Financial Risk Management: Integrated Solutions

Slide 1: 

Integrated Risk Management Paul Leonhirth – Integrated Risk Management Solutions, Banking & Financial Markets August 2010

The reality of living in a globally integrated world is upon us : 

2 The reality of living in a globally integrated world is upon us Sophistication has outstripped our ability to handle it Together government and industry must balance stability and innovation To thrive, firms must innovate their business models Daily interactions must deliver on brand promises Source: Tower Group

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3 The world is connected:economically, socially and technically Source: Tower Group

The need for progress is clear : 

4 The need for progress is clear 80% 93% 25 billion 10,000 Of financial services firms who say their governance, risk and compliance processes are still not integrated across their enterprise. Of the 285 million electronic attacks in 2008 were focused on the finance sector, with well over half detected by third parties. Global trading IT infrastructure are under extreme stress, handling billions of market data messages each day. Estimated number of banking regulations in the US, with 4,000+ new regulations in the pipeline.

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5 Information Access Analytics Integrity and Business Insight Data Quality and Governance of Information Process Improvement, Automation and Rationalization Total Exposure Information Credit Risk Reporting Limits & Utilizations Overdrafts & Netting Collateral Management Operational Risk Reporting Stress Testing Market Risk Reporting & Analytics Trending and Predictive Capabilities Top Risk Management Concerns and Challenges CreditRisk MarketRisk Compliance OperationalRisk Quality & Completeness of Source Data Linking Data to Common Client/Institution Recognition of Risk Management Needs Siloed Initiatives Data Aggregation Data Lineage Key Risk Indicators Credit Limit Approval Process Credit Lending Process New Business Acceptance Client Investment Agreements Multiple Risk Calculators Duplicate Functional Systems GL Reconciliations

They will use transparency as a means to manage risk and as an engine for growth. : 

6 They will use transparency as a means to manage risk and as an engine for growth. Financial institutions must do their part to restore trust and confidence in the global financial system Success requires people, process and technology improvements that include new and smarter ways of Measuring, modeling and applying risk-related information.

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7 Smart is: Having the right mix of control across all points of vulnerability Smart is: Having a cross view of risk exposure Smart is: Mitigating risk by elevating and leveraging IT 1 3 2 Smart is: Automatically managing business processes 4 Smart risk management is about collecting better information, using it more quickly and more effectively, and minimizing the need for human interaction in routine events

Financial Risk : 

8 Financial Risk 1 Risk Insight and Optimization Solution for Financial Services Credit Analytics Scalable Architecture for Financial Reporting These solutions increase the quality, transparency and timeliness of your risk information while proactively managing your exposure and liquidity. Recognize and predict complex causal relationships.

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9 2 Anti-Money Laundering Investigations, Alert Modeling and Analytics Integrated Fraud and Financial Crimes Platform Threat and Fraud Intelligence Identity and Access Management Platform These solutions help in real-time risk-monitoring, continually updating user profiles, associations and patterns of behavior. Financial Crimes

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3 IT & Infrastructure Risk & Resilience, Data Encryption and Leakage Protection Managed Identity, Business Continuity & Resiliency Services Operational Risk Reporting Information Foundation Enterprise Security Risk Monitoring, IT Security Infrastructure These solutions continually track emerging and evolving threats to physical and IT infrastructure assets. Institute a holistic response to business and operational risks. Operational & IT Risk 10

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11 Compliance Information Lifecycle Management Inventory of Obligations Monitoring and Reporting 4 These solutions help adopt a holistic approach to your obligations analysis—driving the control and oversight of your business processes by aligning IT strategy with business strategy. Governance and Compliance

Building Capabilities for Smarter Banking:Integrated Risk Management : 

Building Capabilities for Smarter Banking:Integrated Risk Management 12 Unique value realized Use of Smarter Planet capabilities ManageData 1 AnalyzePatterns 2 Optimize Outcomes 3 Integrate siloed data to improve positions and regulatory reporting Monetize data to achieve performance goals and improve business resilience Manage risk appetite Data for compliance Cost containment Loss mitigation capability Reduction in fraud losses End-to-end visibility Customer retention Business resilience Enabled by the IBM Banking Industry Framework Leverage insights to increase visibility of both threats and opportunities

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13 Enables you to holistically manage risk across the enterprise with an integrated set of software and service assets developed through multiple projects within four core risk management domains. Banking Industry Framework for Integrated Risk Management Key Benefits: Faster deployment Lower Risk Support for adoption of open & industry standards Offer choice of business applications from IBM & its partners Simplified enterprise architecture

Integrated Risk Management — Solution Focus Areas : 

Integrated Risk Management — Solution Focus Areas Financial Crimes Governance and Compliance Financial Risk Operational and IT risk Integration Optimization Analytics Collaboration Security Resiliency WAS, BPM, ILOG BRMS ITSM, TSIEM, TCIM AppScan, Compliance IoO ISASPredictive Analytics Operational and IT Risk Financial Risk Governance and Compliance Financial Crimes Integration Optimization Analytics Collaboration Security Resiliency Integrated Risk Management 14 Automate Resolving False Positives and Alert Triage Integrated Fraud and Financial Crimes platforms AML/Fraud Operational Effectiveness and Risk Mgmt Customer Identification and KYC, Customer Risk Ratings Entity Management / ID Relationship Resolution Investigative Case Management with Web 2.0 Comprehensive Security Risk & Control Management Trusted Identity Management – Identity & Access IT Service Management – Asset, Configuration, Incident, Change, Release Management (ITSM, CRDB, ITIL) Proactive, DB activity/control monitoring, event correlation, analytics and IT Risk Mitigation techniques Application Security, IT Risk, Integrity & Privacy Compliance Information Lifecycle Management Compliance Inventory of Obligations for CorporateGovernance and Internal Controls Sales and Market Conduct Compliance Regulatory Compliance, BI and Reporting Risk Data Management for Credit, Market, Liquidity Risk Risk Insight for Banking Risk and Performance Real Time Risk, BI and Reporting Solutions Risk Analytics, Risk Optimization, Analytics and Insight Quantitative Risk Modeling and Scenario Analysis

We’ve only just begun to uncover what is possible on a smarter planet. : 

15 We’ve only just begun to uncover what is possible on a smarter planet. The world will continue to become smaller, flatter and smarter. We are moving into the age of the globally integrated and intelligent economy, society and planet. There’s no better time to start building a smarter financial system—focused on restoring public and governmental trust and breathing new life into the global economy. Let’s work together to drive real progress in our world. For more information, visit ibm.com/banking/risk