Credit Risk Manager CRM

Transcription

1 Credit Risk Manager CRM The first truly integrated credit risk management system on the market. From counterparty onboarding to advanced credit analytics, Paragon combines state of the art technology with a rich feature set to deliver the most powerful credit risk management system available. Our implementation teams average more than 5 years of experience in the energy risk management space, having successfully implemented software at some of the largest players in the market today.

2 Credit Risk Manager CRM 2 1. Paragon Functional Overview Paragon encompasses the entire scope of credit risk management to ensure consistent and efficient adherence to credit policies of the organization. Our highly flexible application is easily configured to meet the nuances of each client s credit risk management preferences. Paragon allows individual users to create custom views of each screen based on preferences. These custom views can also be shared with other users. Additionally, users can leverage the custom views for the creation of reports. Counterparty Management Contract Management Collateral Management Exposure Management Credit Analytics Credit Scoring Workflow Management 2. Core The Core module consists of a highly flexible framework built to adapt to the way you do business. This framework is the foundation which creates the following functionalities for the entire Paragon suite:

3 Credit Risk Manager CRM 3 3. Counterparty Management The Paragon Counterparty Management module stores all related counterparty information required within any organization. Facilitating Paragon s ability to act as the system of record for Counterparty data, Paragon manages the entire process from initiating the counterparty onboarding to credit assessment and maintenance. Paragon retains information for contacts, billing and notice addresses, related entities, industry classifications, credit ratings, credit limits and tenor restrictions. Additionally, Paragon allows users to define client specific fields for any data which not already captured on the Counterparty record. Comment fields allow user a free form space for notes and memos about the Counterparty. Credit limits can be allocated and managed across internal entities, products, contracts and corporate families. Additionally, temporary limits can be extended and tracked in the application with an expiry date to accommodate one off deals or special transactions. Credit limits can be entered and monitored in multiple currencies. If desired, Paragon can configure limits to require approval in accordance with credit risk policies and delegation of authority prior to becoming effective. Each field captured in the Counterparty record, including the user defined fields, can be used to generate reports. All changes to fields are contained in the database, enabling the generation of audit reports. Alerts can be set up to notify users of changes to Counterparty records created via a manual change or uploaded data. Access permissions are used to control user s ability to view, modify and create Counterparty records. Furthermore, Paragon can be the recipient of the counterparty information from other upstream systems of record.

4 Credit Risk Manager CRM 4 4. Contract Management The Paragon Contract Management module is a fast and flexible repository of contractual data, allowing for instant lookup of the information. The management of all contractual relationships including all trade agreements, credit support annexes and parent guarantees is encompassed in this module. Electronic copies of all contractual arrangements can be attached to the record and stored in the database for ease of reference. Paragon has the capacity to include a variety of contractual arrangements, including standard trading agreements, general terms & agreements, and structured transactions. Paragon allows the flexibility to define the contractual parties, covered transaction types, netting rights, and expirations dates. Additionally, users can configure user defined fields (UDFs) for client specific information or data not already captured on the contract record. By entering trading agreements into Paragon, exposure can be linked to the contract level for exposure monitoring. Credit support annexes are linked to trading agreements. The key terms for proper calculation of margin requirements are captured for both in the internal entity as well as the external counterparty including rounding amounts, minimum transfer amounts, independent amounts, eligible collateral, rounding methodologies and calculation logic. Paragon supports the user of a rating matrix, financial ratio matrix, or fixed value for threshold determination, which can also be compared to guarantee support to derive the appropriate threshold. This allows for superior flexibility in defining thresholds for margin agreements. All key terms of Guarantees are captured in the application. By entering Guarantees in Paragon users can allocate the guarantee to amongst multiple guarantors, beneficiaries and/or recipients as needed. The Guarantees can also be linked to specific trading agreements or credit support annexes. Thus, providing comprehensive flexibility for users to monitor and apply guarantees to the underlying risk. Again, Paragon is capable of acting as the system of record for the contract revision process, as well as accepting data from other upstream systems of record. 5. Collateral Management The Paragon Collateral Management Module is a highly functional and adaptable hub of credit information. The Margining module automates the collateral process from the margin call to the

5 Credit Risk Manager CRM 5 calculation of interest for collateral held. Paragon generates and tracks outstanding incoming/outgoing Daily Call. Collateral calls can be ed directly from the application on a client configured template. Users can easily adapt or modify the templates to accommodate new business units or changes to banking information as needed. By maintaining deal level details for the underlying call, Paragon facilitates quick resolution of margin disputes, if necessary. Capturing cash receipts recorded in Paragon allows user to quickly identify the balances associated with margin, prepayments or security deposits. Balances of cash collateral are tracked and stored for the automatic generation of interest calls each month. The user can also interest calls directly from Paragon on client configured templates. Like the margin templates, the interest templates are easily created and maintained by users. The Letter of Credit screen will track amendments, issuance, and associated fees. The Letters of Credit can be linked to Margin Calls or to deal specific transactions as needed. Independent amounts included in Letters of Credit can be promptly identified and monitored in accordance with collateral terms from the contract. Secondary risk can be tracked by Letter of Credit issuer and monitored for compliance to associated limits. Paragon s Collateral module contains the unique ability for clients to track fees and limits associated with Letters of Credit issued under the client s credit facility. This facilitates the optimization of use for the credit facility to minimize costs associated with credit support.

