Evolution of IFRS 9 and Credit Platforms

Transcription

1 Evolution of IFRS 9 and Credit Platforms Darryl Ivan, National Practice Lead, Risk Management June 2017

2 About today s presentation This is not an introduction to IFRS9 compliance

3 What s in it for banks IFRS9 is NOT just a regulatory exercise but an opportunity to DRIVE INNOVATION INTEGRATION OPTIMIZATION

4 This presentation will focus on The evolution of IFRS 9. As banks continue to evaluate and develop their approaches to not only achieve regulatory compliance they will look to optimize and meet various other business challenges: 1) Using technology to overcome the complexities of IFRS 9 2) Platform integration to support regulatory and business challenges and drive efficiency 3) Criticalness of data management and analytics 4) Convergence of Finance and Risk Management and the role of IT

5 Take away IFRS9 is a continuing saga! This is not a once and done exercise and IFRS 9 will continue to evolve as best practices emerge.

6 Taking the pulse on IFRS 9 Finance Pricing Scenario Planning Risk Many complexities to overcome Compressed timeframes Performing parallel runs prior to deadlines has been a challenge Initial ECL results suggest a significant impact to provisions and increased volatility Moving from tactical to a sustainable and flexible multifunctional platform

7 Using technology to overcome complexities of IFRS 9 Considerations beyond initial model development: Moving from simple to complex models Testing & deployment of series of models Pre-production macro scenario testing On the fly changes to staging rules Coordination of efforts between stakeholders Tracking sign-offs/approvals Dynamic reporting/business insights Criticalness of controls and audit trails

8 Integration supports regulatory and business challenges IFRS 9/CECL Regulatory demands continue to drive complex technology initiatives RegCap /EconCap Common Platform Technology EWST/CCAR /DFAST Business managed applications are costly and inefficient Drive efficiencies through flexible, scalable and extendable technology platforms Linking and harmonizing systems and processes CVA/XVA BCBS239 (RDARR) Analyze more data more often Orchestration of activities across functional areas FRTB Dynamic/real time analytics Increasing sophistication and reliance on models

9 Criticalness of data management and analytics More input data elements and loan level analysis Data integration, quality, sourcing and governance is critical Monthly reporting and multiple macro-economic scenarios More data to report and analyze more frequently

10 Finance and Risk convergence and the role of IT Risk Model development Scalability Transparency Model deployment Reduce key-man risk Financial Analysis Process orchestration What-if analysis Variance analysis Production workflow Controls and sign offs Collaboration Accounting IFRS 9 reg reports Automated entries Auditability IFRS 9 is an accounting standard that relies on analytical and economic skills not typical of accounting Collaboration between Risk and Finance groups are critical IT ultimately supports required infrastructure Technology Infrastructure

11 Closing thoughts IFRS 9 will continue to evolve as regulators and auditors provide guidance post reporting Expect implications on product pricing and portfolio strategies Increased transparency along with higher provisions and increased volatility in ECL necessitates better analytics IFRS 9 is an opportunity for banks to integrate platforms, drive efficiencies and improve processes in addressing regulatory and business challenges

12 Thank you Contact: sas.com

13 Risk Management is a Core Strength and Top Focus Area A critical technology partner to banks globally: 45+ deployments of SAS Expected Credit Loss for IFRS 9 SAS Model Risk Management deployed at 21+ banks including 7 CCAR banks SAS Regulatory Risk Management at 150+ banks Independent analysts rank SAS as a category leader for: Enterprise Stress Testing Systems Credit Risk for the Banking Book Model Risk Management Systems Credit Risk Analytics Solutions