IBM Risk Analytics - Solutions Overview Presenter Name: Henrik Schroter Risk Analytics

IBM Risk Analytics - Solutions Overview
Presenter Name: Henrik Schroter
Presenter Job Title: Domain Expert
Risk Analytics
Date: 18 March 2013
© 2012 IBM Corporation
 Why is this interesting
– Following the financial crisis in 2007/2008 and the subsequent earth quake in the
Banking (1000+ banks went bankrupt / taken over/ nationalised) and FI industry (clients
suffered US$ Trillions of losses) regulators around the world have moved to increase the
level of regulations. In the main these increase the amount of “regulatory capital”
together with a vast amount of increased liquidity and an integrated view of risk across
the organizations.
– These changes can give rise to significant projects as banks seek to change their
approach to risk.
– Risk Analytics products/solutions are an ideal platform to engage with banks and other
FS organizations about how we can help.
© 2012 IBM Corporation
Market drivers remain strong
Operationalizing Risk Management is More Important Than Ever
Regulation
The global regulatory environment is increasingly
proscriptive, requiring companies to provide greater
transparency to enterprise-wide risk exposure
Capital
$
Risk Convergence
3
Increased capital requirements (Basel III) will pressure
ROE, forcing banks to allocate capital more efficiently,
based on risk-adjusted return
Continuing financial uncertainty shows the importance
of integrating and operationalizing risk management
across an organization, and companies are investing in
systems to enable an integrated approach.
© 2012 IBM Corporation
Risk Analytics enables IBM to address a new set of client challenges
What’s keeping these executives up at night?
• Ensuring regulatory
compliance
• Managing through
regulatory change
• Managing regulatory
exams, audits and requests
• Reducing cost for policy
and control management
• Adherence to policy and
procedures
CCO
4
• Managing risk oversight,
and risk/return decisions
• Aligning risk exposure with
business objectives
• Integrating risk
management functions
• Ensuring adequate
regulatory and economic
capital and liquidity
• Quantifying risk exposure
• Establishing risk appetite
• Risk Culture and Policy
CRO
• Forecasting capital and
liquidity adequacy, and
measuring profitability
• Risk adjusted forecasting
and risk-based resource
allocation
• Better financial risk
management (e.g. market,
credit, liquidity, stress
testing)
• Regulatory requirements
CFO
• Reducing risk exposure
• Ensuring regulatory
compliance
• Reducing control
testing burden
• Reporting on risk
exposure against
business objectives
• Preparing for internal
audit
• Business continuity risk
• Vendor risk
CIO/CISO
• Making risk-aware
decisions
• Getting an enterprise
view of counter party
exposure
• Ensuring new
products are
successfully launched
• Enabling re-pricing
of posted collateral
LOB
© 2012 IBM Corporation
Banks need risk systems that can keep pace with emerging regulation
like Basel III, and regional acts Dodd-Frank or EMIR
These regulatory reforms are designed to prevent banks from taking on
excessive risk and damaging global financial markets
Most banks are making reforms to Basel III standards, because Basel III is an
international accord that is adopted through national legislation.
Basel III
Capital
Liquidity
Basel III
requirements apply in
phases starting Jan
2013 up to 2019.
Strengthens capital
adequacy in three
components:
The lead-time is
designed to prevent
lending freezes as
banks improve
operations
• risk weighted
assets
Introduces a regime
that promotes shortterm and long-term
resiliency to liquidity
shocks
Countries adopt the
Basel standards
through national
legislation
• capital resources
• capital ratios
Leverage
Introduces a regime
that constrains
leverage in the
banking sector and
migrates model risk
through non-risk
based measures
Counterparty
Risk
Increases capital that
banks must hold to
protect against
counterparty defaults
Banks will be levied
to protect against
losses resulting from
changes to the
market price of a
potential
counterparty default.
The levy is known as
CVA (credit valuation
adjustment)
© 2012 IBM Corporation
Financial Services – The Challenges
 Regulatory
– In the wake of the Financial Crisis Regulators across the world have moved to introduce
new requirements and strengthen existing regulations.
