Paul Leonhirth – Integrated Risk Management Solutions, Banking & Financial Markets

August 2010

Integrated Risk Management

© 2010 IBM Corporation

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

Building a smarter planet

The world is connected:

economically, socially and technically

3 Source: Tower Group

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

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

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

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

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
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
 Enterprise Security Risk
Monitoring, IT Security
Infrastructure
10
Resilience, Data Encryption
and Leakage Protection
 Managed Identity, Business
Continuity & Resiliency Services
© 2010 IBM Corporation
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

 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
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
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
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