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Black ice technologies rdas (finance)


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Black ice technologies rdas (finance)

  1. 1. BLACK ICE - WHO WE ARE • Black Ice Partners is a global risk management consulting and technology firm with over 20 years experience in the financial Experience services industry, and with clients ranging from large global financial institutions, to small domestic banks. • We have a comprehensive understanding of best risk Knowledge management practices, and continually update our services to cover constantly evolving regulations and demands. • We are a practical and experienced team of industry veterans who Implementation have been part of at least ten Basel implementations around the world, and our partners are industry recognized experts. Solution • Black Ice Risk Data Aggregation Solution (RDAS) 2
  2. 2. OUR TRACK RECORDClient Work DescriptionMalaysian Bank A ICAAP Gap AnalysisMalaysian Bank B Enterprise Risk Management Risk Data MartCanadian Banks (2) Road Map for Basel AIRB Compliance and Gap Analysis ReportSouth Korean Bank Implementation of Basel II AIRB ComplianceSingaporean / Taiwanese Bank Implementation of Basel II AIRB ComplianceCanadian Bank C Road Map for Basel AIRB Compliance and Gap Analysis ReportCanadian Bank D ERM Risk Data MartSingaporean Bank Road Map for Basel AIRB Compliance and Gap Analysis Report and ICAAPNth American Bank Road Map for Basel AIRB Compliance and Gap Analysis RepoData Warehouse Provider Enterprise Risk Management Risk Data Mart Independent Audit of ICAAP Implementation on behalf of Board and Senior Management,Global Bank Basel III and Dodd Frank Gap Analysis and readinessMalaysian & Indonesian& Thai Training to the directors and management of various banks on Basel III and ICAAP, RiskRegulators Governance, Ent Risk Mgmt, Techniques in Risk ManagementMalaysian Investment Bank Training for Bank risk team on ICAAP, Risk Appetite, RAROC, Basel III 3
  3. 3. OUR TRACK RECORDClient Work DescriptionTaiwanese Bank ICAAP Gap AnalysisAustralian Bank Enterprise Risk Management Risk Data MartThailand Bank Road Map for Basel AIRB Compliance and Gap Analysis ReportCanadian Bank Implementation of Basel II AIRB ComplianceHong Kong Bank Implementation of Basel II AIRB Compliance 4
  4. 4. BLACK ICE RISK DATA AGGREGATION SOLUTION (RDAS) A Physical/Logical Data Model framework developed on IBM PureData that enables the organization of data efficiently and effectively in a way that makes sense. Wholesale Credit The Black Ice Risk Data Aggregation Solution (RDAS) addresses all levels of Basel and Dodd Frank compliance with all relevant analytic engines and comprehensive reporting. The Black Ice RDAS compromises of four Logical Data Models that organizes data and feeds analyticOperational Black Ice Retail Credit engines: Risk RDAS u  BRC Wholesale Credit Data Model u  BRC Retail Credit Data Model u  BRC Market Data Model u  BRC Operational Risk Model Allows a financial institution to meet the following regulatory requirements: Market u  Risk Data Aggregation & Reporting (2016) Risk u  Global Legal Entity Identifier u  Basel II/III u  Capital and Risk Weighted Asset calculations 5
  5. 5. CAPABILITIES FINANCIAL INSTITUTIONS MUST MEETBasel Committee on Banking Supervision (BCBS) – Basel II and IIIu  Guidance on international standards on capital adequacy, and principles for effective banking supervisionBCBS – Risk Data Aggregation & Risk Reportingu  A set of principles to strengthen banks’ risk data aggregation capabilities and risk reporting practices. National supervisors expect G-SIBs to implement these principles by 2016.Financial Stability Board – Global Legal Entity Identifiersu  The Global Legal Entity Identifier is designed to accurately identify financial transactions.Country Specific Regulator Guidanceu  ImplementationNotes on Data Maintenance, that prescribe Senior Management Oversight, Data Collection and Data Processing guidelines. 7