• In essence the main thrust of these is:
• Increase in the amount of regulatory capital
• Increase in amount of “liquid” assets held
• For example:
− Solvency II
− Basel II/III
− Dodd-Frank
 Complexity of today’s Financial Services organization
– Complex products
– Rapidly changing business environment
– Global
– Siloed IT systems
© 2012 IBM Corporation
Basel III will impact financial markets worldwide
The ROE of the top banks is expected to drop from 20% to 7%, the best mitigation
efforts could get that back to 14%1
1) Day of reckoning: New regulation and its impact on capital-markets businesses' McKinsey & Company, Sep 2011
© 2012 IBM Corporation
The challenges are significant, firms need to start now
A coordinated approach to Smarter risk management can help banks
significantly mitigate the impact of Basel III on ROE
Without mitigation
ROE is reduced by
65%
With Postmitigation
the decrease is
only 40%
1) Day of reckoning: New regulation and its impact on capital-markets businesses' McKinsey & Company, Sep 2011
© 2012 IBM Corporation
IBM Risk Analytics - Solutions Portfolio includes
Risk
Solutions
FRM
Sell Side
GRC
FRM
Buy Side
Operational Risk
IT Governance & Risk
Regulatory Compliance
Financial Risk – Sell Side (Banks and Financial Markets)
• Credit lifecycle management
• Strategic Business Planning
• Integrated market and credit risk
• Balance sheet risk management
- Counterparty credit risk & CVA
- ALM & liquidity risk
- Collateral management
- Regulatory & economic capital
• Integrated Financial Reporting & Analysis
Financial Risk – Buy Side (Insurance Companies, Investment Mgrs, Hedge Funds)
• Portfolio construction and risk management for investment portfolios
• Economic Capital & Solvency II
• Actuarial and financial modeling
Governance, Risk & Compliance (GRC)
Core Capabilities
• Operational risk management
• Policy and compliance management
• Loss event case studies & database • Enterprise disclosure management
• Governance and IT risk
• Financial controls management
• Internal Audit
9
Business Rules
& Optimization
Workflow
Reporting &
Visualization
Real-time
Decisions
Planning
Collaborating
Scenario
Modeling
© 2012 IBM Corporation
Chartis Basel 3 Technology Solutions 2012– IBM #1
IBM Algorithmics’ Basel 3 capabilities
are built on its enterprise risk
management architecture, Algo
One. IBM Algorithmics maintains that
successful strategies to mitigate the
impact of regulatory reform across
banking operations require both the
breadth of an enterprise-wide view
for providing regulatory transparency
and managing concerted efforts, and
the depth of specific solutions for
executing and optimizing approaches
within functional areas. Examples of
IBM Algorithmics’ key
differentiators include common
risk analytics across the
enterprise, integrated stress
testing and capital optimization.
© 2012 IBM Corporation
Recognized Enterprise GRC Platform Market Leader
11
Magic Quadrant for EGRC Platforms
The Forrester Wave: EGRC Platforms
October 2012
November 2011
© 2012 IBM Corporation
Chartis RiskTech100 Ranking 2012 – IBM #1
 IBM jumped from #7 in 2010
to #1 in 2011
 IBM remains leader in 2012
 Algorithmics adds key
financial risk management
capabilities to the IBM
portfolio
IBM #1
in
Risk!
