How Financial Services Institution Improves Reporting Cycles by 30%
Accelerating Gap Analysis and Project Risk Mitigation for a Global Health Insurance and Health Service Company.
Reporting cycles are notoriously time consuming and stressful, so I’m pleased to bring you an example of a financial services institution that identified a way to improve its reporting times by over 30%.
Whether it’s regulatory reporting, period-end closing, the production of business analytics, or an enterprise-wide stress test, financial groups struggle to meet deadlines and smoothly manage data, calculations, aggregation and analysis.
For most firms it is a challenge to identify and enable the optimum reporting processes to satisfy the many recipients of reports. I invite you to read a project case study in which SecondFloor recently helped an institution find a way to improve reporting cycles by 30% .
Whether you are a banker or insurer, or trying to win weeks or days within your reporting timeframe, the SecondFloor approach can be applied to provide you with actionable insight into improving your reporting processes.
Please read the case study and contact SecondFloor (firstname.lastname@example.org) to discuss how you would benefit from applying SecondFloor’s approach and by enabling the identified improvements to be embedded into your business as usual operations.
How Financial Services Institution Improves Reporting Cycles by 30%
Accelerating Gap Analysis and Project Risk Mitigation for a Global Health Insurance and Health Service Company A semi-automated discovery tool from SecondFloor enabled this global insurer to quickly identify the gaps and weaknesses in its data gathering and reporting processes for Solvency II compliance. The This global health insurance and health service company wanted to use its internalProblem economic capital allocation model as part of its framework for Solvency II compliance. It estimated that by taking a partial internal model approach, it would be able to free up more capital than if it chose to use the EIOPA’s Standard Formula to calculate its capital requirement. However, dry runs carried out in 2011 revealed a serious shortfall between the quantity and quality of the data it was gathering for its internal and standard model calculations, and the data it would be required to submit in Solvency II’s comprehensive Quantitative Reporting Templates (QRTs). March 2013 | www.secondfloor.com
Success The pressure of a looming compliance deadline Criteria With a Solvency II compliance deadline of 1st January 2014 then on the horizon, the company had to act fast to identify where the gaps were, and to understand the effort that would be involved in bringing its data aggregation and reporting processes into line with the new regulations. At this point, a large insurer might traditionally bring in a team of management consultants to analyse current systems and data gathering processes, and produce a report on where the gaps lie. But such a project can take several months, and the client did not have the luxury of time. It needed to get started fast on closing the gaps, and couldn’t waste six months on the discovery phase. The Rapid discovery with Analyzer Fortunately, the company had learned of a Solution much faster way to analyse its current situation. It approached SecondFloor, developers of a software-based solution for mapping the current systems and data, reporting hierarchies, processes, people and responsibilities within a complex organisation. SecondFloor’s Analyzer“ software is unique in its ability to map, analyse and visualise all aspects of the organisation to uncover inefficiencies, gaps and dependencies.It’s like taking a photograph of And it can do so in a matter of weeks.the organisation as it currently SecondFloor consultants, led by project exists,” explains Marcel de manager Marcel de Lange, modelled the 13000 Lange. “You don’t have to data points in Analyzer required for the QRTs, physically go around the then deployed the software to discover and map organisation and ask people where each of those data points currently existed (or should exist) within the organisation, and the what systems they’re running role of the person responsible for supplying each and what data they have. It’s one. Using a similar approach, the SecondFlooralso much less expensive than consultants were able to model reporting a manual discovery exercise. ” hierarchies and reporting processes and identify gaps. March 2013 | www.secondfloor.com 2
Results Eye-opening results After just two months, the SecondFloor team had the results of the discovery exercise to show to the client’s Solvency II steering group, comprising executives from its actuarial, risk and finance divisions. The findings were eye-opening. The data needed for the QRTs was available within the organisation, but not all of it was where it needed to be. A lot of it existed only on paper, filed away in policy documents that had never been digitised. Some of it was in spreadsheets maintained by individuals and departments, which never entered the enterprise data warehouse that was the main source of the insurer’s risk and capital data. And some was held as unstructured data: mainly as notes and comments in freeform text fields that were also not consumed by the data warehouse. Risk of missing reporting deadlines One of the most worrying aspects of Solvency II for many insurers is its aggressive reporting deadlines. This client needed to know whether its existing systems and processes would enable the QRTs to be fully and accurately populated and submitted ultimately within 14 weeks of its financial year-end. From the findings, SecondFloor’s consultants were able to estimate the length of time it would take to get each data point from its source, through the relevant calculation engines, and into the final QRT to be submitted to the supervisor, with appropriate sign-off and validation at every stage. The results were not promising: with so much critical data residing outside of the organisation’s structured systems, the SecondFloor team estimated that meeting the 14-week reporting deadline would be impossible without a major system and process overhaul: with the current systems and processes in place, it would even not be possible to meet the 20-week deadline as set forth by EIOPA for the first phase in 2014. March 2013 | www.secondfloor.com 3
A roadmap to compliance The discovery exercise had quickly confirmed what the insurer had suspected all along: its existing data, systems and processes were in no fit shape to deliver full and accurate disclosures within Solvency II reporting deadlines. Analyzer also enables the “ideal” environment to be modelled, in order for an action plan to be drawn up to get the organisation from the current environment to the ideal situation. That meant SecondFloor’s consultants could identify the critical paths needed to get the QRTs completed on time, and identify the processes that needed to be changed in order to achieve that. A message from the company’s Chief Risk Officer congratulated SecondFloor on the speed and efficacy of its findings, but acknowledged that there was now an enormous amount of work to do in order to become Solvency II-compliant.Summary Fortunately, the introduction of the Solvency II regime was delayed, leaving the insurer more time to get its house in order. But the results of the discovery exercise have put it in a great position to understand which processes need to be changed, and which data sources need to be brought into the analytics and reporting environment so they can contribute to the efficient and automated production of Solvency II reports. It now has a solid baseline from which to plan the transformation, a clear view of where it needs to get to in order to be compliant, and a roadmap for making the necessary changes. All achieved in a matter of weeks using Analyzer. March 2013 | www.secondfloor.com 4