  6. 6. EVOLVING & EMERGING REGULATOR EXPECTATIONS Governance & Infrastructure How does an Data Arch and IT institution Governance Infrastructure effectively operationalize regulatory requirements? Risk Data Aggregation CapabilitiesRisk Data Aggregation Solution Accuracy and Integrity Completeness Data ? Timeliness Adaptability Aggregation BITS u Risk Reporting The majority of institutions will Accuracy Comprehensive require an investment in technology Frequency Clarity solutions to meet requirements 8
  7. 7. INDUSTRY MATURITY ANALYSIS – INVESTMENT REQUIRED Level 1 Level 2 Level 3 Level 4 Infancy Developing Mature Leading Collaboration of business Limited involvement of senior Top management actively Localized Initiatives driven by and IT mangers with senior business and management engaged in enhancing theExecutive Sponsorship individual IT teams management sponsorship in information integration enterprise Business driven data Functional areas own data Lack of data ownership; No Assigned data caretaking for governance; Augmented by IT assets and benefit from defined responsibilities for Data Governance caretaking of data selected data sets support and infrastructure senior business executive support Data accuracy and Data accuracy and Data consolidation is Data is not trusted, not completeness is trusted completeness is trusted Data Quality and consolidated & errors are underway, basic data quality enterprise-wide; Quality is within silos; Quality tools and Integrity corrected manually requirements have been & processes in place actively monitored & defined improved Standardized data model located Single and widely used data in a central repository, centrally No enterprise reference data Defined data model but not model but lacking formalized managed and governance model Data Architecture model in use widely used governance of the model well known across the enterprise No organized BI plan or BI Strategy linked to BI strategy integrated with Data Analytics & strategy; Lack of alignment Multi-year BI strategy and functional strategy; benefits the Enterprise informationBusiness Intelligence to business objectives budget tracked & realized needs and strategy BITS Implementation Industry Average 9
  8. 8. MAIN DRIVERS OF THE PROBLEM FOR AN INSTITUTION Undefined Data Ownership at the Enterprise Level Single View of Client and Relationship to Data Quality Exposures Data Aggregation End-to-end data Inconsistent or element Inaccurate identification u Reporting Complex and Inadequate Comprehensive Structure or Regulatory Framework for Requirements Data 10
  9. 9. QUESTIONS INSTITUTIONS CANNOT USUALLY ANSWERu  Do you understand the impact of IT projects across the entire organization, or only with systems with direct relationships (i.e., one-step removed)?u  Do you know who owns your data, is there a central group that will drive changes, or does each business unit determine their own priorities?u  Do you know how accurate your data is, are you confident that all reports reflect the same information?u  Do you know your data strategy, is there an enterprise or a business-level strategy?u  How comprehensive is your data framework and data policies to support your approach and to ensure regulatory requirements and senior management expectations?u  Has your institution identified Mandatory Risk Data from origination to reporting/calculation?u  Has your institution identified controls to ensure accuracy for Mandatory Risk Data?u  What validation/monitoring do you perform on data quality? Actual Observations at financial institutions•  ALCo reports being generated using incorrect data. The data dictionary was incomplete, and the business thought the data was “real-time/current” and was the same value as the book of record.•  Retail risk reports being generated by two different groups for different purposes, but the values for the same period did not match. Neither group could determine which was the correct value. 11