 IBM gets highest score for
functionality…again
© 2012 IBM Corporation
IBM Solutions Banking & Financial Markets (Summary)
© 2012 IBM Corporation
Firms can apply smarter analytics towards growing profitability
Basel III /
Dodd-Frank / EMIR
Solvency
Profitability
risk/reward governance
own funds adequacy
Capital management
Risk management
Risk based decisions
Risk appetite /
limit setting
Exhaustive assessment
and quantification
Capital planning /
allocation
Interactive and
consistent analysis
Stress testing
Capital structuring /
optimization
Management oversight
of individual incentives
Regulatory requirements
Capital contingency
plans and reporting
Regulatory incentives
© 2012 IBM Corporation
IBM Risk Analytics offering & leverage opportunities
Lines of
Business
CRO
CFO
CCO
Risk Enabled Decision Support
Access / IM
Endpoint
Network
Database
SIEM Labs
Application
IT Operations Mgmt
Legal Case Mgmt
E-Discovery
xxxxxx
Records Mgmt
Industry Content
Control Monitoring
Seg of Duties
Fraud Monitoring
Results
Datamart
Implementaction
Services
IBM Security Solutions
Pension
GTS,GBS SWG-Lab GBS/BAO Services
Vendor Risk
IT Security Risk
Policy &
Compliance
Internal Audit
Financial
Reporting
Operational
Risk
Actuarial
Risk
ALM &
Liquidity Risk
Market Risk
Credit Risk
Credit
Operations
Collateral
Management
Consolidated
Risk Data
AML
Wealth
Management
Trusted Risk Information
Warehouse
Strategic
GRC
Consulting
Integration
Services
Data Aggregation and Monitoring
Loss Event Data
Asset
Servicers
KRI Mgmt
Insurance
Risk Enabled Decision Support & Optimization
Commercial
Lending
Capital Analytics / Strategic
Business Planning
Business
Continuity
GRC Management
Risk Analytics
IT Governance
Retail
Capital
Markets
CIO
Operational
Change
Management
Services
Operational Systems
Hedge and
Asset
Managers
© 2012 IBM Corporation
IBM Risk Analytics offering & leverage opportunities
Lines of
Business
CIO
Vendor Risk
IT Security Risk
Business
Continuity
Policy &
Compliance
Internal Audit
Operational
Risk
Integration
Services
Implementaction
Services
Access / IM
Endpoint
Network
Database
SIEM Labs
Application
IT Operations Mgmt
Legal Case Mgmt
E-Discovery
xxxxxx
Records Mgmt
Industry Content
Control Monitoring
Seg of Duties
Fraud Monitoring
Results
Datamart
AML
Consolidated
Risk Data
Loss Event Data
Wealth
Management
KRI Mgmt
Data gathering / Data
integration
Aggregation and Monitoring
Trusted Risk Information
Warehouse
Can be anything from 1:1 to 100:1, typically 10:1
IBM Security Solutions
Pension
Strategic
GRC
Consulting
GTS,GBS SWG-Lab GBS/BAO Services
Insurance
Actuarial
Risk
Market Risk
Credit Risk
Data architecture
Financial
Reporting
ALM &
Liquidity Risk
Credit
Operations
Business Planning
IT Governance
GRC Management
Implementation consulting:
Commercial
Lending
Asset
Servicers
CCO
Risk Analytics
Strategic consulting:
Capital Analytics / Strategic
Collateral
Management
Capital
Markets
CFO
Other SW products:
BDW, Cognos, SPSS, ….
Risk Enabled Decision Support
Risk Enabled Decision Support & Optimization
Retail
CRO
Operational
Change
Management
Services
Operational Systems
Hedge and
Asset
Managers
© 2012 IBM Corporation
IBM Risk Analytics Solutions – Operational Risk (GRC)
© 2012 IBM Corporation
Risk: Governance Risk & Compliance
CRO/CCO/CFO/CIO
Vertical
Financial Risk Management
Market
Risk
Credit Risk &
Collateral
ALM &
Liquidity Risk
Governance, Risk & Compliance (GRC)
Actuarial
Risk
Operational
Risk
IT
Risk
Policy &
Compliance
Financial Controls
& Internal Audit
Front Office
Middle Office
Back Office
Trusted Information Infrastructure
Horizontal
© 2012 IBM Corporation
Risk Management: The OpenPages Platform
Internal Audit
Management
Financial Controls
Management
IT Risk &
Compliance
Management
19
Operational Risk
Management
Policy & Compliance
Management
Other Platform
Extensions
© 2012 IBM Corporation
Operational Risk Management:
Key Capabilities for GRC
Requirement
20
OpenPages Capability
Integrate multiple areas of
risk and compliance
Central platform for integrated
reporting, workflow, policies
Support any risk
management methodology
Patented, adaptable framework
enabling easy configuration
Provide visibility into
state of risk in business
Interactive dashboards and adhoc reports for decision support
Automate compliance and
risk management activities
Powerful workflow for automating
business processes
© 2012 IBM Corporation
Operational Risk
Software Solutions for Integrated Risk Management
FIVE MODULAR SOLUTIONS
1.Operational Risk Management
2.Policy and Compliance Management
3.IT Governance
4.Internal Audit Management
5.Financial Controls Management
And extensions into other risk management
disciplines:
• Privacy
• Business Continuity Management
• Vendor Risk Management
OpenPages: software solutions for every major risk based regulatory
requirement: Sarbanes Oxley; RMORSA; and Solvency II
21
© 2012 IBM Corporation
Open Pages addresses multiple issues
CRO GRC issues
CIO GRC issues
CRO and others must identify, manage, monitor and report
on operational risks across the enterprise
 CIO, CSIO and others require alignment of IT risk and compliance
with business objectives
Pain: Siloed operational risk data for risk assessment, loss
events, and KRIs, resulting in poor visibility into operational
risk exposure. Also, regulators may require banks to
improve their systems.
