MANAGING CREDIT, MARKET AND LIQUIDITY RISKS IN THE BANKING INDUSTRY

    On November 08, 2023 at the webinar dedicated to OFSAA products (Oracle Financial Services Analytical Applications), Igor Fedotov, an expert from Oracle, spoke about the system's capabilities in terms of working with credit and liquidity risks, as well as the automation of work with assets and liabilities.
    OFSAA SOLUTIONS
    OFSAA - Oracle Financial Services Analytical Applications, a suite of solutions that includes the following functionality:

    • Yield and financial management (transportation pricing, cost allocation, yield analysis and management, reconsiliation, and more);
    • Risk management (liquidity, market, credit, IFRS 9, capital adequacy)
    • Combating financial fraud (online and offline monitoring, case management, list checks)
    • Customer analytics (profitability analysis of financial institution, retail bank, customer analytics)
    The solutions are delivered together with Oracle Analytics-based preconfigured reports and allow to automate the end-to-end process from pulling data for analytics from external systems and analysis to building reports.

    Igor Fedotov
    Oracle expert
    • 800+
      Risk and finance clients in over 99 countries
    • 180+
      Customers that use transfer pricing
    • 150+
      Clients using yield management
    • 120+
      Clients using ALM and liquidity management

    2017/2018/2019

    Winner in categories:

    Risk Data Agregation & Reporting

    Risk & Finance Agregation

    Top Three

    Banking

    PRODUCTS THAT COVER OFSAA SOLUTIONS
    The following is not a complete list of products automated in the system

    Actives
    Revolving loans:
    • Credit cards
    • Overdrafts
    Ordinary loan products:
    • Mortgages
    • Auto loans
    • Syndicated loans
    Leasing
    Annuities
    Trade finance
    Investments (bonds)
    Repo
    Credit lines
    Securitization
    Liabilities
    Deposits:
    • Current accounts
    • Savings accounts
    • Term deposits
    Other liabilities:
    • Bonds
    • Bills of exchange
    • Repo
    • Money market borrowing
    Off-balance instruments
    • Interest rate swaps
    • Currency swaps
    • Swaps with amortization
    • Forward interest rate swaps
    • Guarantees
    • Future interest rate agreements
    • Cap/Float on interest rate
    • Exchange rate agreements

    An important feature of OFSAA solutions is that each module can be installed separately and embedded into any bank's IT landscape, but all of these modules use a consistent data model, allowing for over-utilization of data flows and optimized storage structure.

    ASSET AND LIABILITY MANAGEMENT


    Oracle Financial Services Asset Liability Management application can perform the following calculations based on the bank balance sheet:
    • scenario analysis
    • financial flows for each product
    • book value of the instrument
    The bank balance sheet can be calculated for a future date taking into account scenarios (currency values, capital flows, opening and closing of products) and serve to calculate net interest income, liquidity gaps and other indicators.

    The system allows to calculate VaR (value at risk) and EaR (earning at risk) indicators using the following methods: Monte Carlo, historical and variation-covariance.
    Processing of calculations in Asset Liability Management

    On-balance sheet and off-balance sheet instruments and market data such as yield curves, exchange rates, volatility, macroeconomics, etc. are used as inputs.

    To calculate targets, the system includes calculation mechanisms, forecasting models and behavioral preconditions that can be adapted and extended for a specific client.

    The system can perform calculations in several scenarios, such as standard business as usual, as well as positive and negative market development scenarios.
    Based on the assumptions described above, the system analyzes data to the accuracy of a single contract, accordingly, in the reporting client can see both aggregated data broken down by different divisions or products or other indicators, and detailing to the level of the account or contract.
    LIQUIDITY RISK MANAGEMENT



    Module Functionality:
    • LCR / NSFR calculation
    • Intra-day calculation
    • Flexible customization of time baskets
    • Customization of business prerequisites and stretch tests
    • Management reporting
    • Flexible integration options

    CREDIT RISK MANAGEMENT



    The solution allows you to manage credit risk pricing, calculate expected credit losses, model risk parameters, and has a set of preconfigured reports.