Teradata

Organizations continue to improve their risk policies and methodologies more quickly than their information management systems. As a result, risk methodologies and policies are often constrained by the systems and technology that are available. Additional capability in information management is built or extended at great time and expense, if it is ever implemented. Although businesses have been able to realize the value of increased scope and scale (via M&A activity and organic growth), technology has struggled to maintain current service levels. Significant information management benefits due to growth or post-merger are still largely unrealized. Compound this with an increasingly complex operational environment, changing regulatory and compliance requirements, such as Basel II and SOX, competitive challenges, and globalization, and it's easy to understand why there are so many challenges and seemingly no improvement in sight.

Risk management and technology groups are under increasing pressure to deliver more while constantly struggling to put out fires. Dialog between these groups is often challenging. As specialists in their fields, they lack the ability to effectively communicate with each other. Understanding of each other's requirements, challenges, and solutions varies considerably. As an example of the lack of a common language, risk managers typically describe information shortcomings impacting their ability to identify, measure, mitigate, and manage as "data quality issues". Technologists, however, view them in much finer detail as problems of data architecture, modeling, technologies, master data management, data quality, and metadata.

Sophisticated risk methodologies are often challenged by the fact that the underlying information is usually a mosaic of data from multiple line, risk, and finance processes. Information management for smaller processes has been successful in varying degrees, but large and more complex processes require greater communication, understanding, and rigor than is currently being practiced.

Symptoms of risk information management challenges:

• The organization has limited confidence in the consistency and quality of its disclosures.
• Numbers often conflict.
• Activities and responses supporting governance, risk, and compliance are not frequent and timely enough.
• Responses to ad hoc questions are often not timely, efficient, accurate, or relevant.
• Risk measures and modeling are constrained due to the quality, completeness, timeliness, frequency, and relevance of information.
• There is a negative impact of using aggregated and averaged information.
• Combined risk and technology operational information costs are too high.
• Risk experts, managers, and PhDs spend more time managing infor mation than analyzing and managing risk.
• Excessive time and effort is expended to meet compliance or governance requirements.
• The information environment is not flexible and agile enough.
• It cannot easily adapt and continue to meet evolving risk and market practice, as well as regulatory and compliance changes.
• Changes to information systems to support new or change requirements have a high cost or extended time to complete?
• Risk requirements are either not requested or done directly within the risk unit due to the cost, complexity, and timeframe.
• Sophisticated risk and return measures (e.g., Economic Capital, RAROC, and SVA) and transactional business processes (Risk Based Pricing) are not well aligned or integrated.
• Risk Adjusted Performance Measurement and Risk-Based Pricing more often use proxy, aggregated, and estimated information than actual results?

Given the increasing complexity of risk and a focus on the enterprise, risk information management has failed to keep pace with risk requirements. The maturity of risk methodologies far outweighs that of information management. Changes in risk methodology are generally understood and quantifiable. The impact of information management is often not known, but has far greater impact. It is critical that information management is properly aligned with key RM initiatives such as:

• Disclosure
• Risk based pricing (RBP)
• Risk adjusted performance measurement (RAPM)
• Capital management
• Economic capital
• Regulatory capital (Basel II)
• Stress and scenario testing
• Value at risk (VaR)
• Asset liability management (ALM)
• Anti-money laundering (AML)
• Fraud
• Operational risk management
• Limit management
• Authorizations

But how does one know if information management is aligned to support rather than constrain key RM drivers and strategies? How does one evaluate how well information architecture aligns with desired RM capabilities? How can a common dialog between risk and technology groups be cultivated?

A Teradata® Risk Management (RM) Information Management Assessment will help you identify the key issues that constrain your ability to more effectively manage risk and return. Through interview input from your key risk managers and IT architects, we can provide an in-depth analysis of key opportunities to improve your specific RM needs.

An RM Information Management Assessment from Teradata has many benefits, including allowing you to:

• Determine gaps between your current and desired RM practice.
• Provide insight into peer/industry practice.
• Get a detailed analysis and prioritized set of recommendations to close gaps.
• Use it in conjunction with other information management assessments and development processes to develop superior information management.

Why not leverage years of accumulated information management experience combined with insight from award winning Teradata customers and industry specialists? The result will be a best practice solution that aligns the maturity of your information management to the sophistication of your RM goals. We've distilled this experience down to a series of dimensions and maturity stages that allows you to harvest maximum value from your RM information management.

A key deliverable from Teradata is the RM Information Management scorecard. The scorecard clearly defines and measures current and target risk information management practices. You can use the maturity ratings to provide assessments of your control, compliance, reporting, and analytical capabilities, as well as recommendations for improving efficiencies.

Why should you choose Teradata? Because we offer a blend of industry knowledge, consulting, information management, and technology experience unavailable from any other source. For 25 years, we've been providing innovative, best-in-class business information management and technology solutions for many of the world's most successful businesses. We support seven of the ten top earning banks and many other large financial institutions. And we've long supported best-in-class information management environments. As a matter of fact, we've been ranked number one in data warehousing and a leader in risk management solutions by Gartner Group for several consecutive years.

To find out more about how the Teradata Risk Information Management Assessment service can help you align analytical capabilities across your organization, contact your local Teradata representative.