 Pain: Multiple regulatory requirements, standards and best
practices must be aligned into a single control framework, to
mitigate the company’s biggest business risks at the lowest cost
Solution: IBM OpenPages Operational Risk Management
 What to ask: How do you manage IT regulatory compliance
reporting? How do you prepare for IT audits? Are you able to
report on IT control status by risk, regulation, resource, etc.
What to ask: How do you manage operational risk today?
Do you have an integrated program? Are you under
pressure from regulators to improve?
CFO GRC issues
CFO and finance/audit department want to ensure the
integrity of their financial controls and put in place a
programmatic approach to risk assurance
Pain: Many companies struggle with running their SOX
program in spreadsheets, and they use outdated
technology for internal audits, driving down efficiency
 Solution: IBM OpenPages IT Governance
CCO GRC issues
CCO, CLO, and others must sustain compliance across multiple
policies and regulatory mandates, report to regulators
Pain: Multiple regulatory requirements and reporting silos, hard
to manage regulator interaction and change over time. Difficult
to attest to policy compliance across the company.
Solution: OpenPages Policy and Compliance Management
Solutions: IBM OpenPages Financial Controls
Management, Internal Audit Management
What to ask: How are you managing your SOX program
today? Are you struggling with spreadsheets? Does your
internal audit team have a modern system for tracking
their work?
What to ask: How do you manage regulatory reporting today?
Do you have a way to track and manage regulatory interaction?
How do you extend your compliance framework with additional
regulations?
© 2012 IBM Corporation
OpenPages - Summary
 Horizontal solution
 Single, Integrated Repository Controls to Mitigate and Manage Risk
 Integrated with Cognos – Dashboards and Reporting
 IT Governance underpins Data Quality and could be away of
differentiating a BI proposition
 Particularly applicable to highly regulated industries or processes
– Financial Services
– Pharmaceutical
– Utilities – service delivery standards, access
– US Foreign Corrupt Practices Act – any US company or company that
has a listing on a US Stock Exchange
 Equally strong in Performance Management – ensuring the policies,
procedures and data are complete and adequate
23
© 2012 IBM Corporation
IBM Risk Analytics Solutions – Sell Side (Banks)
© 2012 IBM Corporation
© 2012 IBM Corporation
What to Listen for from Banking Customers
Risk

Key Roles: CEO, COO, Board of Directors, Chief Risk Officer, Head of
Compliance, Head of Risk IT, Risk Reporting, CFO, Budget officers, Financial
Staff, CIO, IT Departments, IT Analysts

Client Concerns
–
–
–
–
–
–
–
–
–
We need to strengthen our ability to respond to regulatory demands
Risk is fragmented across the bank
How do we operationalise Risk appetite across the business
Pricing decisions are not risk informed
Best practice risk measurement (RAROC) not supported in current model
Real time risk scenario modeling not available
Over dependant on IT to get answers quickly
Poor insight to liquidity positions
Strategic Plans are not Risk informed
© 2012 IBM Corporation
Strategic Business Planning
Forward looking, proactive risk based business planning
Strategic Business Planning offers senior executives of banks an essential decision
support tool, combining a comprehensive view of the bank’s risk and profitability profile
with the ability to stress test, forecast and optimize capital and/or balance sheet over a
range of possible portfolios and key risk factors, at an enterprise level.
