IBM’s integrated risk management solutions enable financial institutions to: Understand market and credit risk exposure across multiple silos to make financial and risk decisions consistent with business objectives; Secure all transactions and forms of interaction; proactively prevent increasingly sophisticated internal and external prohibited activities and effectively manage detected events; Proactively manage potential risks from events impacting operations, processes and applications - both from internal & external and business & IT; Understand and manage compliance across a dynamic set of voluntary and mandatory requirements imposed by multiple regulatory bodies, across operating jurisdictions, at an optimal cost for value.

1. Paul Leonhirth – Integrated Risk Management Solutions, Banking & Financial Markets
August 2010
Integrated Risk Management
© 2010 IBM Corporation

2. Building a smarter planet
The reality of living in a globally
integrated world is upon us
 Sophistication has outstripped our
ability to handle it
 Together government and industry
must balance stability and innovation
 To thrive, firms must innovate their
business models
 Daily interactions must deliver on
brand promises
2 Source: Tower Group © 2010 IBM Corporation

3. Building a smarter planet
The world is connected:
economically, socially and technically
3 Source: Tower Group
© 2010 IBM Corporation

4. Building a smarter planet
The need for progress is clear
80% 93%
Of financial services firms who Of the 285 million electronic
say their governance, risk and attacks in 2008 were
compliance processes are still focused on the finance
not integrated across their sector, with well over half
enterprise. detected by third parties.
25 billion 10,000
Global trading IT infrastructure Estimated number of
are under extreme stress, banking regulations in the
handling billions of market data US, with 4,000+ new
messages each day. regulations in the pipeline.
4 © 2010 IBM Corporation

5. Building a smarter planet
Top Risk Management Concerns and Challenges
Credit Market Operational Compliance
Risk Risk Risk
Information  Total Exposure Information  Operational Risk Reporting
 Credit Risk Reporting  Stress Testing
Access Analytics
 Limits & Utilizations  Market Risk Reporting & Analytics
Integrity and  Overdrafts & Netting  Trending and Predictive
Business Insight  Collateral Management Capabilities
Data Quality and  Quality & Completeness of Source Data  Siloed Initiatives
Governance of  Linking Data to Common Client/Institution  Data Aggregation
Information  Recognition of Risk Management Needs  Data Lineage
Process  Key Risk Indicators  Client Investment Agreements
Improvement,  Credit Limit Approval Process  Multiple Risk Calculators
Automation and  Credit Lending Process  Duplicate Functional Systems
Rationalization  New Business Acceptance  GL Reconciliations
5 © 2010 IBM Corporation

6. Building a smarter planet
Financial institutions must do their part to restore
trust and confidence in the global financial system
They will use transparency as a
means to manage risk and as an
engine for growth.
Success requires people,
process and technology
improvements that include
new and smarter ways of
Measuring, modeling and applying
risk-related information.
6 © 2010 IBM Corporation

7. Building a smarter planet
Smart risk management is about collecting better
information, using it more quickly and more
effectively, and minimizing the need for human
interaction in routine events
1 Smart is:
Having a cross view
of risk exposure
2 Smart is:
Having the right mix
of control across all
points of vulnerability
3 Smart is:
Mitigating risk by
elevating and
4 Smart is:
Automatically
managing business
leveraging IT processes
7 © 2010 IBM Corporation

8. Building a smarter planet
1 Financial Risk
These solutions increase the quality, transparency and
timeliness of your risk information while proactively managing
your exposure and liquidity. Recognize and predict complex
causal relationships.
 Risk Insight and  Credit Analytics
Optimization Solution for  Scalable Architecture
Financial Services for Financial Reporting
8 © 2010 IBM Corporation

9. Building a smarter planet
2 Financial Crimes
These solutions help in real-time risk-monitoring, continually
updating user profiles, associations and patterns of behavior.
 Anti-Money Laundering  Threat and Fraud Intelligence
Investigations, Alert  Identity and Access
Modeling and Analytics Management Platform
 Integrated Fraud and
Financial Crimes Platform
9 © 2010 IBM Corporation

