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risk and capital management solutions

Effective risk and capital management enables your institution to increase share­holder value by identifying and reallocating capital to areas of the business that have high strategic value and sustainable returns, or that have long-term growth and profitability potential.

Financial Studio’s risk and capital management solution comes with an extensive range of functionality to address the requirements of Basel II, RAROC, and other risk-related performance measurement ratios, and

  • provides a totally integrated risk and capital management solution,
  • delivers comprehensive support for enterprise-wide credit, market, and operational risk management,
  • ensures compliance with external regulations,
  • allows your institution to maximise the investments made to meet the immediate short term requirements,
  • builds a comprehensive capital framework and enterprise risk management platform with superior internal controls.

The available working capital of an enterprise will have a significant effect on its business. Organisations with the flexibility to calculate capital usage accurately at different levels and apply different methods will gain the largest returns on their investment and be the market leaders.

Basel Requirements

Through its detailed analytical structure, Financial Studio offers a solid framework for Basel compliance. Based on the analysis of capital usage, in-depth investigation per product or customer group enables you to identify initial areas of over-exposure and capital need. Financial Studio

  • supports all applicable approaches across different portfolios,
  • allows for even greater risk sensitivity by providing an integrated solution that evolves easily from standard to more complex calculations,
  • integrates both internal and external current and historical data,
  • supports the identification, gathering, and calculation of the key risk components,
  • contains a wide range of financial indicators for operational and market risk management.  

Liquidity Risk

FinArch's Liquidity Risk Framework module provides a full understanding of the nature of the risks that are taken and can be tailored to customer specific business needs and/or regulatory requirements. The module can be integrated with internally developed models and enables complete understanding of how liquidity risk behaves under various scenarios. Financial Studio

  • measures various liquidity risk measures, such as finding gaps which can be compared to the value of liquidity reserve and concentration risk measures,
  • includes a powerful stress testing engine.

Economic Capital

Economic capital is attributed on the basis of market risk, credit risk, and operational risk. Financial Studio allows :

  • economic capital methodologies to be applied across products, clients, lines of business and other segmentations, as required, to measure specific types of performance,
  • the resulting capital attributed to each business line to provide the financial framework for understanding and evaluating sustainable performance,
  • a financial institution to actively manage the composition of the business portfolio and to increase shareholder value.

Asset Liability Management (ALM) 

  • computes the sensitivity of earning and capital to interest rate changes using repricing gap analysis and earnings-at-risk
  • computes FTP rates to gauge the effective contribution of each unit to a firm's net interest margin  

RAROC

The combination of Financial Studio’s Basel solution with profitability calculations delivers an integrated platform for the implementation of an enterprise-wide strategy for RAROC as it :

  • provides the basis for effective economic capital budgeting and incentive compensation at the business-unit level,
  • allows to measure a business unit’s contribution to shareholder value,
  • allows to assign capital to business units after determining the risk-adjusted rate of return and, ultimately, the economic added value of each business unit.  

 Looking for more information about FinArch's risk and capital management solutions ? Contact us.