Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Agile and Cost
Effective Financial
Compliance
Going Beyond
Business Rules with
Decision Management
JamesTaylor,
CEO
©2014 Decision Management Solutions 2
Your Presenters
James Taylor
CEO of Decision
Management Solutions
We help clients to...
Agenda
Compliance
Challenges in Compliance
The Business Rules
Advantage
Decision Management
The Essential Framework
Worked...
Aims of Compliance
Capital Adequacy
Basel II/III, Solvency II
Reporting and Disclosure: FED 5G
FED 5G, MCO, FATCA
Capital ...
5
Basel II
Dodd-Frank
FED 5G
Solvency II
FATCA
Basel III
Capital Adequacy
Capital Management
Reporting and Disclosure
Time...
Why is Compliance Demanding?
Challenging Pre-requisites
Data standardisation and quality
Reference data alignment and cons...
What Do Compliance Rules Share?
Automation Is Required
Application Throughput Frequency
Need for Swift Remediation
Very Ex...
Challenges in Compliance
5 Measuring Effectiveness
Near Real Time Management of Faults
Ability to Self Check
Immediate Art...
Time to Market
Many mandates have implementation times < 1 year
Fast Resolution of Issues/Imposed Changes
‘Expedited’ chan...
Challenges in Compliance
3 Consistency
Initiatives Often Impact Many Systems
Need to ensure they all behave coherently
Can...
Challenges in Compliance
2 Transparency
Precision
Convey meaning in business terms
You cannot safely change what you don’t...
Each Mandate Adds Complexity
Few points of high complexity, just a sprawl
Large number of information sources and variatio...
13©2014 Decision Management Solutions
Scale
Transparency
Consistency
Agility
Effectiveness
The Business Rules
Advantage
©2014 Decision Management Solutions 15
Business Rules Drive Compliance
But policies and
regulations are
hard to manage
©2014 Decision Management Solutions 16
Business Rules Deliver Transparency
Scale
Transparency
Consistency
Agility
Effectiv...
©2014 Decision Management Solutions 17
Business Rules Deliver Agility
public class Application {
private Customer customer...
©2014 Decision Management Solutions 18
Hard To Measure Effectiveness
Rarely just one rule
Many rules must be executed
to d...
©2014 Decision Management Solutions
Hard To Scale
19
Scale
Transparency
Consistency
Agility
Effectiveness
Lots of regulati...
Hard To Be Consistent
Rules spread across processes
and systems like Peanut Butter
20©2014 Decision Management Solutions
S...
Decision Management
The Essential Framework
©2014 Decision Management Solutions
Decision Management
A business discipline and a technology stack
That builds on existi...
Business Processes
©2014 Decision Management Solutions 23
Decisions At The Center
Analytics
People
KPIs
Customers
Systems
...
©2014 Decision Management Solutions 24
Put Decisions In Context
Know which business
processes will be improved by
your rul...
©2014 Decision Management Solutions 25
Tie KPIs to Decisions
KPIs impacted by decision
Capital
Adequacy
Accuracy of
Liquid...
©2014 Decision Management Solutions 26
How To Describe Decisions
Information
• What is needed?
• Where does it come
from?
...
©2014 Decision Management Solutions 27
Decisions Require Information
“Determine Federal Reserve Eligibility”
requires Curr...
©2014 Decision Management Solutions 28
Decisions Require Knowledge
“Determine Federal Reserve Eligibility”
requires Collat...
©2014 Decision Management Solutions 29
Decompose Decisioning
What is required to make decision?
Information
Guidelines, po...
©2014 Decision Management Solutions 30
Decisions Require Decisions
These decisions must be made first
Scale up and down
Sc...
©2014 Decision Management Solutions 31
Decision Models Improve Compliance
Transparency
of Sources
Consistent Rule
Groups
S...
©2014 Decision Management Solutions
Decision Models Deliver Traceability
©2014 Decision Management Solutions
Decisions Models: Agile Automation
Decision Modeling and Notation (DMN)
“… provide a common notation that is readily
understandable by all business users... ...
Walkthrough
Decisions First Modeller Example
FED Eligibility and Asset Classification
Will Address All of the Issues We’ve...
Walkthrough
We’ve Seen How…
Scale is Addressed by Providing Structure
Transparency is Addressed by Linking to Sources
Effe...
Questions?
Recap and Next Steps
Succeed with Decisions
Decisions First
Decisions first, rules second
Make Decisions part of Business Architecture
Adopt Decision Modeling
40©2014...
DecisionsFirst Modeler
Social, collaborative, cloud-based Decision Management
modeling software that puts decisions at the...
Free Companion White Paper
Download the companion
white paper
http://www.decisionmanageme
ntsolutions.com/whitepaper/
rapi...
Thank You
JamesTaylor
james@decisionmanagementsolutions.com
Jan Purchase
purchase@luxmagi.com
More on Decision Management ...
Upcoming SlideShare
Loading in …5
×

Agile and Cost Effective Compliance: Going Beyond Business Rules with Decision Management

Decision management and business rules management systems are the ideal platform for an agile and cost-effective compliance approach. In regulated industries like financial services, leading companies are building compliance into every process and system with consistency and transparency across the entire organization and with the agility to meet ever more challenging deadlines. Companies that fail to do so incur huge costs with manual checks and balances and risk significant fines.
In this webinar James Taylor, CEO of Decision Management Solutions and Jan Purchase, Director and Founder of Investment Banking Specialists Lux Magi, share know-how and best practices from their extensive experience of helping clients implement decision management and business rules management systems to conquer complexity, improve agility, lower costs and measure ongoing effectiveness in financial compliance.
The webinar includes illustrations of how the decision management approach has been applied in compliance projects and a walkthrough of real decision model from one of these.