Capabilities
Business Outcomes
 Efficiently consolidates risk and finance
information from multiple sources
 Provides extensive top-down analysis
reconcilable with the bottom-up approaches
 Utilizes transparent models to consolidate and
forecast risk, revenues and capital plans
 Facilitates real-time and regulatory stress testing
and scenario analysis
 Captures impact of long term planning cycles,
applying scenario changes and factor shocks
either instantaneously or in the future
 Enhanced strategic decision making and
planning
 Optimized use of capital employed
 Leveraged a bank’s investment in existing
financial infrastructure and systems
 Enabled timely, efficient reporting, analysis and
risk oversight
 Improved long-term risk adjusted profitability and
growth
Solution: Algo Strategic Business Planning
© 2012 IBM Corporation
Integrated Market and Credit Risk
The power to manage enterprise-wide risk, with industry-leading
analytics to accurately measure market and credit risk across the
trading books.
Delivers faster and more consistent valuations, as well as real-time support for high volume
and profit-focused front office applications such as pre-deal limit checks and credit valuation
adjustment [CVA]. CVA plays a critical role in helping banks to manage counterparty risk.
Capabilities
Business Outcomes
 Assess and price the incremental impact of the new
trade at the time of the trade.
 Scenarios are generated on risk factors, economic
variables whose value or change in value may
result in a change in the value of a portfolio.
 Speed of calculation allowing sub-second results
 Enables both pre-deal and post deal CVA
calculation.
 Integrated Market and Credit Risk’s scenario-based
methodology and centralized data architecture
combines measures of market and credit risk and
integrates the trading and banking books.

Improves profitability and frees up credit
utilization.

Pre-deal CVA desk has been shown to
reduce regulatory capital requirements and
hence enabling more profitable use of capital.

The integrated approach links risk metrics
from across an organization to offer a
consolidated view of risk across multiple risk
types, asset classes and geographies
covering the entire risk spectrum.
Solution: Algo Credit Exposure, Algo Market Analytics and CVA Add-on
© 2012 IBM Corporation
Balance Sheet Risk Management
Managing your P/L, Liquidity and the associated Risk of your
total balance sheet
Asset & Liability Management together with Liquidity Risk Management enables the bank
to gain an up-to-date transparent view of the total business with respect to the current
profitability and the cash available for the business. The risk associated with the business
can the thoroughly analyzed and quantified using stress testing across interest rates, FX
rates, volatilities, pre-payments, credit defaults roll-overs and reduced re-payments.
Capabilities
Benefits
 Efficiently aggregate information from multiple sources
 Provides detailed bottom-up risk analysis reconcilable
with the top-down approach and indeed Information from
Finance.
 Has transparent models to consolidate and forecast
 Facilitates near-time business and regulatory stress
testing and scenario analysis
 Uncovers the financial risks associated with present and
future business plans
 Enhances strategic decision making
and planning thus contributing to
fulfillment of the vision of the bank
29
 Contributes to the avoidance of
excessive market and liquidity risks
which decrease the possibility of
bankruptcy
 Enables effective compliance
 Optimizes long-term profitability within
the agreed risk tolerance
Solutions:
Supporting solutions:
Algo One ALM
SPSS: Predictive cashflow modeling
Algo One Liquidity Risk
ILM: Intra-day Liquidity Management
© 2012 IBM Corporation
Capital Management
Managing your Reserves and Capital on the total balance sheet
Capital Management – Credit Regulatory and Credit Economic Capital enables enterprisewide portfolio credit and integrated risk measurements for Basel II and III capital
calculations including ICAAP-specific requirements.
Capabilities
 Address all three pillars of Basel II and III, calculations,
transparency and disclosure
 Calculates all necessary key-ratios PD, LGD, EAD and
RWA.
 Covers all levels of compliance: Standardised,
Foundation Internal Ratings Approach (F-IRB) and
Advanced Approach (A-IRB) .
 Has transparent models to consolidate and forecast
 Facilitates near-time business and regulatory stress
testing and scenario analysis
Benefits
 Use of Capital is the key profitability
driver for Banks and this solution
contributes to minimise the amount of
capital required for its business.
 Enhances strategic decision wrt capital
making and planning thus contributing
to fulfillment of the vision of the bank
 Enables effective compliance
 Optimizes long-term profitability within
the agreed capital ratios
Solutions: Algo One Credit Regulatory Capital, Algo One Credit Economic Capital
30
© 2012 IBM Corporation
Collateral Management
Helps reduce credit and operational risks associated with
collateral management
Algo Collateral Management is a comprehensive, automated data management system
that helps financial institutions reduce operational risks, and mitigate credit risk, associated
with collateral management programs. It offers a variety of functions to enable the
increasing use of collateral within the global banking community, with support for over-thecounter (OTC) Derivatives Margining, Repo Margining and Securities Lending Margining.
