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IBANK, EPM, BPM, OBIEE, HYPERION, OFSAA

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IBANK, EPM, BPM, OBIEE, HYPERION, OFSAA
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Oracle Reveleus

High Performing Financial Institutions and the Keys to Success in an Uncertain Environment

2008 Oracle Corporation Proprietary and Confidential

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Presentation to the Caribbean Association of Indigenous Banks by Peter Hill, Oracle Financial Services SoftwareHigh Performing Financial Institutions and the Keys to Success in an uncertain Environment

The liquidity crisisIncreasing scrutiny by regulatorsThe importance of bringing Risk and Finance into decision makingWe describe this as the New Normal

2008 Oracle Corporation Proprietary and Confidential

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New Normal in Financial Services Transformation Unfolding NowSound risk management must now be embedded in all decision making processes across the institutionRisk and performance management, along with accounting functions, must naturally exist within a common decision making platformCompliance with advancing and more complex regulatory mandates will trigger a shift in focus from paper pushing/reporting driven efforts to competitive driverCapital adequacy and liquidity risk management will define an institutions ability to not only survive, but thrive, in the New Normal marketplace

2008 Oracle Corporation Proprietary and Confidential

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New Normal in Financial Services This Transformation MeansOperational Risk must play a more prominent and integrated role at the top of the institution to identify, control and manage risk and performance issuesFinancial crime and compliance strategies are already moving from pure regulatory compliance plays to strategic with increased need for integrated with other risk systemsCIOs must revisit the nature of supporting data warehouse architecture strategies as cross functional needs drive major change and restructuringCollection and distribution focused data strategies will transform into more purpose-built and end use case approaches

2008 Oracle Corporation Proprietary and Confidential

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Ever-Changing Compliance is a Big Issue6 2010 Oracle Corporation Proprietary and Confidential

2008 Oracle Corporation Proprietary and Confidential

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Banks Face Many Different Types of Risks Trading & ModelRisksBusinessContinuityLegal RisksOutsourced and SupplierRisksCompliance RisksFinancialCrime (AML, Fraud, Rogue Trading)ProductRisksMarketRiskIT Governance and Information SecurityDocumentation RisksReputational RisksRisks need to be identified and evaluated.What controls are in place? Do they work? What happens in stress scenarios?Credit Risk

2008 Oracle Corporation Proprietary and Confidential

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Worst-Case Workshop ScenariosIdentify, examine, and consider action about risks at a strategic level:

2008 Oracle Corporation Proprietary and Confidential

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ERM & Capital AdequacyLiquidity Risk Management*

2008 Oracle Corporation Proprietary and Confidential

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ERM & Capital AdequacyEnterprise Stress Testing*

2008 Oracle Corporation Proprietary and Confidential

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ERM & Capital AdequacyRisk Adjusted Performance Measurement*

2008 Oracle Corporation Proprietary and Confidential

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ERM & Capital AdequacyRisk Materiality Assessment*

2008 Oracle Corporation Proprietary and Confidential

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ERM & Capital AdequacyCapital Planning*

2008 Oracle Corporation Proprietary and Confidential

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A Strategic Approach to the Risk Analytical ChallengeBegin with Firm Foundationsv061510A Financial Services data model, an intelligent infrastructure, and a BI reporting layer used to drive all of our risk analytical solutions representing a one-time investment. *

2008 Oracle Corporation Proprietary and Confidential

A Strategic Approach to the Risk Analytical ChallengeThen Add Applications as RequiredUnified Analytical MetadataFINANCIAL SERVICES ANALYTICAL APPLICATIONS DATA MODELFINANCIAL SERVICES ANALYTICAL APPLICATIONS INFRASTRUCTUREFINANCIAL SERVICES BUSINESS INTELLIGENCEDataSourcesLiquidity Risk

Capital Adequacy

CreditRisk

MarketRisk

*Operational Risk

etc.A one-time investment in analytical and reporting infrastructure that is leveraged by all analytical applications.