  10. 10. WHAT IS BEING SAID ABOUT DATA AGGREGATIONu  G-SIBs need to act now to meet the deadline, but those that embrace this opportunity to deliver strategic change will gain competitive advantage. -  Deloitte EMEA Centre for Regulatory Strategyu  Overall,we see further evidence in these changes of the shift from risk as a compliance function to risk as a support function for improved performance across the business. And, as we look ahead, the baseline is that G-SIBs have got to get moving and start investing in the systems that will keep them on track towards the 2016 deadline. -  IBM Integrated Risk Platformu  Inadequate data aggregation, insufficient risk reporting and ineffective IT systems were seen as a significant contributor to the financial crisis -  Thompson Reutersu  The financial crisis revealed that many banks, including global systemically important banks (G-SIBs), were unable to aggregate risk exposures and identify concentrations fully, quickly and accurately. This meant that banks ability to take risk decisions in a timely fashion was seriously impaired with wide- ranging consequences for the banks themselves and for the stability of the financial system as a whole. -  The Asian Bankeru  Riskdata and reports should provide management with the ability to monitor and track risks relative to the bank’s risk tolerance/appetite. -  BCBSu  Common data governance and management issues are found across the industry with data aggregation as a critical foundation for resolution -  Deloitte & Touche LLP 12
  12. 12. BLACK ICE RDAS – PROVIDES COMPLIANCE BCBS Global Legal Risk Data Identity Aggregation Identifier and Risk Reporting Board and BCBS Capital Senior Calculations Management Reporting 15
  13. 13. BLACK ICE RDAS – OUR DIFFERENTIATIONThe solution provides critical advantages to the client in the areas of:u  Platform agnostic, enterprise-wide risk infrastructure covering Market, Operational, Credit Risk (across retail & Wholesale asset classes)u  Cost effective solution available as measured in Total Cost to Acquire and Cost to Maintainu  Rapid time to deploy (typically between 3 to 8 months to implement and achieve full compliance)u  Compliant with regulator requirements for end-to-end data lineageu  Supports disparate data and reporting requirements across -  Management reporting; -  Board of Directors reporting; -  Regulatory reports; and -  Regulatory audit processes.u  Provides a foundation for future risk requirements (e.g., by BCBS or by the regulator) through the enterprise risk data foundation schema, resulting in a reduced effort to assess and meet new requirementsu  Delivers the capability for a single identifier across the institutionu  Other solutions such as RDAS exist, but are expensive and often are in-house bespoke solutions built by financial institutions themselves that focus on Integrated Enterprise Wide Risk and Capital Data.u  RDAS is what a Global Financial Institution usually builds for itself given the resources and knowledge they have in-house but at a significantly higher cost. 16
  14. 14. BENEFITS OF HOLISTIC DATA AGGREGATION & REPORTING Improved Decision Making Improved quality Improved speed at which of strategic information is available planning Enhanced Reduced probability Improved ability to management of of losses resulting manage risks information across from weak risk the institution management 17
  15. 15. HOW DOES RDAS FIT INTO THE IMPLEMENTATIONSOLUTION Implement Self Assessment Define Strategy Common (Consulting Firm and/or Financial Institution) (Consulting Firm and/or Financial Institution) Data Model (Black Ice Technologies) 18
  16. 16. IMPLEMENTATION OPTIONS FOR RDAS Data Models by Asset Class (4): Provides the capability for an institution to ONE be BCBS data and GLEI compliant Includes comprehensive library of regulatory and Board & Management reports out of the BOX Analytics (yes/no): Provides the capability to leverage stored TWO procedures inside the RDAS, or leverage existing analytic engines currently in use at the institution 19