6 Credit Risk Manager CRM 6 6. Exposure Management The Paragon Exposure Management module is the command center for risk management professionals. This module is a custom built solution for credit analysts in today s fast paced trading environment. Paragon supports both 60 Day Notional Exposure and Unbilled + Fwd Cash + Fwd methods of calculating credit exposure. The real time view allows users up to date information for the evaluation of available credit. The level of exposure detail granularity is dictated by the availability of information provided by data sources. Paragon is able to accept all fields generated from other systems to accurately track aging information and drill down for exposure details as well. Users can effortlessly configure the view to show top exposures, top obligations, credit line utilization, available credit and collateral requirements. Additionally, any of these user preferred views can be shared with others and used to generate reports for distribution. Easy to read custom graphics allow clients to instantly digest the company s daily credit position based on a variety of metrics.

7 Credit Risk Manager CRM 7 7. Advanced Credit Analytics Many software titans use cookie cutter analytics across industries. Paragon Advanced Credit Analytics was developed with over two decades of Energy Trading Software experience. The models incorporate a Monte Carlo Simulation to completely re evaluate transactions and determine potential future exposure at various confidence intervals. The simulations are capable of incorporating rating downgrades and migrations to see the impact on collateral requirements. Paragon Advanced Credit Analytics incorporates CVaR and Expected Shortfall Risk to quantify extreme losses due to future credit events and the worst possible case scenarios where loss exceeds CVaR s extremes. This module also includes a Parallel Shift model which allows users to view exposure and collateral effects after definable market shocks.

8 Credit Risk Manager CRM 8 8. Credit Scoring Paragon s open architecture facilitates easy integration with various financial and market data sources creating an enormous database of financial filing data and industry ratios. Paragon s Credit Scoring module is integrated with the SEC Edgar Online system to monitor public company filings. Additionally, Paragon can be effortlessly configured to import data from alternative sources based on customer preference. The import of data incorporates periods of information including quarterly and annual filings. Including various time periods over multiple years accommodates any review cycle preferred for financial assessment. Market data can be imported from the external sources including (but not limited to) Dun and Bradstreet, Bloomberg, and others. Paragon offers a financial statement feed from xignite, for an additional fee. Users can opt to manually enter financial or market data. If desired, users assigned the proper access permissions can override the imported information. If amounts are stated in another currency, the data can be converted to the base currency of the customer s business, if necessary. The Credit Scoring module allows users to define unlimited, flexible scoring modules for various counterparty types. The Scorecards can be configured to account for a multitude of industry groups using a boundless number of user definable financial parameters and measures with associated weightings as needed to align with internal credit policies. Financial and market data can be applied to multiple Scorecards, if desired. Users can evaluate trends in the financial parameters with year on year or quarter on quarter comparisons of quantitative analysis. Additionally, qualitative assessment by users can be incorporated into the Scorecard analysis. Results from the Scorecard assessment can be configured to designate an internal rating for comparison with external ratings established by external agencies.

9 Credit Risk Manager CRM 9 The Scoring module can be configured to recommend default credit limits based on results of the various models using defined benchmarks for each Scorecard. The limits recommended based on Scorecard analysis can be configured to automatically update limits assigned to the counterparty in Paragon. Alternatively, the Scoring module can incorporate the delegation of authority of the credit policy for limit approval and require approval by a user with appropriate authority before updating the counterparty record in Paragon. Users can easily modify Scorecards and update related benchmark statistics as needed to address changes in the industry segments or risk appetite. The modification of Scorecards can be controlled via access permissions to ensure consistent application of credit policy. Paragon offers consulting services to assist with the creation and maintenance of Scorecards as requested. The Scoring module facilitates overall portfolio analysis with the ability to create Peer Reviews and Industry Comparative Analysis. User can also create Focus Question Reports, Quick Call Summaries and other configurable reports to document financial decisions.

10 Credit Risk Manager CRM Flexible Pricing License/Annual Maintenance Model The client will provide the hardware (application and database server) and database software (Oracle) to operate the Paragon CRM system. There will be a 1 time license fee plus annual maintenance Subscription Model We host the application/database server within Amazon Web Services (AWS). There are no upfront hardware/software costs, only a monthly subscription that includes license and maintenance. 10. Why Paragon? Credit Software Focus 100% Referenceable 100% On time/on budget Implementation History Low Cost Of Ownership Customer Focused Lengthy Energy Experience