Insights. Financial modelling. Topical articles, tutorials, case studies and news. Welcome. Introducing RiskAgility FM. Overview

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1 Insights April 2014 Financial modelling Topical articles, tutorials, case studies and news Welcome For our first edition of 2014 we are delighted to introduce our readers to our new financial modelling solution, RiskAgility FM (Financial Modelling). While we remain committed to, and will continue to support MoSes, we see RiskAgility FM as a compelling solution for both MoSes users as well as users of competing software. Given the significant benefits of RiskAgility FM, the ability to import MoSes models directly into the system and our licence exchange program for clients wishing to migrate, this provides a natural next step in the road map for our software clients. The article in this edition touches on just a few aspects of RiskAgility FM. Please contact us for further information or for a demonstration of the system. Joel Fox Global Financial Modelling and Reporting Product Group Leader (Life), Towers Watson Introducing RiskAgility FM RiskAgility Financial Modeller is our next generation financial modelling system. It builds on the success of our existing MoSes system and includes significant improvements, based on feedback from users, as to what they need from a financial modelling platform. A lot of time has been invested to find out about clients likes and dislikes, and perceptions of strengths and weaknesses of different approaches to financial modelling. This has all been used to design and develop RiskAgility FM. RiskAgility FM incorporates many new features and updated technologies to give organisations the best possible environment for creating and maintaining sophisticated modelling applications. The new platform has been designed for enhanced usability while giving improved performance and more efficient use of grids and the cloud. While RiskAgility FM is a new system, it has been designed to enable existing MoSes applications to run with minimal changes. The same development language is used and an automatic migration step is provided within the system. We also have a licence exchange programme so that in most cases there will be no additional fees for existing MoSes users to migrate to RiskAgility FM. Further details about this can be provided on request. RiskAgility FM is now available in Desktop edition with Team and Enterprise editions currently in development. Overview The interface has the familiar look and feel of a Windows application so is intuitive to use and easy to work with (Figure 01). Figure 01. RiskAgility FM interface Work Area Solution Explorer Property Panel

2 Figure 02. RiskAgility FM solution explorer The interface includes the Solution Explorer (Figure 02) which allows you to easily access all parts of the Project in the same place. It is possible to open multiple models, known as Projects, within RiskAgility FM and these can each be accessed within the Solution Explorer. The solution explorer allows the user to access the different managers required to run and manage their models. The managers available are the Input Manager, Output Manager, Run Manager and Code Manager. Input Manager Assumption and input management is an area that has been greatly enhanced within RiskAgility FM. The Input Manager layout has been designed to be flexible and user configurable (Figure 03). Users can use Input and Data Pages to organise the inputs to the model calculations in a way that meets the needs and preferences of the business. Input Pages are used to organise assumption information, typically by category, for example, decrements or expenses data pages are used to link data to code variables within the model. Allowing user defined categorisation of assumptions within these Input Pages allow for maintenance and management of assumption sets at a much more granular level. The inputs can be set within the RiskAgility FM system, or external sources can be accessed directly. There are tools to link to external information in Excel, text or database file types. All of the allowed file types can be used for both data and assumptions input (including FoxPro database files if necessary to retain the integrity of your existing processes). External sources are all maintained in one single location within the Input Manager for all assumptions and data. It is easy to update and see where the external sources are being used in the model. As a typical model tends to have many external sources, this ease of use greatly reduces the risk of the wrong information being used and simplifies the updating and checking process. External files can be previewed from within the RiskAgility FM platform and can be opened at the click of a button in order to edit the underlying file. Within MoSes many lines of code may be needed to manage reading assumptions from external sources. For example, to perform a table lookup for a mortality rate which varied by age and gender, code would be needed not only for the lookup but also to make sure that the lookup age was an integer. Further code may have been needed to avoid any errors with problematic data where gender was outside the expected male/female options. In addition, the lookup table might not cover every possible age so we would also commonly include code to determine what rates should be used after the last age included in the table. Within RiskAgility FM, table reads and all the common code around them has been designed into the system. The input management within the system is very powerful, meaning that all the above options and many more are now standard properties of the input process. All the developer needs to do now is choose options from a list. Multi-dimensional lookups are also now possible as standard within the Input Manager, increasing the flexibility of assumptions that can be used. As well as removing the need to write code for standard procedures this also means that the process of getting data from external sources 2 towerswatson.com

