The Hindu Business Line : ‘CIOs may liaise with rating agencies on a regular basis’

Thiruvananthapuram, Sept. 6 Chief information officers constantly liaising with rating agencies is an option that de-risking strategists at financial houses may explore in order that a US sub-prime-like crisis does not repeat itself.

The enormous data that raters have at their disposal could be probably leveraged to help influence a strategy to deal with these situations, according to Mr Gavin L. Gallagher, CIO at H-E-B, a US grocery and general merchandise retailer. Speaking to Business Line here, he said that most of these companies do their business based on computer models. They would henceforth need to re-adjust the models to better understand and reflect the risks involved.

“We have lot more awareness about the global economy than we used to probably have at any time in the past. But it’s also becoming increasingly hard to predict it, which is partially due to automation of the technology used to carry out critical decisions such as buy and sell,” Mr Gallagher said.

“I think there’s large awareness about business continuity after 9/11 but I think it would be information security that’s going to drive more work. I also tend to think it’s not going to be a boom as in the case of Y2K or the dotcom business. It’d rather be a steadily growing one, with no particular surge in outsourcing opportunities any time soon.

“If at all there is some focused spending in technology, it’s on chasing productivity improvement. Companies don’t have a problem investing capital to address issues such as building new technical capabilities for improving productivity. “We in the US struggle to find value in having to invest for complying with regulatory requirements such as Sarbanes-Oxley (SOX) and HIPAA (Health Insurance Portability and Accountability Act), which would continue to drag business out of the US.

“Being retailers and particularly working in the pharmacy sector, the need to protect patient healthcare information impacts us also but I also don’t see anything that’s going to probably mean less regulations…there’s only more waiting to come, and with them more outsourcing business for countries such as India,” he added.

On the backlash in the US against moving jobs out of the country has died down, he said that it hadn’t quite. “There’s always been concern in terms of jobs going out and how new jobs are being created. We are hoping that more new jobs would be created back home than are being taken away…”

Mr Gallagher said US Technology is helping H-E-B deal with its growth. “We’ve been in business with US Technology for just over a year but we’ve reached a stage where 90 per cent of our applications are run and supported by them,” Mr Gallagher said.

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