Abstract This webinar explains how decision management and a decision model based approach can overcome many of the challenges of implementing compliance systems: aggressive deadlines, increasing complexity, inconsistent and ambiguous requirements, misunderstood data dependencies, constant change requests and the need for post hoc explanation and transparency. We illustrate the benefits of decision modeling using real examples from financial regulatory compliance. This webinar covers: What is the Decision Model and Notation (DMN), an open standard for modeling complex business decisions Insights into how to automate and improve the transparency of your compliance implementations using DMN How DMN enables a model-driven approach to compliance that reduces the needs for code development, lowers the risk of error and improves agility A live demonstration using Trisotech’s DMN Modeler to model parts of a regulatory system Tried and tested DMN techniques for quickly determining your true data dependencies, handling change and improving accountability Featured Panelist: Jan Purchase, Co-Founder & Financial Decision Management Consultant, Lux Magi

1. Overcoming the Challenges of Financial
Decisions with DMN
How Decision Modeling Addresses the Risks of Regulatory Compliance
Jan Purchase www.luxmagi.com

2. Agenda
� Key Issues of Automating Decisions in Finance
� The pain points faced by financial institutions
� The challenges of regulatory compliance
� Addressing These Issues with Decision Modeling
� What is Decision Modeling?
� How does it mitigate the issues?
� How is this relevant to other business domains?
� Demonstration
� Example decision model: Investment Risk Category
� Decision modeling with Trisotech DES
� Q&A
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3. About Lux Magi
� Lux Magi Ltd (www.luxmagi.com)
� Lux Magi helps investment banks and financial institutions
worldwide leverage Business Decision Modeling and Business
Decision Management.
� We help clients to manage, automate and optimize their operational
policies for regulatory compliance and competitive advantage.
� Lux Magi offers effective training and mentoring programs to ensure
clients get the best results from decision technologies.
� 17 years Business Rules Consultancy in Finance Sector
� Business Decision and DMN experts
� Training, mentoring, team leading
� Mining, analysing and building solutions
� Trisotech partner
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4. About Jan Purchase
� Working in IB for 19 Years
� Applying Decision Management
and business rules to regulatory
compliance since 2011
� Experienced Decision Modeler
� DMN practitioner, mentor, trainer
� Co­author with James Taylor of
“Real­World Decision Modeling
with DMN”
� Available Q4, 2016
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5. Compliance is a Serious Issue
� Wide Ranging
� Risk/Liquidity Management: Basel II/III, FTP, Volatility
Buffer
� Disclosure: FATCA, FASB, IFRS 9, FED 5G, EBA, QIS
� Consumer Protection: Dodd Frank, MiFID, GDPR
� Fraud: SOX
Therefore Broad Process/Architecture Impact
� Expensive
� Many Pessimistic About Delivery Against Deadlines
� Cost of Failure is High
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6. Compliance is Decision Making
� Compliance is About Making Operational Decisions
� How risky is that asset?
� Can I use it as collateral? What is its collateral value?
� Should (and how do) I report that liquidity profile?
� With whom can this client data be shared?
� Not All Business Decisions Are About Compliance
� Should I offer this client a loan?
� Can I write­off this vehicle?
� Should I pay this insurance claim?
� What web content is most relevant for this client?
� But Compliance Decisions Must be Explained
� Scope of Compliance is Growing
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7. What is a Decision?
� A Decision Is…
� A determination a business makes on a regular basis
� Results in an output given one or more inputs
� Output has observable impact on an organisation (action)
� Decisions Should
� Have real business value and impact
� Be made frequently
� Be conducted at high volume or at high speed
� Require consistent or audited application
� Change
� Have an error cost
� Be managed
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8. Compliance Decision Making
� Compliance Decisions Need to Be Made
� Accurately
� Transparently
� Explicitly
� Quickly
� Consistently
� Flexibly
� Often This Means They Must Be Automated
� Decisions Must Be a ‘First Class Citizen’
� Decisions Must be Managed
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9. Decisions Are ‘First Class Citizens’
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� They Must Be Managed

10. What is Decision Management
� Approach and Technology Stack for
� Making decisions explicit, transparent, accurate, consistent
� Increasing business agility and adaptability
� Linking decisions to measurable business performance
metrics
� Automation
� Important Part of this is Decision Modeling
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11. What is Decision Modeling
� Means of Documenting Decisions
� Standardized – Decision Model and Notation (DMN)
� Business oriented – effective means of collaboration
� Precise – ‘living spec’, can be executed
� Traceable – direct links to specifications
� Scalable – able to represent large requirements
� Insightful – quickly determines data requirements, dependencies
� Identifies, Captures, Shares and Improves Decisions
� From the heads of SMEs – in legacy system code – in rules
� How Are Decisions Modeled?
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12. How Does Decision Modeling Work?
� First Identify and Mine Your Business’s Key Decisions
� From processes, goals, policies and BI
� From your subject matter experts
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13. Decision Modeling
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� Capture Decision Details
� Question being asked
� Allowable answers
� Business goals, metrics
� Owners, Stakeholders
� Then Add Detail…

14. Decision Modeling
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� Add Sources of Data

15. Decision Modeling
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� Break down decisions

16. Decision Modeling
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� Add knowledge sources

17. Decision Modeling
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� Identify alternate
strategies
� And required extra data

18. Decision Modeling
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� Add knowledge sources

19. Decision Modeling
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� Break down decisions

20. Decision Modeling
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� Identify reusable decisions

21. Execution
Decision
Decision Modeling
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Feedback Feedback
Continuous
Improvement
Manual Decisions Automated Decisions

22. Compliance – The Key Challenges
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Time Pressure
Proliferation of Regulations – Short Deadlines
Specification Complexity
Big, Ambiguous and Inconsistent Specification
Late Discovery of Errors
Faster, More Accurate Data Requirements
Rigor/Execution Finds Logical Flaws/Omissions
Rigor/Early Testing Identifies Issues More Quickly
Hierarchical Definition ‘Divide and Conquer’
Less Time Wasted on ‘Shelfware’ Documentation
Accountability
Coverage – Unexpected Results ­ Maintenance
Knowledge Links Prove Coverage/Explain Results
Post­Op Statistics Prompt Improvements
Safe Agility
Consistent Need for Rapid Change Without Error
Strong Traceability Allows ‘Keyhole Surgery’
Explicit Dependency Support Impact Analysis
Collaboration and Transparency Avoids Mistakes

23. Demo
� Subject: Instrument Rating Category
� Ideal for Decision Management
� High volume throughput, repeatable
� High risk, need to get it right
� Requires traceability
� Frequently changing
� Using Trisotech DES Decision Modeler
� Decision Model and Notation (DMN) CL3
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24. Demo Summary
� How Are Our Issues Addressed?
� Hierarchy provides Scale
� Addressing Size Complexity
� Notation provides Business Orientation and Precision
� Supporting safe agility, business engagement and direct execution
� Easing time pressure
� Connectedness provides Traceability
� Providing Accountability
� Providing Impact Assessment
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25. Next Steps / Q&A
� Find out More: Decision Management/Modeling in
Finance
� Training – Mentorship – Quick Start Programs
� www.luxmagi.com/services/
� http://blog.luxmagi.com
� Email: jap@luxmagi.com
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� Our Book
� Available on Amazon/Barnes&Noble/Kindle
� http://info.decisionmanagementsolutions.com
/real­world­decision­modeling­with­dmn
� Any Questions?