A subsystem is independent or an add-on. An add-on is built atop another subsystem. But they're closed in the system sense.
Subsystems in quant innovations are usual representing process steps or individual flows in a multi flow system - from a slab to cold rolled coils through plate mills, strip mills, cooling section, cold rolling, coating…or the thermo-flow subsystem.
In quant finance we have financial instruments divided into asset classes (equity, interest rates, currencies, inflation commodities…) with pricing, risk management and accounting flows. Typically one would see pricing, valuation and risk analytics systems with special add ons for VaR calculations, xVA…configured to subsystems for trading, treasury, asset management, risk management…
A subsystem represents a a major stage in a system and is responsible for a major change.
It must have constructors, manage progressive problems and provide insightful solutions that can be further evaluated…
The VaR Universe of UnRisk is built atop UnRisk-Q (in UnRisk Quant) or atop the UnRisk FACTORY in UnRisk Capital Manager. In general it's an instantiation of the general portfolio across scenario simulation with the required practical details. It offers all relevant methodologies (parametric, historic, Montecarlo), calculates VaRs across the instruments in a portfolio and risk factors. It serves all kinds of tests…it uses the pricing and calibration functions as well as the tasks of UnRisk-Q intensively.
But ist has its own constructors, manages progressive functions and provides solutions with cascades of results…
It works so well, because the functions, the tasks and their own building blocks work so well.
Because subsystems are systems there's no need to treat them extra...so, this concludes the post about the units…
In the next time I'll walk through the scheme again in order to find potential for improvement. And I'll maybe dive a little deeper into examples.
