“High Performing Financial Institutions and the Keys to Success in an Uncertain Environment”
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Transcript of “High Performing Financial Institutions and the Keys to Success in an Uncertain Environment”
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“High Performing Financial Institutions and the Keys to Success in an Uncertain Environment”
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Presentation to the Caribbean Association of Indigenous Banks by Peter Hill, Oracle Financial Services Software
“High Performing Financial Institutions and the Keys to Success in an uncertain Environment”
The liquidity crisis
Increasing scrutiny by regulators
The importance of bringing Risk and Finance into decision making
“High Performing Financial Institutions and the Keys to Success in an uncertain Environment”
The liquidity crisis
Increasing scrutiny by regulators
The importance of bringing Risk and Finance into decision making
We describe this as the ‘New Normal’We describe this as the ‘New Normal’
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“New Normal” in Financial Services Transformation Unfolding Now
• Sound risk management must now be embedded in all
decision making processes across the institution
• Risk and performance management, along with accounting
functions, must naturally exist within a common decision
making platform
• Compliance with advancing and more complex regulatory
mandates will trigger a shift in focus from paper
pushing/reporting driven efforts to competitive driver
• Capital adequacy and liquidity risk management will define an
institutions’ ability to not only survive, but thrive, in the “New
Normal” marketplace
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“New Normal” in Financial Services This Transformation Means…
• Operational Risk must play a more prominent and integrated
role at the top of the institution to identify, control and
manage risk and performance issues
• Financial crime and compliance strategies are already
moving from pure regulatory compliance plays to strategic
with increased need for integrated with other risk systems
• CIOs must revisit the nature of supporting data warehouse
architecture strategies as cross functional needs drive major
change and restructuring
• Collection and distribution focused data strategies will
transform into more purpose-built and end use case
approaches
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Ever-Changing Compliance is a Big Issue
6© 2010 Oracle Corporation – Proprietary and Confidential
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Banks Face Many Different Types of Risks
Trading & ModelRisks
BusinessContinuity
LegalRisks
Outsourced and Supplier
Risks
Compliance Risks
FinancialCrime
(AML, Fraud, Rogue Trading)
ProductRisks
MarketRisk
IT Governance and Information
Security
Documentation Risks
Reputational Risks Risks need to be
identified and evaluated.
What controls are in place? Do they work?
What happens in stress scenarios?
Risks need to be identified and evaluated.
What controls are in place? Do they work?
What happens in stress scenarios?
Credit Risk
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Worst-Case Workshop ScenariosIdentify, examine, and consider action about risks at a strategic level:
External threats e.g. competition, loss of key staff, weather issues, terrorism
Temporary issues e.g. loss of electricity, public transport, medical pandemic, IT or communication failure
Market disruption e.g. lack of liquidity, changes in economy
Consider scenarios as:
1. Consider relevance and potential impact
2. Determine necessary action
3. Periodically review
Record outcome of workshops:
Use workshops and a moderator
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ERM & Capital AdequacyLiquidity Risk Management
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ERM & Capital AdequacyEnterprise Stress Testing
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ERM & Capital AdequacyRisk Adjusted Performance Measurement
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ERM & Capital AdequacyRisk Materiality Assessment
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ERM & Capital AdequacyCapital Planning
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A Strategic Approach to the Risk Analytical ChallengeBegin with Firm Foundations
v061510A 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.
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A Strategic Approach to the Risk Analytical ChallengeThen Add Applications as Required
Uni
fied
Anal
ytica
l Met
adat
a
FINANCIAL SERVICES ANALYTICAL APPLICATIONS DATA MODEL
FINANCIAL SERVICES ANALYTICAL APPLICATIONS INFRASTRUCTURE
FINANCIAL SERVICES BUSINESS INTELLIGENCE
DataSources
DataSources
Reports Alerts Dashboards Embedded
Computations Common Tools Business Rules Stochastic Modeling
Common Objects Common Dimensions Pre-Integrated/ Extensible High Volume
Liquidity Risk
Capital Adequacy
CreditRisk
MarketRisk
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Operational Risk etc.
A one-time investment in analytical and reporting infrastructure that is leveraged by all analytical applications.
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A “Joined Up” IT Strategy Potentially Allows:
• Stress testing of key risks• Scenario 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 risk• Internal Audit are partners with Compliance Managers with Operational Risk
Managers to ensure compliance with internal standards and external regulations• Failure to comply with AML regulations adequately is a Compliance and
Operational Risk• Fraud and cyber crime are both growing threats
This “New Normal” requires a state of ‘Analytical Transformation’
This “New Normal” requires a state of ‘Analytical Transformation’
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What this means:
• You don’t have to throw out your existing software
• It 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
Oracle Financial Services Analytical Applications Infrastructure and the necessary applications to fill the gaps
Import DataImport Data Financial data warehouseFinancial data warehouse
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 Oracle’s products remains at the sole discretion of Oracle.