience. While we cannot entirely predict how geopolitical matters may shake out, what we can say is that preparedness will be critical to firms’ success.

Interested in more insights on how asset managers are managing their data sets, systems, and hosting decision? Read our recently released research here.