10. Building a smarter planet
3 Operational & IT Risk
These solutions continually track emerging and evolving
threats to physical and IT infrastructure assets. Institute a
holistic response to business and operational risks.
 Operational Risk Reporting  IT & Infrastructure Risk &
Information Foundation Resilience, Data Encryption
 Enterprise Security Risk and Leakage Protection
Monitoring, IT Security  Managed Identity, Business
Infrastructure Continuity & Resiliency Services
10 © 2010 IBM Corporation

11. Building a smarter planet
4 Governance and Compliance
These solutions help adopt a holistic approach to your
obligations analysis—driving the control and oversight of
your business processes by aligning IT strategy with
business strategy.
 Compliance Information  Inventory of Obligations
Lifecycle Management  Monitoring and Reporting
11 © 2010 IBM Corporation

12. Building a smarter planet
Building Capabilities for Smarter Banking:
Integrated Risk Management
Integrate siloed data to Leverage insights to Monetize data to achieve
Unique value realized
improve positions and increase visibility of performance goals and
regulatory reporting both threats and improve business resilience
opportunities
Optimize
Analyze
3 Outcomes
Manage 2 Patterns
1 Data
Cost containment End-to-end visibility
Manage risk appetite Loss mitigation capability Customer retention
Data for compliance Reduction in fraud losses Business resilience
Enabled by the IBM Banking Industry Framework Use of Smarter Planet capabilities
12 © 2010 IBM Corporation

13. Building a smarter planet
Banking Industry Framework for
Integrated Risk Management
Enables you to holistically manage
risk across the enterprise with an
integrated set of software and
service assets developed through
multiple projects within four core
risk management domains.
Key Benefits:
 Faster deployment
 Lower Risk
 Support for adoption of open & industry standards
 Offer choice of business applications from IBM & its partners
 Simplified enterprise architecture
13 © 2010 IBM Corporation

14. Building a smarter planet
Integrated Risk Management —
Solution Focus Areas  Risk Data Management for Credit, Market, Liquidity Risk
 Risk Insight for Banking Risk and Performance
 Real Time Risk, BI and Reporting Solutions
 Risk Analytics, Risk Optimization, Analytics and Insight
ISAS
Predictive  Quantitative Risk Modeling and Scenario Analysis
WAS, BPM, ILOG BRMS
Analytics
 Automate Resolving False Positives and Alert Triage
Financial
Financial  Integrated Fraud and Financial Crimes platforms
Crimes
Crimes ITSM, TSIEM, TCIM  AML/Fraud Operational Effectiveness and Risk Mgmt
Operational
Financial Operational
and IT risk  Customer Identification and KYC, Customer Risk Ratings
Risk and IT Risk  Entity Management / ID Relationship Resolution
Financial
Integration  Investigative Case Management with Web 2.0
Risk Integration
Optimization
Optimization
Analytics
Analytics
 Comprehensive Security Risk & Control Management
Collaboration
Collaboration Governance
Security Governance
and  Trusted Identity Management – Identity & Access
Security and
Resiliency Compliance  IT Service Management – Asset, Configuration, Incident,
Resiliency Compliance Change, Release Management (ITSM, CRDB, ITIL)
 Proactive, DB activity/control monitoring, event
correlation, analytics and IT Risk Mitigation techniques
Integrated Risk  Application Security, IT Risk, Integrity & Privacy
Management AppScan, Compliance IoO
 Compliance Information Lifecycle Management
 Compliance Inventory of Obligations for Corporate
Governance and Internal Controls
 Sales and Market Conduct Compliance
 Regulatory Compliance, BI and Reporting
14 © 2010 IBM Corporation

15. Building a smarter planet
We’ve only just begun to uncover what is
possible on a smarter planet.
The world will continue to become smaller,
flatter and smarter. We are moving into
the age of the globally integrated and
intelligent economy, society and planet.
There’s no better time to start building a
smarter financial system—focused on
restoring public and governmental trust
and breathing new life into the global
economy.
Let’s work together to drive real progress
in our world.
For more information, visit ibm.com/banking/risk
15 © 2010 IBM Corporation