PRIMED helps financial institutions manage their complex financial stress testing by providing a layer of control, risk management and governance across many the many lines of business and functions involved in these processes.
Better Understanding of process obligations, dependencies and workflows
Evidence-based audit & control
Real-time risk management and performance metrics
Alignment of process improvements to strategic objectives
Remove layers of administration and co-ordination by automating your workflow, communications and metrics reporting
Better controls with real-time risk and change management, escalations and metrics, while having an audited and repeatable processes.
Track performance metrics of business processes and track improvements over time against strategic objectives and Key Performance Indicators (KPIs).
Many financial institutions have a number of regulatory-mandated processes and reporting obligations that occur almost on a continuous basis. In Europe, the European Banking Authority (EBA) introduced the Capital Requirements Directive IV (CRD IV) which covers banks, building societies and investment firms, and comprises two sets of reports namely COREP (Common Reporting) and FINREP (Financial Reporting). In the United states, there are a few similar regulations for banking organizations with over $10billion of assets: Federal Reserve Bank (FRB)’s CCAR (Comprehensive Capital Analysis and Review) and the complimentary DFAST (Dodd-Frank Act Stress Test) that share some of the same demands upon financial institutions. In the UK, the Bank of England (BoE) has a stress-testing framework for banks and building societies that broadly follows the same principles as those from the EBA and FRB. For the insurance industry, European Union (EU)’s Solvency II Directive concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.
These regulations seek to test whether the financial institutions have sufficient capital (Capital Adequacy) to continue operations throughout times of economic and financial stress and that they have robust, forward-looking capital-planning processes that account for their unique risks. Further, they assess whether the institutions have sufficient capital to absorb losses and support operations during adverse economic conditions.
Failing to meet the standards of the appropriate regulators examinations can result in significant regulatory fines, sever brand and reputational damage, potential for markets contagion and even potential restructuring of the company.
Calculating capital adequacy, credit and counterparts credit risk, group solvency, market risk and preparing balance sheet, income statements and other financial disclosures requires a lot of co-ordination and data movement across lines of business and corporate functions.
PRIMED provides workflow and notifications across business and functional owners when activities have been completed, or when key control points and sign-offs are needed.
Depending on the regulation being followed, many of these obligations and processes need to be repeated on monthly, quarterly, semi-annual or annual basis. This means that financial institutions need to be constantly running through these cycles, and ideally improving their process performance.
PRIMED supports well-defined business processes that need to be repeated over time through templatized Runbooks.
Financial institutions need to demonstrate that they have the appropriate process controls, governance and compliance procedures in place to ensure that the results of the stress test are delivered on time, and with demonstrably accurate results. This requires good evidence-based controls while being effective in their analysis.
PRIMED tracks the execution of key controls, supports the documentation of the completion of specific tasks, and keeps an audit of all significant changes to tasks and their status.
It is imperative that risks, issues, blockers and other concerns are tracked closely to ensure that the process is effective, accurate and efficient. Further, being able to measure how the process is performing across each cycle will help identify opportunities to change and improve systems, processes, controls and governance.
PRIMED provides risks and change management that specifically ties into the stress testing runbook and its processes and activities. This allows full traceability of risks and issues against specific processes and organizations, while offering full transparency on where future process improvement and investment needs to occur.
Internally, financial institutions need to be able to align Business-As-Usual (BAU) process improvement with change investment and group-wide strategic objectives and KPIs.
PRIMED provides full traceability of BAU process improvements through change projects to strategic objectives and Key Performance Indicators (KPIs).