sungard basel ii solutions

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  • 8/6/2019 Sungard Basel II Solutions

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    A Flexible, Extendible,

    Global Risk Infrastructure

    The Accord places rigorous demands on a bank that

    must be supported by an integrated risk infrastructure.

    Banks must open up their methods, models,

    assumptions and processes to the regulators and

    disclose much more information to the general market

    than has been required to date about their risk and

    capital profiles. To meet these requirements in an

    auditable and robust fashion demands extensive data

    collection and consolidation as well as system

    integration and reporting capabilities within a global

    infrastructure. Key to achieving this is creating a clear

    blueprint that identifies opportunities to leverage or

    enhance existing systems, as well as gaps that must

    be filled by implementing new solutions.

    Vital Role of Data

    To take full advantage of Basel II, banks must have

    complete confidence in their risk data and

    infrastructure. Numerous complex data involved in

    credit and operational risk management, including

    volumes of historical credit and operational loss data,

    must be captured, aggregated, evaluated and acted

    upon globally under a consistent policy framework and

    a global IT system.

    SunGard understands that core data aggregation and

    consolidation is essential in order to reflect the risk-reducing impact of diversification across regions,

    industries and specific obligors, as seen from an

    aggregate, high-level view. SunGard offers

    comprehensive data management with solutions that

    capture and combine data from a variety of sources

    and sub-systems to ensure data integrity. SunGards

    Basel II solutions capture and consolidate all risks

    related to the quality of a specific legal entity including

    traditional banking book credit exposures (like loans,

    letters of credit, un-drawn commitments, etc.),

    counterparty exposures in the trading book (OTC),settlement risk (resulting from timing differences in

    exchanges for value) and issuer risk (resulting from the

    holding of debt or equity securities).

    BankingBook

    TradingBook

    Credit Risk Market Risk Operational Risk

    Standard Approach IRB Foundation

    IRB Advanced

    Credit Risk Mitigation

    Best practice

    encouraged by

    Basel II

    Sound practices

    (minimum requirements)

    Basic Indicator Approach

    TSA

    AMA

    Additional qualitativerequirements for TSAand AMA

    Credit risk exposuresfrom trading (OTC)positions

    Standard Approach /Internal Model Approach(Nothing changed)

    ALM

    (Little change fromBasel I)

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    SunGard Trading and Risk Systems provides integrated, enterprise-wide solutions for financial and energy trading, risk management andoperations, as well as asset liability management and financial planning and forecasting. Serving over 900 clients, it offers Web-enabledsolutions for achieving straight-through processing, and for managing market, credit and operational risk. Clients include financialinstitutions, energy companies, government agencies and corporations of every size, geographical reach and operational complexity.SunGard Trading and Risk Systems also offers systems integration, project management and consulting services.

    SunGard is a global leader in integrated software and processing solutions for financial services. SunGard also helps information-dependententerprises of all types to ensure the continuity of their business. SunGard serves more than 20,000 customers in over 50 countries,including 47 of the world's 50 largest financial services companies. SunGard (NYSE:SDS) is a member of the S&P 500 and has annualrevenues of more than $2 billion.

    www.risk.sungard.comCopyright 2003 SunGard. SunGard and the SunGard logo are registered trademarks of SunGard Data Systems Inc. in the U.S. and othercountries.

    All other trade names are trademarks or registered trademarks of their respective holders.

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    BASEL I I SOLUTIONS

    Leveraging Basel II

    To Achieve A Competitive Edge

    www.sungard.com

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    Reaching Higher Via Basel II

    Risk Sensitive Approaches

    for Credit Risk

    The Basel II recommendations empower banks to use

    different methodologies of increasing sophistication to

    calculate their regulatory capital for credit risk. The

    more refined the methodology, the higher the benefits

    that can be achieved by the bank. Banks can choose to

    implement the Standard, Foundation Internal Ratings-

    Based (IRB) or Advanced IRB approach. It is vital that

    institutions systems architecture is flexible enough to

    support all three proposed methodologies, as well as

    special local regulatory requirements and user-specific

    proprietary analytics.

