Enterprise Risk Management Customers
ALM AND LIQUIDITY RISK MANAGEMENT
ALM and Liquidity Risk Management is increasingly important for today's financial institutions. Financial institutions recognise the need to manage risk in real-time and many are now searching for next generation risk management tools that are able to integrated business risk and performance valuation. Firms that are able to optimise capital and liquidity management will be at a significant competitive advantage in today's volatile market. As financial institutions strengthen balance sheets and rebuild discretionary investment portfolios, there is a fundamental shift in focus from pure regulatory compliance to transparency and the implementation of best practice. Funding efficiency and liquidity risk have moved to the top of the agenda. In addition there is a greater emphasis at board level on the timeliness and granularity of reporting. Banks are expected to understand and anticipate future scenarios and upcoming risks better. This is putting financial and risk management under pressure to run more frequent and efficient stress tests and scenarios.
Key challenges in ALM and liquidity management
Balancing capital and liquidity
Banks are looking across their portfolios for growth opportunities - broadening their portfolios to include new asset classes and increasingly complex instruments. In this environment, sophisticated funding strategies are essential to enable banks to balance capital requirements with liquidity needs.
A simple view on each separate asset class is not enough to deliver this and might expose the firm to incompatibilities across measurements of asset classes. Risk management systems need to be capable of monitoring and valuing portfolios on a regular basis, including multiple asset classes.
Infrastructure won't support real-time
Historically, the approach to the development of IT and risk systems has been tactical - little consideration has been given to the trade off between best of breed systems and enterprise wide collaboration and transparency. Financial services firms adjusted and developed their systems to cover imminent needs such as the integration of new asset classes and the expansion into different geographical areas. In order to be effective, the IT structure of a risk management system needs to be synchronized and flexible enough to adjust and cover multiple asset classes and their respective systems. In addition, financial institutions require the ability to move from end-of-day to intra-day reporting and, in some cases, real-time distribution of data.
Lack of Front Office visibility
Lack of visibility over risks being taken in the front office means businesses face challenges determining the level of capital to set aside for potential losses. Financial institutions need to focus on holistic and accurate risk reporting across multiple asset classes and multiple business lines. Having a consistent, accurate and timely view of the whole business is fundamental to modern financial institutions. Reporting on portfolios should be available on a regular basis and ideally incorporate intra-day and real-time developments. Furthermore, consistent market data and analytics are needed to accomplish this task and to create value for the firm in the future.
Business agility
To bring new products to market quickly, while ensuring pricing and risk is effectively reflected and managed, banks need to have an intuitive understanding of the product risks and what action should to be taken in response to external events. This means building open services around an existing architecture, including transparent interface into different databases for real-time market data and position service, as well as to support open financial & analytics service.
Moving from accrued to real-time accounting
- Regulators demand consistency between economic & regulatory risk and pricing models. This means that Treasury, Risk Management and Finance need to reconcile their models to ensure all the key parameters that feed into their P&L are consistent.
More demanding scenario analysis
Market pressures are driving banks to take a more comprehensive view over positions and future liabilities, under a broader range of potential scenarios. The time taken to build and run scenarios can limit a bank's ability to anticipate their response to future events.
TopOffice: Key benefits for ALM and Liquidity Management
Power to deliver real-time risk adjusted P&L
TopOffice serves as a central middle office repository, delivering consistent risk analyses and P&L across multiple asset classes and instrument types by accurately representing and modelling all data - trade, market, reference - from disparate front-office systems and data sources. In TopOffice, consolidated risk and P&L information from a range of asset classes can be identified and monitored in a timely and accurate manner.
Lightening fast scenario creation and stress testing
TopOffice is capable of performing a range of complex analyses, including forward-looking risk analysis and optimization, as well as what-if simulation and scenario analysis.
For portfolio risk models that are based on cross asset risk factors and consistent cross asset-risk models, TopOffice is able to better account for correlations across asset classes.
TopOffice also enables models based on statistical analysis and frequent updates of data points to respond to changes in underlying risk factor structures faster and more accurately.
Ultimate flexibility in reporting with drill-down to the Front Office
TopOffice delivers real-time, interactive risk reporting across all portfolios, trading operations, subsidiaries and geographies. The interactive, customizable dashboard reports make seeing trends in risk positions easier, achieving fast and meaningful insights to drive trading and hedging strategies.
Solve the data integration challenge
Using sophisticated mapping technology the solution leverages existing IT investment by seamlessly integrating to multiple front-office systems, data sources and banking systems. The risk management framework is powered by an Integration Tool and single database, ensuring performance and interoperability with all other internal and/or 3rd party systems.
Quick, cost effective implementation
TopOffice capitalizes on existing infrastructure to greatly reduce implementation costs and time. The highly flexible and configurable technology allows integration with multiple systems to support a bank's trading and banking operations. TopOffice integration tools automate the uploading of customer and transaction data, as well as real-time market data into.
