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Leverage BI to Manage Operational Risk
The document discusses leveraging business intelligence (BI) to enhance enterprise visibility into various types of risk, including market, credit, and operational risks. It highlights key lessons from the financial crisis, emphasizing the importance of effective risk communication and management strategies, and outlines how BI applications can support data analysis, risk reporting, and decision-making. Additionally, it showcases the capabilities of Panorama's BI solutions, which offer intuitive reporting, visualization, and real-time insights to help organizations manage risks proactively.
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Leverage BI to Manage Operational Risk
- 1. Leverage BI toGain Enterprise Visibility into Risk (incl. Market, Credit and Operational Risk)
- 2. Agenda • Risk Management& BI • Key Lesson from Recent Financial Crisis • Risk Reporting & Analysis • Usage Scenarios • Demo • Q & A
- 3. Risk Strategy Components •Risk Policy Principals • Risk Appetite • Risk Structure • Risk Management • Risk Reporting • Risk Analysis
- 4. Effective Risk Management canmake an organization increase profitability and stability
- 5. • Market risk •Credit risk • Operational risk What we saw during the recent Financial Crisis
- 6. Key Lesson Learned: Financialinstitutions did not make a connection between the “numbers” produced by traditional risk engines and the risk exposure that they faced.
- 7. “If a riskis managed and no one is told, is it actually being managed?”
- 8. Solution: Demonstrate the valuethat risk management can bring to the organization and ensure those at the top understand and value risk.
- 9. Questions about Riskthat BI can Answer • Daily Operations: Executive level transparency • How your business is operating? • What are the risks and exposures? • How are you performing in mitigating risks? • Project Basis: Risk-adjusted performance review • What are the possibilities of risk? • How can they affect the organization?
- 10. BI is Keyto Effective Risk Management BI applications allow organizations to: • Collect and analyze data on detailed level • Preview all types of risk at high level (different business units, categories, geographies, etc.) • Provide global view into enterprise risk and performance
- 11. Panorama NovaViewSSASPanorama NovaView QuIC Holisticand aggregated view of Risk (include VaR – Value at Risk) Aggregation of risk, including flexible modeling using the conservative handling of correlations Traditional Risk Engines for Market Risk, Credit Risk, Operational Risk Misys Infosys SunGard Thompson Reuters Risk Management Solution MS SQL DB2 Oracle A lgorith- mics
- 12. • An enterpriseview of risk with drill-down options • Empower organizational leaders to make accurate risk-based decisions (Supported by well defined processes) • Adapt unified risk reporting approaches across all business units • Collaboration - risk reporting is not a one-way street Effective Risk Reporting
- 13. Build a bridgebetween data & executives without reliance on IT or analysts Provide your management team with: • Access to any data from different sources • Real-time, robust reporting of Enterprise Risk • Rich but easy-to-use analytics & data visualization • Advanced analysis of data at the aggregate level with ability to drill down for details • Intuitive interface to view data at many angles, drill down to details • Global Risk Dashboard - Tracking important KRI’s (Key Risk Indicators)
- 14. Intuitive & Interactive PanoramaNovaView BI Suite Analytics Reporting Dashboards KPI’s & KRI’s Visualization (i.e. treemaps) Office Integration Complete offering for holistic view of Risk by executives
- 15. Same User Interface& multi-dimensional capabilities for all data sources (relational, OLAP, in-memory) Complete Web-Based Experience • No Installation • Access from anywhere • Intuitive & Interactive
- 16. BI for BusinessUsers – Easy-to-use – Interactive analysis – Animated, self-discoverable features – Zero training NovaView Flash Analytics The most user friendly, self-service analytical client available today
- 17. • Creates, formatsand distributes high quality reports in one click • Enables full integration with user data – Supports all analytical capabilities within the report – “Slice and dice” and search capabilities – ‘In Cell’ visualization, Bands • “One-click” conversion to Excel and PDF BI for End Users NovaView Smart Reporting One environment for analysis & reporting
- 18. BI for EndUsers NovaView Dashboards • Translate data into synchronized, visually rich graphical elements which show multiple results together • Guided analysis for an intuitive user experience • Self-Service Dashboards with personalized look and feel At a glance view of multiple results together
- 19. BI for EndUsers NovaView Spotlight • Deliver live, interactive insights to users in a simple and intuitive way • Put insights where people work, in the most popular desktop applications • From Insight to Analysis in one click A personal dashboard inside MS Outlook
- 20. – Maintain directinteraction with data (“drill-down” and “slice and dice” capabilities) – “One-click” charting and graphic tools provide users options for quickly modifying data – Tree Maps (Heat Maps) for examining hierarchical data and finding correlation between two measures • Sophisticated visual presentations of data analysis: BI for End Users NovaView Visuals
- 21. About Panorama • 15years of experience in Business Intelligence • Original developer of Microsoft Analysis Services and MDX • Long standing partnerships with Microsoft, SAP and Google • Over 1,500 customers worldwide
- 22. • Get intouch with us: kseniyas@panorama.com • Follow us on Twitter: http://twitter.com/PanoramaSW • Panorama Software on LinkedIn: http://www.linkedin.com/company/13163 • Panorama blog: www.panorama.com/blog Q & A
Editor's Notes
- #4 The bank need to have all of these in order to manage risk. During this presentation we will focus on Risk Reporting and Analysis
- #6 Market risk is the risk of the market changing for the bank, so things like Forex or interest rate are changing and affecting it's value of the portfolio, Credit risk is about default of loans, or detrition in bank assets etc, and operational is really about human and system processes, etc. During the last crisis we saw it all…. The market crashed, interest rate changed, etc affecting market risk, And the people and companies and cross holding were in defaults, causing credit risk issue, And also operational risk occurred and we found lots of fraud such as the one in SocGen in France or even maydof in the USA…
- #7 Lack of visibility of the risk data prevented executives from challenging the assumptions fed into the risk management systems.
