IBM has paid Fitch Group $387 million to acquire Algorithmics, a Toronto-based risk software solutions provider. The company's risk analytics software, content and advisory services are used by banks, investment and insurance businesses to help assess risk, address regulatory requirements and make more insightful business decisions. 

The acquisition expands IBM's business analytics capabilities in the financial services industry by helping clients quantify, manage and optimize their risk exposure across a range of financial risk domains including market, liquidity, credit, operational and insurance risk as well as economic and regulatory capital risk. Algorithmics' analytics software and advisory service users include The Allianz Group, BlueCrest, HSBC, Nedbank, Nomura, Societe Generale, and Scotia Capital.

"Today's economic environment demands that financial institutions have more cash on hand, a better understanding of their financial standing and the ability to deliver more transparency to stakeholders," said Rob Ashe, general manager, business analytics, IBM. "Combining Algorithmics' expertise with IBM's deep analytics portfolio will allow clients to take a more holistic approach to managing risk and responding to economic change across their enterprises." 

With the combination of IBM and Algorithmics' analytics technologies, companies can measure and assess operational risk associated with lending processes, market and credit risk exposures. Having this type of transparency and granular insight of financial risk in advance can help organizations meet new regulatory requirements. 

"It is increasingly important to deliver integrated solutions that provide an understanding of risk and enable effective decision support while meeting rapidly evolving regulatory requirements," said Michael Zerbs, president and chief operating officer, Algorithmics.  "The need to have the right information at the right time is fundamental to developing and managing business strategies. The combination of Algorithmics' thought leadership, technology, content and services and IBM's globally recognized analytics business will help a broader group of clients improve their business performance based on a deeper understanding of risk."

Algorithmics' risk advisers will enhance IBM's Business Analytics and Optimization practice. The Business Analytics and Optimization team has more than 8,000 consultants including 200 mathematicians. The acquisition is subject to applicable regulatory clearances and other customary closing conditions. With the closing of this acquisition, approximately 900 Algorithmics employees will join IBM's Software Group.