  17. 17. PureData RISK DATA AGGREGATION SOLUTION – COMPONENTS IBM Data Retail Market Operational Models WholesaleBlack Ice / 3rd Party / None RWA RWA RWA RWA Implementation Options: Stored Procedures Economic Capital Economic Capital Economic Capital Economic Capital Analytic Stress Testing Stress Testing Stress Testing Stress Testing Engines RAROC RAROC Risk Rating Models Liquidity Risk Risk Rating Models eVaR Includes Core Templates Report Management + Management + Management + Management + Regulatory Regulatory Regulatory Reports Reports Regulatory Reports Reports Reports 20
  18. 18. RISK DATA AGGREGATION SOLUTION – DATA ARCHITECTURE Source Systems BLACK ICE Corporate and Commercial RDAS Banking Systems•  Risk Rating •  Collections and Credit Risk Retail/Wholesale Solution By Systems Workout Systems SQL / DataStage•  Credit Approval •  Trading Systems Operational Risk (AMA) Systems •  Trading Exposure Financial Market Risk (B2.5)•  Credit Servicing Systems Data Systems Basel II Basel II.5 Basel III Retail Banking Systems•  Small Business •  Retail Portfolio Credit Management External Application Data Mart In Database Analytic Engines•  Credit Card •  Analytics and Concentration Risk Products Decision Support Analysis•  Mortgages •  Physical /Logical Data Model Trading Room Credit Risks Risk Adjusted Pricing &•  Facility •  Collateral •  Basel Asset RAPM Apportionment Management and Classes•  Ratings Systems Valuation Financial •  Global Legal•  Exposure •  Securities Reconciliation OR Measurement Finance Identity Identifier Regulatory Capital Calculation Special Products•  Securitization •  Non-Traded GL Data Equities RAROC & Economic Capital Finance Systems•  Detailed GL •  Financial Postings Hierarchies Internal Reporting Stress Testing and Back Audit Testing Source Systems feed Regulatory Board Management Metadata into Physical/ Repository Logical Data Model 21
  19. 19. MAPPING AVAILABLE FOR SEVERAL RISK APPLICATIONSThe BlackIce RDAS is already mapped to the following downstream Risk Applications:u  SASu  Moody’s Analayitcsu  ALGO Risk Watchu  Sungard Adaptiv,u  Sungard Panaroma,u  Sungard Front Arenau  Sungard B2CMu  Sungard BancWareu  Moodys KMVu  Several G/LThe BlackIce RDAS is already mapped to these upstream aggregated data warehouse models:u  FSLDMu  BDWu  Razoru  Murexu  Calypsou  Xtraderu  Misysu  Sophus 22
  20. 20. CURRENT OPPORTUNITIES – PHASE ONEClient Country Status Contract PeriodSiam Commercial Bank Thailand Final contract negotiations ~$400k + Q2Bank of China China Workshop / Proof of Concept ~$1.0M – $2.0M + Q3China Guangfa Bank China Workshop / Proof of Concept ~$1.0M – $1.5M + Q3Bank of Bejing China Engagement Started ~$1.0M + Q4Chengdu Bank China Engagement Started TBC Q4SBV Vietnam RFP Process with IBM ~$2.0M + Q2/Q4TMX Group Canada Engagement Started ~$1.0M (plus reseller license) + Q3Sales Focus§  Initial sales effort started in Thailand, Philippines, Indonesia and Vietnam due to the infancy of the financial system§  Countries are mandated to implement BCBS guidelines as directed by the timelines provided by their home regulator (see market size in appendix)Existing Partnerships§  IBM§  Deloitte, PwC, Pactera, Camelot, Digital China 24
  21. 21. PROJECTED FINANCIALSFinancials - Asia Financials - USA 25
  22. 22. BLACK ICE RDAS – PRICING STRATEGY Option 1 Option 2 Risk Data Aggregation Report Templates Analytics No Analytics Purchase: $2.5M Purchase: $2.0M Lease: $110k/month – 3 year contract Lease: $100k/month – 3 year contract Purchase Option: Support is optional and fixed at 10% - No obligation Lease Option: Support is included in lease payment Hardware costs are extra and dependent on size requirements 26
  23. 23. INVESTMENT PROPOSAL & USE OF FUNDSInvestment Proposalu  $300K -$500K Requiredu  Set up a syndicate structure – Limited Partnershipu  Funds Invested as Shareholders loanu  Loan paid before majority Shareholders loanu  Interest paid on the Investment beginning 12Months from date of Investmentu  Syndicate receives 15% - 25% of Equity depending on amount Investedu  Board SeatsUse of Fundsu  Hire staff for upcoming projectsu  Bridge financing for operationsu  Finish documentation for RDAS solutionu  Marketing effortsu  Finish development and packaging of the GCD Solution 27