copyright 2011 tata consultancy services limited confidential nov, 2011 the brighter side of risk...

Copyright © 2011 Tata Consultancy Services Limited

CONFIDENTIAL

Nov, 2011

The brighter side of riskBusiness Intelligence 2.0

Document NameCONFIDENTIAL- 2 -

The Finance FunctionUsage of IT by Finance over Time

View

What happened?

Analyze

Why it happened?

Predict

What will happen?

Active

What is happening?

Pro Active

How to make it happen?

Finance is moving from providing static reporting to a more proactive role of providing dynamic business insight to decision makers

Batch

Event-Based Triggering

Ad Hoc

Analytics

Continuous Update

80’s

Early 90’sLate 90’s

2000+

Future

Document NameCONFIDENTIAL

Untapped marketBlind spots

State of business intelligence

- 3 -

Risk

Information

Opportunity

Events

Competition

Operations

Regulations

Market

New orders

New customer

New LoB

Audit

Internal External

Cost

Indirect Direct

Business intelligence 1.0

Today, BI has moved beyond traditional Accounting and MIS in few Enterprises


State of business intelligence

- 4 -

Regulations New orders

Audit

Internal External

Cost

Indirect Direct

Traditional Accounting and MIS

ERP

GRC Suite

MRP

CRM

Global consolidation to financial statementsTraceability of business recordsFinancial controls

Standard cost visibilityActivity Based Costing to indirect costs

Profit centre costing

ComplianceQuality governanceCorporate governance

Field reportingSales-force Automation

Demand visibility

Disconnections?


True potential of Business Intelligence

ERP

GRC Suite

MRP

CRM

Events

Actions

Cost Structure

Proposals

“Customer X bankrupt; we have a default risk”

“Component Y can be substituted; we now have a lower price”

Risk

Information

Opportunity

Event based reporting

Business Intelligence 2.0


Two things behind Business Intelligence 2.0

Events

Actions

Cost Structure

Proposals

Event based reporting

Risk

Information

Opportunity

XBRL

ESB


XBRL tenets

XBRL

Data in XMLMachine readable and human readable at the same time

Data is hierarchicalTransactions to dashboard – rollup and drilldown at will

XLinkData is not replicated – but fetched real time and cross-referenced

TaxonomySemantics is standard – cross entity exchange and compare

Global directory supportYour accounts receivable can dynamically check debtors accounts

payableFrom being a data pusher, you can not become a data puller…


XBRL BI pulls real time data out of dynamic contexts

- 8 -

Staging areaApplications

ApplicationsXBRL ReportsXlink Directories

XBRL XBRL

XBRL XBRL

XBRL Replication

XBRL Replication

Xlink (Pull)

Xlink(real-

time drill down

Extract – Transform -

load

Trad

ition

al B

I (P

erio

dic)

XB

RL B

I (R

eal-time)

Data Marts

Push

Reports

Push

Report formats are constant

Data is periodic

Reports are context- driven

Data is real time


Information cycle is risk/opportunity IT system

- 9 -

ApplicationsXBRL ReportsXlink Directories

XBRL XBRL

XBRL XBRL

XBRL Replication

XBRL Replication

Xlink (Pull)

Xlink(real-

time drill down

ESBRisk events

• Customer X defaulted• Supplier blocked

shipment • Exchange volatile• Privacy breach

incidence• Insider Trading alert• Others

ERP/ TreasuryRisk Controls

• Debtor credit• Stock lead time• Export costing• Audit Trail• Disclosure • Others

GRCRisk contexts

• Default risk• Solvency risk• Market risk• Privacy risk• Compliance

risk• OthersTrigger

ConfigurePublish

Machine readable


Eventually, business will be run by two minds

- 10 -

XBRL Reports

ESBRisk events




Humans

For both can read

XBRL

ERP/ TreasuryRisk Controls

• Debtor credit• Stock lead time• Export costing• Audit Trail• Disclosure • Others

And both can

exercise controls

Enterprise Service

Bus


EDI

Workflow

Events

Controls

Dashboard

What is this about

ESBRisk events




Enterprise Service

Bus

Stands between

applications

But data is shared transactionally

Workflow data is parsed to trigger

Events carry criteria to notify

Controls create context to define

And it is distributed


What does distributed mean?

ESB 1 ESB 2 ESB 3 ESB 4 ESB 5

Application Application Application Application Application Application

Each unit is assigned a set of risk/opportunity

contexts


ESB 1 ESB 2 ESB 3 ESB 4 ESB 5

What does distributed mean?

Market risk Liquidity risk Solvency risk Default risk Vendor risk

Application Application Application Application Application Application

Forming a risk radar…

Events


So lets take a look at your new risk radar

- 14 -

IFRS(Context:Reporting & Disclosure)

Solvency II(Context: Solvency of Insurance Firms

within EU)

Payment Services Directive

(Context: Privacy)AML (Suspici-

-ous Transaction Monitoring

SOXContext: Ethical Corp.

Governance) SEPA (Cross-country Monetary Transactions

Retrospective Reporting

Contingent liability reporting

Creditor Statement Reconciliation

Currency translations

Mandatory disclosures

Process efficiency thresholds

(Order to Cash)

Counterparty exposure thresholds

Straight Through Processing(financial)

Electronic Money Flow Surveillance

Tran

sfer

Fee

U

nifo

rmity

Audit trails

Tran

sact

ion

Type

Internal funds rating thresholds

Customer credit rating thresholds

Value at Risk thresholds

Manipulative Short selling

Solvency Ratios

Settlement default alerts

Inter-related exposures

Data A

cces

s

Provis

ioning

Disclosure case detection

Suspicious Activity Report(SAR)

Dat

a A

cces

s P

rovi

sion

ing

Operational Risk

CreditRisk

MarketRisk

LiquidityRisk

VendorRisk

PrivacyRisk

FinancialRisk

Order Validationparameters

Basel II(Context: Exposure

Monitoring)MiFID

(Context: Investment Services)

SEC(Context: Securities Issuance &

Monitoring)

Legend : Nature of Risk Source: Validity of information origin Interpretation: Wrong message taken from valid information Regulatory Arbitrage: Regulatory loopholes exploited

Risk Analytics

Data integrityIn reporting closures

Collaterals pile-up threshold

Portfoliocap defaults

Network compliance

Value at Risk thresholds

Exposure to Unauthorized

Debtors

Exposure to Unauthorized

Creditors

Data

priv

acy

and

thef

tVolatile currency exposure thresholds

Credit defaults in critical financial

supply chain

Reserves depletion


To summarize

• BI never was real-time, so was your risk and opportunity management

• BI data models are built on risk your foresee, not on the risks that ambush

• To make business truly risk aware, processes need to be risk aware

• XBRL supports next generation BI, by not assembling predefined data models

• Rather XBRL assemblies are highly contextual

• The context remain in ESB, as events that are triggered when thresholds are crossed

• ESB mediates every business transaction, hence it is context-aware and risk aware

• ERPs can respond to these events by applying controls dynamically on processes

• Few years from now ESBs will manage business in tandem with humans- 15 -

copyright 2011 tata consultancy services limited confidential nov, 2011 the brighter side of risk...

Documents