- #8 Of all the major developments in risk management in the past few years – enterprise risk management (ERM), the use of technology and the emergence of the chief risk officer to name a few – there is one element that brings it all together, and in many cases, stands between success and failure: risk reporting. Perhaps the most key application for risk reporting, in terms of risk professionals, is demonstrating the value that risk management can bring to an organisation and ensuring that those at the top understand and value risk. And with senior executives and boards increasingly looking to realise return on investment in risk, risk reporting is becoming increasingly important. When effective risk reporting contributes to effective management of business operations, senior management and executives will see the value, rather than the burden, of risk reporting Amateur philosopher: “If a tree falls in the forest and no one is there to hear it, does it make a sound?” Risk professional: “If a risk is managed and no one is told, is it actually being managed?”
- #9 Of all the major developments in risk management in the past few years – enterprise risk management (ERM), the use of technology and the emergence of the chief risk officer to name a few – there is one element that brings it all together, and in many cases, stands between success and failure: risk reporting. Perhaps the most key application for risk reporting, in terms of risk professionals, is demonstrating the value that risk management can bring to an organisation and ensuring that those at the top understand and value risk. And with senior executives and boards increasingly looking to realise return on investment in risk, risk reporting is becoming increasingly important. When effective risk reporting contributes to effective management of business operations, senior management and executives will see the value, rather than the burden, of risk reporting Amateur philosopher: “If a tree falls in the forest and no one is there to hear it, does it make a sound?” Risk professional: “If a risk is managed and no one is told, is it actually being managed?”
- #10 Business Intelligence and risk management are linked on two levels. First, when used in conjunction they provide executive level transparency into risks within the organization, and secondly, they can provide a risk-adjusted performance review. For example, when an organization is putting together a strategic plan (i.e. a product launch or new corporate direction) it is critical that the organization has a clear understanding of the risks it may run into, and consequently provide a risk-adjusted performance review. This is where BI is crucial, as it provides data, analysis and reporting—the high level of information needed—to make insightful and accurate business decisions. Through the use of Risk Management and BI practices, overall business performance is improved. Executive transparency and risk adjusted performance review are tightly linked. However, executive transparency tends to be more of a proactive, operational daily approach at the executive level. This involves understanding how your business is operating, what are the risks, and how you are performing with respect to mitigating these risks. Risk-adjusted performance reviews occur on more of a project basis, where corporate direction is analyzed to deeply understand the possibility of risk, and consequently adjust plans and forecasts accordingly.
- #11 Risk management cannot effectively function without BI. The BI infrastructure within an organization is needed to collect and analyze data on a highly detailed level which is then input into risk-related decisions. BI also is needed to allow executive level decision-makers the ability to look across all categories of risk (in different business units, categories, geographies etc.), providing a more global view into business performance, and where certain risk-related issues need to be addressed.
- #13 All business units need to take an enterprise view of risk so that the potential impact one business unit’s actions may have on the total organisation is understood, assessed and communicated. The risk management functions within the business units work closely with the corporate risk unit using continual communication, participation in various management committees and a clearly defined matrix reporting structure. Key is to tailor risk reporting frameworks to the individual organization. With many organisations looking to maintain a central risk executive – the chief risk officer – while empowering business units to manage their own risk, adapting risk reporting approaches can be difficult, particularly in organisations with diverse and complex operations. Another key challenge is the integration of risk management processes to bring conformity to our reporting regime. The major challenge here is convincing and negotiating with the broad range of stakeholders that manage their own risk management processes and systems. It’s also crucial to ensure that risk reporting is not a one-way street. While, ostensibly risk reporting is designed to enable senior executives and the board of directors to make informed business decisions on the basis of accurate risk information, it should also be linked back to those ‘at the coalface’.
- #17 Very inviting & user-friendly interface - we’re using the power of Flash technology that gives us new ways to make functionality self discoverable A simplified analytical tool that lets business users to perform analysis in a very intuitive way
- #18 Creates, formats and distributes high quality reports in one click Customizable formatting features include highlighting, visual coding and sorting Pixel perfect reports, WYSIWYG Enables full integration with user data Supports all analytical capabilities within the report “Slice and dice” and search capabilities ‘In Cell’ visualization, Bands “One-click” conversion to Excel and PDF