3 Insights April 2014 Figure 03. RiskAgility FM Input Manager (user defined Input Pages) is optimised automatically. This is very important as table reads can be one of the slowest parts of a model if not performed efficiently. Having the table reading functionality built into the system means that inputs are dealt with separately from the core actuarial code which makes models much easier to understand and maintain. Each of the Input Pages described above can be further organised into columns called Assumption Sets. An Assumption Set is a set of values for the variables allocated to that Input Page that can be used to help define a Projection in the Run Manager (Figure 04). Users can set up several Assumption Sets to create the bases for multiple sensitivity projections. A comparison tool is included to easily compare Assumption Sets and multiple Assumption Sets can also be linked together which makes assumption setting much more efficient and flexible. Run Manager In the Run Manager, the organisation of variables into Input Pages from the Input Manager, is used to help define Projections. Users can choose from the Assumption Sets available on each Input Page and combine them in a multitude of ways to create a unique Projection. This mixing and matching of Assumption Sets from the various Input Pages simplifies the process of setting up different projections. Sensitivity projections can be created easily by mixing and matching Assumption Sets. RiskAgility FM provides automated tools to easily generate projections for different combinations. Figure 04. RiskAgility FM Mixing and matching assumption sets in the Run Manager A very powerful and flexible feature of Assumption Sets is that the values used for the variables can be maintained in different formats. An example of this would be for a mortality rate which was using an external source table that varied by age and gender in one assumption set. It is possible, with RiskAgility FM, to create a second assumption set that points to a new external source table that varies by smoker status as well as age and gender. RiskAgility FM can access both of these tables without changing any code. All that is needed is for the code to reference the mortality rate and the Input Manager takes care of the rest of the reading from whichever type of table has been selected. towerswatson.com 3

4 Code Manager and debugging As with MoSes, the flexibility and transparency of RiskAgility FM s code development environment is a key feature of the system. The Code Manager will be used by experienced coders as well as those who only need to review and understand code behind the projections. Figure 05. RiskAgility FM Auto-completion The same subset of C++ code is used as for MoSes, enabling MoSes models to be immediately migrated into RiskAgility FM. The code development area is likely to be the part of RiskAgility FM most familiar to MoSes users but with significant improvements to make the model development process easier, quicker and more flexible. RiskAgility FM is built using Microsoft s Visual Studio. This provides powerful advanced capabilities for ease of use and productivity, and means that the Code Manager has access to Microsoft s IntelliSense functionality and many other powerful development tools, including: Auto-completion of typing, which mean that as you start to type, a pop up list provides available completion options. This covers both project specific code and system variables and is useful both for avoiding spelling errors and coding without remembering exactly what something is called. Figure 05 shows an example of a pop up auto-completion list. Automatic syntax checking, where code is checked as you type with any syntax errors highlighted immediately. This reduces errors and hence development time. For example Figure 06 shows red underlining where a semi-colon is missing. Built in access to the latest C++ compiler with both 32bit and 64bit compilation options with the 64bit option giving increases in memory limits as is increasingly important for large ALM models. Hyperlinking to the incorrect formula code for compile errors, speeding up the correction process. Integrated debugging capability. Break points can be set directly in the code and can be left in the code for production runs if required as the projection will only break when being debugged. Users have full access to other parts of the RiskAgility FM while debugging, making the debugger a very powerful tool for developing, testing and understanding models. Results can be seen directly within the debugger, further aiding with testing and development. Figure 06. Code Manager Automatic syntax checking RiskAgility FM incorporates many new features and updated technologies to give organisations the best possible environment for creating and maintaining sophisticated modelling applications. The new platform has been designed for enhanced usability while giving improved performance and more efficient use of grids and the cloud. 4 towerswatson.com

5 Output Manager In contrast to the existing MoSes system, FoxPro databases are not used and output is instead produced in a.csv file format. This format is extremely flexible and can be integrated easily with downstream reporting solutions. The Output Manager provides a very flexible way to define the output requirements of a Project. The definitions can be created at a very granular level such as those output fields required for an individual report. One or more of these output definitions can then be selected in an output parameter set, making for a very powerful way of defining the output requirements for a projection. This is another example of where users can define items once and then reuse them many times across a range of projections. Any update to output definitions only need to be made in one place to update all projections using this output parameter set. Efficient distribution over grids RiskAgility FM includes powerful new features that allow you to get the most efficient and effective use of your grid resources for distributed projection runs. RiskAgility FM allows you to set up dependencies between projections, with independent projections automatically distributed to the grid to be run (Figure 07) in parallel. This enables companies to fully use available cores especially in large grids or in the cloud. RiskAgility FM also makes it possible to distribute both outer and inner loops for a set of nested stochastic projections and specify whether these can be executed independently. Migrating models from MoSes An automatic MoSes to RiskAgility FM migration process has been built into RiskAgility FM allowing MoSes models to be easily migrated to the new platform. A migration can be carried out by selecting File -> New, choosing Import MoSes Application as shown in Figure 08 and then pointing to the folder location that contains your existing MoSes application. The RiskAgility FM software will then automatically read the MoSes system files and create the appropriate files and system structures for an equivalent RiskAgility FM Project. Most MoSes applications will migrate easily into the RiskAgility FM platform and run without modification. Other applications may need some modification to allow for the significantly different processing options available in the new platform. A soft HASP is used for licences, removing the need for physical hasp keys. The licence software is based on your network server and your usual windows login is used to access RiskAgility FM without the need for a separate user name and password. The licences can also be detached from the network for limited periods enabling you to use RiskAgility FM when not connected to the company network if necessary. Figure 07. Run Manager Setting up dependencies between projections towerswatson.com 5

