Risk & Regulatory

Get granular with a bottom-up approach

Most banks’ risk models tend to lump all businesses into one of a dozen or so categories – for example, all restaurants, bars and hotels are classified as “Hospitality” – which disregards the fundamental differences in how these business operate and makes it harder for banks to identify the most vulnerable businesses in their portfolio. Our product enables banks to interrogate the differences between businesses at a granular level, where significant variations exist, leading to a better understanding of risk and more tailored credit policies.

Event-based scenario analysis

In the intervening years since the ‘08 recession, regulators have sought to understand how banks’ thought processes and risk management capabilities have evolved. The challenge is that traditional risk models don’t take into account how quickly industries and consumer behaviors are changing. Banks therefore need the ability to run event-based scenario analysis on an ongoing basis in order to determine how governmental, macro or socio-economic changes are impacting their loan book.

Glass box, not black box

Our solution replaces the traditional third-party vendor ‘black box’ approach in favor of a ‘glass box’. Banks see the underlying assumptions that flow into the product, alter the parameters of scenarios, and see the impact of those changes instantly. They can set their own rules for financial alerts, such as hard or soft covenant triggers. A sector alert is fully explainable, with direct or derived data points and context for the alert. Even for event-based scenarios, our solution provides full transparency on assumptions, calculations, parameters, weights, and thresholds within the user interface: going a step further to provide users with the ability to create their own scenarios and re-run tests.