Integrated Risk Management Solution

Integrated risk management is the planned and sustained process of managing all risks associated with all the activities that are undertaken across any financial organization. In the context of the banking industry, common risks are liquidity risk, interest rate risk, market risk, credit risk, and various forms of operational risks. The most vital factor that is common among all these risks is that they can all bring about negative impacts on revenues and even the credibility of the organization.

Business Challenges That You Face

These are some of the challenges that point to the need for robust integrated risk management solutions:

• Evolution of the real-time business environment has increased risks.
• Banks need to comply with tougher regulatory requirements.
• The global marketplace is fast developing, so is competition.
• There is increased concern about business continuity and operational reliability.
• Rapid technological changes have made it difficult for banks to keep operations updated.
• Volatility of earnings needs to be limited so that shareholder value increases.
• Multiple silos track the same type of exposures but do not share information.
• Data is not captured on a continuous or consistent basis such events are not linked across the organization. Reliable information should be sent regularly from the business units to decision makers such as the senior management and the board.

What We Offer You

In order to address the challenges listed above, Kumaran can offer to develop for your organization a risk management system, which provides information and analytical tools to support the entire range of enterprise risk management functions. An effective integrated risk management framework needs to be supported by an information technology architecture that is consistent with such integration.

While participating in implementation of integrated risk management, Kumaran has delivered these IT systems to CIBC:

• Comprehensive credit origination and adjudication system for Retail SME customers
• Powerful credit origination and adjudication system for wholesale customers
• Transaction booking system for non-performing loans, which is the bank�s book of record for all loan loss information
• Business Intelligence solutions for Risk reporting
• Wholesale Credit Centralized repository
• Retail Credit centralized repository
• Portfolio Management repository
• An offline data repository, which contains portfolio level information of all commercial and corporate loans
• A loan pricing application
• A web based intranet application to analyze exposure to public and private entities
• An offline data repository, which contains portfolio level information of all commercial and corporate loans
• A web-based intranet application, which contains repository of account information of retail and small business credits in Canada
• A tool used by Credit Investment and Treasury Department of CIBC for buying and selling shares of stocks and securities of listed Corporate
• A tool, which provides real-time feed information to the Horizon group

Benefits of Integrated Risk Management

A superior integrated risk management system facilitates these benefits:

• Strategic value creation
• Better regulatory compliance
• Mechanism for efficient allocation of economic capital
• Maximized ROI
• Lower capital costs
• Better decision making due to scenario analyses
• Risk-adjusted pricing
• Loss reduction due to clearer understanding of correlations
• Elimination of unwanted exposures

Improving IT Systems

Sizeable investments in IT infrastructure are required for implementing BASEL II in an integrated risk management environment. Especially, these systems need to be implemented, or enhanced in case of a pre-existing system:

• Internal risk scoring models for credit
• Portfolio management models
• Models for estimating VAR for market risk
• Operational risk databases
• Asset Liability Management System
• Data warehouse with separate interfaces for Analytical, Modelling, and Reporting