  • Be the first to comment

Agile and Cost Effective Compliance: Going Beyond Business Rules with Decision Management

  1. 1. Agile and Cost Effective Financial Compliance Going Beyond Business Rules with Decision Management JamesTaylor, CEO
  2. 2. ©2014 Decision Management Solutions 2 Your Presenters James Taylor CEO of Decision Management Solutions We help clients to improve their business by applying business rules and analytic technology to automate and improve decisions I have spent the 11 years championing Decision Management and developing Decision Management Systems Jan Purchase Director Lux Magi We enable investment banks to automate demanding financial compliance regulations, against challenging deadlines, through the application of business rules, business decision modelling and business decision management systems
  3. 3. Agenda Compliance Challenges in Compliance The Business Rules Advantage Decision Management The Essential Framework Worked Examples 3©2014 Decision Management Solutions
  4. 4. Aims of Compliance Capital Adequacy Basel II/III, Solvency II Reporting and Disclosure: FED 5G FED 5G, MCO, FATCA Capital Management Dodd-Frank, FED Eligibility Customer Protection MiFID ©2014 Lux Magi Ltd 4
  5. 5. 5 Basel II Dodd-Frank FED 5G Solvency II FATCA Basel III Capital Adequacy Capital Management Reporting and Disclosure Timeline ©2014 Lux Magi Ltd
  6. 6. Why is Compliance Demanding? Challenging Pre-requisites Data standardisation and quality Reference data alignment and consistency Cross Department Impact Short ‘Time to Market’ Many Intersecting Rules for Special Cases ©2014 Lux Magi Ltd 6
  7. 7. What Do Compliance Rules Share? Automation Is Required Application Throughput Frequency Need for Swift Remediation Very Exceptional Escalation for Manual Decisions Repeatable Subject to General and Specific Audit Temporality 7©2014 Lux Magi Ltd
  8. 8. Challenges in Compliance 5 Measuring Effectiveness Near Real Time Management of Faults Ability to Self Check Immediate Articulation of Issues Improvement OverTime Explicit Articulation and Management of Goals Continuous Monitoring and Improvement Meaningful Metrics How to define them How to associate them with the rules 8©2014 Lux Magi Ltd
  9. 9. Time to Market Many mandates have implementation times < 1 year Fast Resolution of Issues/Imposed Changes ‘Expedited’ change cycle often less than one day Risk/Cost of errors is high Requires aids to comprehension, impact analysis Many sources of externally imposed change All change needs to be strongly audited Closure controlled and logged Challenges in Compliance 4 Agility 9©2014 Lux Magi Ltd
  10. 10. Challenges in Compliance 3 Consistency Initiatives Often Impact Many Systems Need to ensure they all behave coherently Can’t implement policy changes in each Need a common approach at different points of complex business process Facilitating Inter-Departmental Integrity Instrument Data Sourcing for Multiple Feeds Platform Ubiquity and Reuse 10©2014 Lux Magi Ltd
  11. 11. Challenges in Compliance 2 Transparency Precision Convey meaning in business terms You cannot safely change what you don’t understand Standard representation to make sharing easier Traceability Which rules were used? Why where they selected? What authority justified them? Can the regulation be seen to have been followed? 11©2014 Lux Magi Ltd
  12. 12. Each Mandate Adds Complexity Few points of high complexity, just a sprawl Large number of information sources and variations Many hidden interdependencies between rules Vital to Impose Structure, Otherwise… Difficult to comprehend, change, assess impact Becomes an amorphous ‘bag of rules’ Loss of integrity and consistency: gaps, overlaps Business Rules Alone Can’t SupportThis We Need a Larger Organising Principle Challenges in Compliance 1 Scale 12©2014 Lux Magi Ltd
  13. 13. 13©2014 Decision Management Solutions Scale Transparency Consistency Agility Effectiveness
  14. 14. The Business Rules Advantage
  15. 15. ©2014 Decision Management Solutions 15 Business Rules Drive Compliance But policies and regulations are hard to manage
  16. 16. ©2014 Decision Management Solutions 16 Business Rules Deliver Transparency Scale Transparency Consistency Agility Effectiveness
  17. 17. ©2014 Decision Management Solutions 17 Business Rules Deliver Agility public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } } If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% College Loan Discounts Current Discount = Eligibility Gold Customer and Home Equity Loan more than $100,000 % Which would you rather change? Scale Transparency Consistency Agility Effectiveness
  18. 18. ©2014 Decision Management Solutions 18 Hard To Measure Effectiveness Rarely just one rule Many rules must be executed to deliver improvement Mapping rules to KPIs does not work Scale Transparency Consistency Agility Effectiveness
  19. 19. ©2014 Decision Management Solutions Hard To Scale 19 Scale Transparency Consistency Agility Effectiveness Lots of regulations Lots of policies Lots of rules No structure
