Banks facing intensifying regulations, including BCBS 239, and market volatility are struggling to speed quantitative risk assessment processes, improve risk data and access critical data on demand.
The challenge of making improvements in risk data aggregation capabilities and risk reporting practices was even recently noted by supervisors from the Basel Committee on Banking Supervision who cited the need for more industry progress.
Smart banks are implementing comprehensive enterprise risk management that integrates data management, analytics and visualization. The latest versions of key SAS® risk solutions help banks juggle the varied demands through an integrated risk platform powered by high-performance analytics.
A modern risk management framework harnessing today's high-performance technologies is more cost-effective and generates quick investment payoffs. "Banks need automated solutions that deliver concise, intuitive and more informative reports based on real-time data," said Jaroslaw Knapik, Senior Analyst for Financial Services at Ovum. "SAS has made impressive strides, offering banks a competitive advantage with big data technologies. Leveraging a wide array of data sources for risk data aggregation, reporting and decision making, SAS helps reduce report preparation time and analyze data instantly."
Operational and strategic business decisions demand the most up-to-date and integrated risk management framework for evolving needs including comprehensive aggregation of risk measures across portfolios and geographies. SAS High-Performance Risk can provide this consolidated view of risk through accelerated analytics that use in-memory computation on industry-standard server grids. That means quicker access to accurate calculations of market risk, counterparty exposure, liquidity risk management, credit risk, stress testing and scenario analysis. Enhancements include on-demand risk exploration via an updated graphical interface, continuous data integration fed by the SAS Event Stream Processing Engine, and backup and restoration along with Hadoop integration.
SAS on-demand risk analytics and reporting let business analysts explore and monitor updated risk sources as needed. They can easily navigate and graphically visualize the risk profile and incorporate a wealth of built-in measures they can select and view at any time. Portfolio pricing and valuations can also be performed directly in SAS High-Performance Risk using in-house and/or third-party pricing routines. SAS acts as the risk-aggregation "cockpit" for line-of-business executives and chief risk officers to assess both aggregated exposures – including integrating and consolidating portfolios from in-house risk analytics applications – and individual exposures from trading desks, business units, counterparties or instrument types.
The SAS Event Stream Processing Engine provides the capability to continuously receive data from risk source systems and manage updates through orchestration techniques. Incorporating streaming data into risk analysis helps provide more timely and accurate risk exposure analysis and can alert management to changing risk profiles.
Liquidity risk management, both in terms of regulatory capital management and ongoing, proactive asset liability management (ALM), is increasingly important in banking. Banks are rapidly concluding – especially after seeing the impact of liquidity shortfalls during the economic downturn – that actively managing liquidity risk is a necessity for a sound risk management strategy.
The latest version of SAS Asset and Liability Management, part of SAS Risk Management for Banking, helps banks address new Basel III liquidity regulations and measure exposure and risk across the enterprise. Enhancements include: out-of-the-box support of Basel III liquidity ratios, including LCR and NSFR, and monitoring standards; better business workflows for critical stress testing and liquidity reserves management; and improved cash flow management.
SAS Asset and Liability Management has an advanced analytics environment with interactive reporting to evaluate traditional balance-sheet instruments and dynamically calculate cash flows, funding gaps and net interest income, and analyze funds transfer pricing and profitability.
To battle low confidence in credit markets, it is critical for banks to ramp up credit risk management practices. The new version of SAS Credit Risk Management for Banking addresses the global adoption of the Basel III regulatory guidelines, providing the latest calculations and reporting required to meet regulatory obligations across jurisdictions. With SAS Credit Risk Management for Banking, banks operating in the European Union (EU) – and subject to the European Banking Authority's capital preservation recommendation in July – can handle risk-weighted assets and regulatory capital calculations, stress testing and reporting based on the EU Capital Requirements Directive IV (CRD IV) including CP50/COREP, large exposure and leverage ratio reports.
"Global regulators demand improved risk data aggregation, liquidity risk management and stress testing so banks and capital market firms can properly measure performance against risk appetite and for regulatory reporting," said David M. Wallace, Global Financial Services Marketing Manager at SAS. "Leading organizations will answer regulations with interactive, on-demand visualization and analysis of exposures and stresses. These solutions will help firms fully optimize capital rather than just ensuring adequacy and also improve transparency with regulators, customers and markets."