    From the calculation of credit risk capital for on-and

    off-balance sheet items, through providing robust,

    transparent processes and reporting, SunGard helpsbanks automate and streamline their processes and

    achieve compliance. SunGard also provides the

    advanced credit risk portfolio analytics, speed and

    flexibility to help banks implement current best

    practice risk management techniques and meet the

    expected requirements of future regulations.

    We can provide incremental return on a banks

    technology investment for Basel II with solutions that

    are proven, mission-critical and extendable.

    For on-balance sheet items, our solutions provide the

    capital allocation calculations required by Basel II, as

    well as integrated data management, interest rate risk

    and asset liability management and workflow tools. For

    off-balance sheet items, we provide a technology

    environment for banks to collect and consolidate the

    full range of credit risk data, compute credit risk

    exposures, store internal and external credit ratings

    and produce the range of reports required by the

    Accord for greater transparency.

    SunGard solutions offer robust credit portfolio

    management of on- and off-balance sheet items to

    help banks identify and reduce global portfolio risk,

    increase business opportunities through the sharing oflimits, and align regulatory and economic capital.

    The proposed Basel II Capital Accord is designed to facilitate a more

    comprehensive, sophisticated and risk-sensitive approach for banks to

    calculate regulatory capital. The proposals will enable banks to align

    regulatory requirements more closely with their internal risk

    measurement and to improve operational processes.

    Forward thinking institutions recognise that the Accord also provides a

    unique opportunity to modernise and upgrade their overall risk

    practices and risk infrastructure, specifically for credit and operational

    risk. For these banks, Basel II means more than compliance; rather it

    denotes the opportunity to achieve distinct competitive advantage in a

    tight global market.

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    New Charge for Operational

    Risk

    Basel II incorporates a new proposed capital charge for

    operational risk, also incorporating three approaches.

    These are the Basic Indicator and Standardised

    Approaches as well as three Advanced Measurement

    Approaches (AMA). There are regulatory capital

    reduction incentives for banks to move to the more

    sophisticated approaches. An emerging development

    is that qualitative process review and improvement will

    be required as the ticket of admission to be allowed

    to use either the Standardised or one of the Advanced

    Measurement Approaches. Advanced analytics applied

    to loss data will not, in and of itself, be sufficient to

    achieve a reduced regulatory capital level.

    SunGard has developed the Operational Risk Pyramid

    to illustrate the 5 levels of operational risk that should

    be addressed over time for a systematic approach.

    SunGard offers many tools to support a banks

    operational risk strategy including solutions that

    provide straight-through processing, electronic

    confirmation matching tools and automated collateral

    management systems, to name just a few. SunGard

    also provides business continuity services that

    facilitate operational resilience. We also provide the

    consulting expertise to help clients establish their

    operational risk strategy.

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    Loss

    Data Collection

    KeyRiskIndicators

    ControlandRisk SelfAssessment

    OperationalProcesses

    Analytics

    The Operational Risk Pyramid

    Solutions for Basel II

    SunGard recognises that the roadmap to Basel II

    compliance is unique for every client while, at the

    same time, there are certain common areas that are

    being addressed across many clients.

    We offer an integrated suite of solutions that can form

    the centrepiece of a Basel II compliant infrastructure.

    Our Basel II solutions incorporate:

    Credit risk solutions for banking and trading book

    Comprehensive data management solutions

    Operational risk consulting and review

    Availability services for operational resilience

    Extensive Basel II consulting services.

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    BASEL I I SOLUTIONS

    For more information on how we can help your bank gaincompetitive advantage while meeting the Basel II

    proposals, contact:

    SunGard Trading and Risk Systems

    33 St Mary Axe

    London

    EC3A 8AA

    Tel: + 44 (0) 207 337 6000

    Fax: + 44 (0) 207 337 6010

    www.risk.sungard.com

    e-mail: [email protected]