6 Figure 08. Migrating MoSes model to RiskAgility FM RiskAgility FM includes powerful new features that allow you to get the most efficient and effective use of your grid resources for distributed projection runs. Immediate benefits available after import include: Access to the Code Manager with its integrated debugger, advanced compiler and visual studio capabilities, such as IntelliSense. More efficient usage of existing grid capabilities allowing more runs to be performed in parallel Use of the latest Microsoft compiler and access to both 32bit and 64bit technology. Granularity of Input Manager allows for easy management and auditing of multiple assumption sets. Ability to access data files in non-foxpro format. Ability to manage multiple Projects at the same time. Further benefits are available through restructuring elements of your model to take advantage of the powerful new features that were not available in the MoSes platform such as: Ability to access data and assumptions directly from their native source (Excel, databases and so on). Ability to use more complex data structures in assumption tables and use multi-key lookups. Ability to separate the actuarial code and table reading functionality, materially simplifying code. Ability to leverage the easier run management process, aiding model management, understanding and auditability multiple sensitivities or analysis of movement runs can be organised and orchestrated in an easy to visualise way inside the Run Manager. More control of output produced, including the ability to re-use output definitions across projections and ensuring that the projection calculations performed are tied to the output required. Due to the flexible modelling approach that we have implemented, these changes do not need to be implemented immediately and do not need to be implemented all in one go. Towers Watson has migrated many MoSes applications to RiskAgility FM over the past few months and the expertise we have gained can help you in understanding, planning and executing the migration of your applications. In summary RiskAgility FM is a new financial modelling product built using the latest software technology. It carries forward both the MoSes legacy, and the RiskAgility brand name. It is designed to enable more efficient development of financial models in its feature-rich development environment and provides significant functionality and flexibility to enable users to implement streamlined and highly efficient reporting processes. MoSes models can be imported into RiskAgility FM and, through more efficient use of both hardware and grid technology, modelling projections will complete faster, in some cases, significantly faster. Existing MoSes and TAS software clients will be able to acquire RiskAgility FM licenses by making use of our license exchange program for no additional license fee. The current release of RiskAgility FM is a Desktop release. Moving forward, there will be Desktop, Team and Enterprise editions. For more information about or a demonstration of the system please contact your local RiskAgility FM representative. 6 towerswatson.com

7 News from the world of financial modelling Provisional MoSes training course dates Below is a list of training courses scheduled for our London High Holborn office in The course dates will be confirmed based upon number of registrations. Dates Users Foundation Developer Intermediate Developer Monday 9th June 9 and 10 June 12 and 13 June 16 and 17 June Tuesday 17th June Please moses_training_eu@towerswatson.com to register your interest or request further details. Alternatively, if you would like to speak to someone please call Louise Hare on Courses may also be arranged in other territories. Please speak to your local representative for details. Recent Towers Watson papers The following papers were published in Q3 of 2013: CRO Insights To gain a deeper insight into CROs views on their roles, Towers Watson recently carried out interviews with a number of CROs from various insurance companies across Europe. The objective of these interviews was to gain additional information on the focus of their role, their opinion on the changing nature of the role and the challenges ahead. Risk Appetite Achieving near-real-time risk monitoring is the second paper in a three-part series that revisits the concept of risk appetite and how insurers can extract full value from its implementation. The first paper in the series, Another Bite at the Apple, looks at enhancing risk appetite articulation with clearer linkages to the business. towerswatson.com 7

8 Contacts Regional support centres Europe, Middle East and Africa Asia-Pacific support_apac@towerswatson.com IFM Europe/Asia-Pacific editorial team Corina Dobre corina.dobre@towerswatson.com Julie Achord julie.have@towerswatson.com RiskAgility FM EMEA contacts France Thibault Guenee thibault.guenee@towerswatson.com Germany Christian Naecker christian.naecker@towerswatson.com Italy Cinzia Bonomi cinzia.bonomi towerswatson.com Spain Ana Escudero ana.escudero towerswatson.com Sweden Simon Stronkhorst simon.stronkhorst@towerswatson.com Turkey Kathleen Jervis kathleen.jervis@towerswatson.com United Kingdom Louise Hare louise.hare@towerswatson.com David Pond david.pond@towerswatson.com Asia-Pacific contacts Sherry Du sherry.du@towerswatson.com About Towers Watson Towers Watson is a leading global professional services company that helps organisations improve performance through effective people, risk and financial management. With more than 14,000 associates around the world, we offer consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson is represented in the UK by Towers Watson Limited. The information in this publication is of general interest and guidance. Action should not be taken on the basis of any article without seeking specific advice. To unsubscribe, eu.unsubscribe@towerswatson.com with the publication name as the subject and include your name, title and company address. Copyright 2014 Towers Watson. All rights reserved. TW-EU April towerswatson.com