It's fair to say that collateral management was seen as a sleepy backwoods area that got much more attention after the credit crisis (credit crisis news) took hold. Counterparty risk, of course, got most of the headlines. But risk managers also started taking a look at the process by which companies manage and assess the value of their collateral.

At some companies, this has exploded as a huge issue. An obvious example is AIG (AIG news), which offered many CDSs on CDOs. Recall that buyers of these CDSs ultimately demanded so much more collateral that they threatened the viability of the firm. Unsurprisingly, we've seen more companies upgrade their systems. A recent Celent report awarded high marks to SunGard and Algorithmics, which rated highest of six top collateral management systems. This is a nice marketing win in a competitive arena.

"Both firms demonstrate a strong track record of staying at the cutting edge of broad asset class support, risk exposure measurements and collateral reconciliation," noted the report, which also looked at products from Lombard Risk, Misys, Rockail Technologies and Sophis. Securities Industry News notes that most collateral management software support core activities such as margin calls, valuation and regulatory reporting. However, products that "cover all of the departments and across all of the collateralization lifecycle were not available. Coverage for all the asset classes is also still lacking which prevents collateral optimization techniques from being used."

We'll see more product development no doubt. But you could also see these products being folded into more encompassing risk management products.

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