Capabilities
Business Outcomes
 Anticipation and mitigation of operational risk
and credit risk
 Helps reduce regulatory capital
 Integrate with live market data
 Comprehensive and flexible data management
helps you meet the diverse needs of multiple
collateral management programs.
 Streamlined back office workflow automates all
processes associated with margin calls and
supports risk oversight.
 Enables senior officers and collateral managers
to proactively plan risk mitigation strategies.
 Reduced regulatory capital requirements can
improve profitability
 Automated dispute management reduces
resolution time

MI Dashboard delivers further valuable insight
into performance and current positions allowing
management and clients to better understand
their position and operation environment.
Supporting Solution: Algo Collateral Management
© 2012 IBM Corporation
Credit Lifecycle Management
Enable comprehensive credit risk management across banking
and trading books
Algo Credit Manager enables risk-informed decision making at all stages of the credit
process - from origination, renewal and approvals, and monitoring of exposure, conditions
and covenants, to workouts and recovery. It offers banks comprehensive, enterprise-wide
credit risk aggregation and limits management capabilities, spanning multiple business lines
and products, across the banking and trading books. It enables enhanced performance
monitoring and credit decision support for better management of customer relationships and
the overall credit portfolio.
Capabilities
Business Outcomes
 Comprehensive credit lifecycle support
 Flexible limits management.
 Consistent credit approval data management
enhances customer service and operational
efficiency.
 Highly reliable control environment helps protect
against credit losses and supports growth.
 Single source for daily global credit limit and
exposure data for a counterparty, group or
portfolio across the entire enterprise
 Enables more effective, end-to-end
management of customer credit
relationships.
 Set and manage credit limits across the
enterprise improving control
 Provides consistent credit approval data
management, reducing risk and improving
governance
 Optimizes long-term profitability and growth
Supporting Solution: Algo Credit Manager
32
© 2012 IBM Corporation
IBM Risk Analytics Solutions – Buy Side (FI and Investment Banks)
© 2012 IBM Corporation
What to Listen for from Buy-side Customers
Risk
 Key Roles: CEO, COO, Board of Directors, Chief Risk Officer, Head of
Compliance, Head of Risk IT, Risk Reporting, CFO, Budget officers,
Financial Staff, CIO, IT Departments, IT Analysts, Head of Actuaries

Client Concerns
–
–
–
–
–
–
–
–
We need to strengthen our ability to respond to regulatory demands
Risk is fragmented across the bank
How do we comply with Solvency II
How do we integrate Actuarial models with Risk models
How do we improve our Capital workflow process
How do I calculate Economic Capital
Over dependant on IT to get answers quickly
Poor insight to liquidity positions
© 2012 IBM Corporation
Portfolio Construction and Risk Management for Hedge
Funds, Fund Managers and Asset Servicers
Provides an integrated platform for better risk oversight and portfolio
optimization
Helps address regulatory compliance, enhance investor confidence and enable risk-informed
investment decision making. Offers an advanced portfolio and risk analysis platform to
integrate the front and middle office in a consistent, cost effective fashion.
Capabilities
Business Outcomes
 Robust, scalable risk analytics with broad asset
coverage including exchange traded and OTC.
 Integrated, centralized analytics support both front
and middle office decision making.
 Customizable Web-based interface delivers real-time
risk and performance information tailored to your
particular requirements.
 Adaptable, collaborative decision support tool that
helps meet the business needs of diverse users, with
multiple investment strategies, asset classes, and
valuation methodologies.
 Enables risk-based performance and
investment decisions with advanced portfolio
and risk analytics.
 Enhances internal risk management
 Strengthens client relationships with standard
and customized reports.
 Supports product innovation and adapts to
evolving regulatory requirements for longterm business development.
