AN ECONOMIC ANALYSIS OF SERVICE-ORIENTEDINFRASTRUCTURES FOR RISK/RETURN MANAGEMENT

Risk/return management has not only evolved as one of the key success factors for enterprisesespecially in the financial services industry, but is in the times of the financial crisis crucial for thesurvival of a company. It demands powerful and at the same time flexible computational resourcesmaking it an almost ideal application for service-oriented computing concepts. An essentialcharacteristic of service-oriented infrastructures is that computational resources can be accessed ondemand and paid per use. Taking the estimation of covariances for a portfolio of risky investmentobjects as an example, we propose quantification for the economic value of fast risk/returnmanagement calculations. Our model analyzes the influence factors on the optimal computingcapacity dedicated to these calculations and reveals interesting insights in how far the optimalcomputing capacity depends on market parameters. Our main result is that more volatile marketsrequire a lower computing capacity as the optimal computing capacity depends positively on changesof the market risk but negatively on the risk itself....