  20. 20. Hard To Be Consistent Rules spread across processes and systems like Peanut Butter 20©2014 Decision Management Solutions Scale Transparency Consistency Agility Effectiveness
  21. 21. Decision Management The Essential Framework
  22. 22. ©2014 Decision Management Solutions Decision Management A business discipline and a technology stack That builds on existing IT infrastructure Enhancing business processes Increasing transparency and business control Leveraging analytics to manage uncertainty It is a proven framework for implementing business rules management systems 22
  23. 23. Business Processes ©2014 Decision Management Solutions 23 Decisions At The Center Analytics People KPIs Customers Systems Decision
  24. 24. ©2014 Decision Management Solutions 24 Put Decisions In Context Know which business processes will be improved by your rules Know when your rules will be needed to make a decision Know how you will have to deploy your rules to automate decisions Know who needs to be involved in elicitation and manage - and why Scale Transparency Consistency Agility Effectiveness
  25. 25. ©2014 Decision Management Solutions 25 Tie KPIs to Decisions KPIs impacted by decision Capital Adequacy Accuracy of Liquidity Profile Accuracy of Risk Reporting … … Is this instrument eligible for use as collateral * * What is the asset class of this instrument? * * What is the worst credit rating of this instrument? * * * … Scale Transparency Consistency Agility Effectiveness
  26. 26. ©2014 Decision Management Solutions 26 How To Describe Decisions Information • What is needed? • Where does it come from? Know-how • How to make it • How to improve it Precision • Exactly how? • Specificity without technical details
  27. 27. ©2014 Decision Management Solutions 27 Decisions Require Information “Determine Federal Reserve Eligibility” requires Currency Classification and Eligibility “ValidateTax Return” requires Return and Citizen information “Refer claim for fraud” requires Claim and Provider information
  28. 28. ©2014 Decision Management Solutions 28 Decisions Require Knowledge “Determine Federal Reserve Eligibility” requires Collateral Guidelines andVolatility “ValidateTax Return” requiresTax Regulations “Refer claim for fraud” requires likelihood of fraud
  29. 29. ©2014 Decision Management Solutions 29 Decompose Decisioning What is required to make decision? Information Guidelines, policy Expertise Regulations Predictive Analytic Models Data Mining Results The results of other decisions
  30. 30. ©2014 Decision Management Solutions 30 Decisions Require Decisions These decisions must be made first Scale up and down Scale Transparency Consistency Agility Effectiveness
  31. 31. ©2014 Decision Management Solutions 31 Decision Models Improve Compliance Transparency of Sources Consistent Rule Groups Scale and Reuse
  32. 32. ©2014 Decision Management Solutions Decision Models Deliver Traceability
  33. 33. ©2014 Decision Management Solutions Decisions Models: Agile Automation
  34. 34. Decision Modeling and Notation (DMN) “… provide a common notation that is readily understandable by all business users... DMN creates a standardized bridge for the gap between the business decision design and decision implementation.” Use Cases Modeling Human Decision-making Modeling Requirements for automated Decision-making Implementing automated Decision-making OMG Beta Specification Released Standard expected mid-2014 Decision Management Solutions, IBM, Oracle,TIBCO, FICO, Escape Velocity, KUL, Model Systems, KPI,Visumpoint ©2014 Decision Management Solutions
  35. 35. Walkthrough Decisions First Modeller Example FED Eligibility and Asset Classification Will Address All of the Issues We’ve Discussed 35©2014 Lux Magi Ltd
  36. 36. Walkthrough We’ve Seen How… Scale is Addressed by Providing Structure Transparency is Addressed by Linking to Sources Effectiveness Measurements are Built in Consistency Support by Process/Event/Decisions Agility Handled by impact assessment (shown) Deployment to BRMS (not shown) 36©2014 Lux Magi Ltd
  37. 37. Questions?
  38. 38. Recap and Next Steps
  39. 39. Succeed with Decisions
  40. 40. Decisions First Decisions first, rules second Make Decisions part of Business Architecture Adopt Decision Modeling 40©2014 Decision Management Solutions Scale Transparency Consistency Agility Effectiveness
  41. 41. DecisionsFirst Modeler Social, collaborative, cloud-based Decision Management modeling software that puts decisions at the heart of your business architecture, building better requirements and driving successful business rules implementations 41©2013 Decision Management Solutions decisionmanagementsolutions.com/decisionsfirst-modeler
  42. 42. Free Companion White Paper Download the companion white paper http://www.decisionmanageme ntsolutions.com/whitepaper/ rapid-and-cost-effective- financial-compliance/ 42©2014-15 Decision Management Solutions
  43. 43. Thank You JamesTaylor james@decisionmanagementsolutions.com Jan Purchase purchase@luxmagi.com More on Decision Management at decisionmangementsolutions.com luxmagi.com

×