Supporting Solutions:
Algo Risk, Algo Risk Service on Cloud, Algo Risk Reports and
35
Algo Collateral Management
© 2012 IBM Corporation
Portfolio Construction and Risk Management for Pension
Fund Managers
Help improve pension fund management with advanced risk
analytics and monitoring tools that improve investment processes
Offers a fully scalable and comprehensive solution for all pension funds, irrespective of size,
complexity or level of sophistication. Provides advanced risk analytics to different
stakeholders, ranging from chief investment officers and risk managers to trustees, with
actionable insights to help improve decision making.
Capabilities
Business Outcomes
 Comprehensive asset coverage and support for
liabilities
 Powerful portfolio risk analytics and comprehensive risk
management
 Portfolio Construction
 Effective reporting to satisfy multiple audiences and
stakeholders
 Risk budgeting, monitoring and control functionality
 Help reduce the impact (level & volatility) of
funding contributions on the corporate
balance sheet
 Help pension plans to meet their pension
promise to past, present and future members
 Select, measure and manage external fund
managers
 Help achieve regulatory compliance
Supporting Solutions:
Algo Risk, Algo Risk Service on Cloud
and Advisory Services
36
© 2012 IBM Corporation
Investment Design for Wealth Managers
Provides a powerful portfolio and risk/return analytics platform to
help wealth managers to construct and allocate investors’
portfolios.
Enables wealth managers to grow their business, irrespective of their scale or the make-up of
their client base.
Capabilities
Business Outcomes





 Help achieve regulatory compliance.
Product Risk/Return Profiling
Portfolio Performance Monitoring
Multi-period Simulation
Customized portfolios for each client
Product risk/return profiling offers wealth managers the
capability to map each product’s risk/return
characteristics to defined categories.
 Build funds under management with
improved client service.
 Provides a differentiated, added value
services to sell structured products inside
portfolios (these account up to 50% of
WM’s profitability)
Supporting Solutions:
Monitoring and Reporting Edition, Standard Edition and Enterprise Edition
37
© 2012 IBM Corporation
Economic Capital and Solvency II
Solvency II solution designed for regulatory compliance and
capital optimization
Capabilities
An award winning solution for both standard formula and internal model approaches
comprising different Editions designed to meet the needs of insurers, irrespective of their size
or level of complexity. There is a migration path between the Editions if insurers want to scale
up as their requirements evolve or as time allows. This solution can be integrated with other
IBM offerings to form the IBM ERM framework which covers all three pillars of Solvency II
and is both flexible and extensible.
 Facilitates solvency capital calculations through
Standard Formula, partial and full internal models.
 Asset and liability modeling, an economic scenario
generator and covariance matrix management.
 Leverage different proxy techniques to improve
speed and execution.
 Deliver timely and actionable information to key
Solvency II decision makers for tactical and strategic
decision making
 Manage Solvency II modelling processes with
advanced workflow and audit tools.
Business Outcomes
 Achieve regulatory compliance
 Optimize Solvency Capital
 Pre-configured to help to lower project risk,
control costs
 Help embed risk management into day to day
business to go beyond compliance.
 Helps reduce costs with support for rapid
implementation tailored to your specific
requirements.
Supporting Solutions:
Algo Risk, Algo Capital Workflow Manager, Algo Audit and Compliance and Algo
Financial Modeler
38
© 2012 IBM Corporation
Actuarial and Financial Modeling
Perform a wide range of actuarial focused life insurance business
functions
Calculate a wide range of reports and deliver complex management information based on a
multitude of products, over a range of scenarios under ever reducing timescales and
increasing legislation and regulation, such as Solvency II and IFRS.
Capabilities
Business Outcomes
 A flexible calculation platform, optimized for large
scale processing
 Delivers transparency, audit, workflow and control
over the data input, output, models and reports
 Audit features for fully managed and transparent
model development and production
 Separation of the modeling and production
environments
 Integrated with market risk models for balance sheet
management
 Achieve high performance financial modeling
 Model complex products/funds/company
structures and interactions easily and quickly
 Achieve accountability and greater control
 Extend use of models to a broader business
audience while reducing model risk
 Reporting to regulators, the Board and other
business users in an efficient and timely
manner with the level of granularity and
accuracy required
Supporting Solutions: - Algo Risk, Algo Audit and Compliance and Algo Financial
Modeler
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© 2012 IBM Corporation
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© 2012 IBM Corporation