2008 Oracle Corporation Proprietary and Confidential

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A Joined Up IT Strategy Potentially Allows:Stress testing of key risksScenario analysis to see how prepared the organisation is for the unexpected event Satisfy regulators with comprehensive risk assessments across the enterprise Compliance risk is another type of operational riskInternal Audit are partners with Compliance Managers with Operational Risk Managers to ensure compliance with internal standards and external regulationsFailure to comply with AML regulations adequately is a Compliance and Operational RiskFraud and cyber crime are both growing threats This New Normal requires a state of Analytical Transformation

2008 Oracle Corporation Proprietary and Confidential

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What this means:You dont have to throw out your existing softwareIt does mean you need to think whether or not you really have a joined-up IT strategy capable of delivering a joined-up risk view

2008 Oracle Corporation Proprietary and Confidential

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracles products remains at the sole discretion of Oracle.

2008 Oracle Corporation Proprietary and Confidential

2008 Oracle Corporation Proprietary and Confidential

**Following the crisis of the past year, financial institutions find themselves under increasing scrutiny from regulators, shareholders and customers alike with regard to financial performance and stability. Compound this with stronger demands to manage enterprise risk. Liquidity management, capital adequacy and stress testing all figure prominently in the day to day management of the worlds financial institutions.Using the Risk Category hierarchy, it is possible to define any type of risk in the Risk Library, and localize it for assessment in any business unit. In addition to assessing risks individually by business unit, regulators expect businesses to look at risk at a higher level on a scenario basis. How would the business cope with a flood, a pandemic of some kind, a transport strike, a terrorist attack, or market disruption through lack of available liquidity? Oracle Reveleus Operational Risk provides functionality where this type of risk can be recorded, and assessed, and action plans determined accordingly. Oracle Team and Development Method

Single Division Focused on Analytic Applications for Financial ServicesSignificant New Investment in Development ResourcesFramework Based Approach to DevelopmentCommon Objects Leveraged Across SolutionsAllows greater speed to marketE.g. Common retail pooling engine stratifies instrument groups for use in Basel II, ALM, FTP, Economic CapitalE.g. Prepayment assumptions defined in single place and leveraged across the suiteBusiness Logic Embedded in Rules InterfaceUsers able to modify calculations to fit their business

Oracle is using a framework-based approach to delivering these solutions. Common reusable objects are being leveraged across the solutions to deliver far more robust solutions to market with greater speed. For example, in forming the creation of retail pools, there is a common retail pooling engine that stratifies instrument groups for use in Basel II, ALM, FTP, and Economic Capital. Similarly, economic scenarios such as prepayment assumptions are defined in a single place and leveraged across the entire solution. An average daily balance used in a Basel II solution will be the same as what is used in a profitability calculation. Wherever possible, business logic is instantiated in a rules interface so that users may modify calculations to fit their businesses.

*Oracle Team and Development Method

Single Division Focused on Analytic Applications for Financial ServicesSignificant New Investment in Development ResourcesFramework Based Approach to DevelopmentCommon Objects Leveraged Across SolutionsAllows greater speed to marketE.g. Common retail pooling engine stratifies instrument groups for use in Basel II, ALM, FTP, Economic CapitalE.g. Prepayment assumptions defined in single place and leveraged across the suiteBusiness Logic Embedded in Rules InterfaceUsers able to modify calculations to fit their business

Oracle is using a framework-based approach to delivering these solutions. Common reusable objects are being leveraged across the solutions to deliver far more robust solutions to market with greater speed. For example, in forming the creation of retail pools, there is a common retail pooling engine that stratifies instrument groups for use in Basel II, ALM, FTP, and Economic Capital. Similarly, economic scenarios such as prepayment assumptions are defined in a single place and leveraged across the entire solution. An average daily balance used in a Basel II solution will be the same as what is used in a profitability calculation. Wherever possible, business logic is instantiated in a rules interface so that users may modify calculations to fit their businesses.

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