Within this suite of integrated components FinArch provides a totally integrated risk management solution that delivers comprehensive support for
company-wide credit, market and operational risk and ensures compliance with
the new Basel II Capital Accord.
Through its detailed analytical structure, Financial Studio supports not only the Standard Approach but also the new Internal Ratings Based (IRB) Foundation and Advanced Approach, allowing for greater risk sensitivity. It provides risk-weighted balance calculation for all assets and off-balance-sheet positions, resulting in aggregated risk-weighted asset values. Financial Studio also adopts the risk weighting calculation by reference to either external credit assessment institutions' ratings or internal PD factors.
Operating within a single database environment the system includes a sophisticated credit mitigation routine with full audit trail capabilities, which assures proper treatment of collateral portfolios, guarantees, credit derivatives and netting agreements. Extensive drill-down capability allows tracking and identifying sources of risk and areas of over-exposure.
Matching between the different risk methods allows banks to optimise the establishment of minimum capital requirements. Furthermore, by measuring capital allocation on a more detailed level and combining its results with profitability calculations, also available in Financial Studio, the bank obtains an integrated platform for the implementation of a company-wide strategy for RAROC.
"We can draw on the extensive data model from our Financial Studio application to quickly anticipate changing market requirements" says Dirk De Beule, CEO of FinArch. "By providing an early stage solution for Basel II and IAS within an integrated system, financial institutions will take a quantum leap in the preparation for these new regulations".
Also available within Financial Studio is the support for new international accounting standards being introduced. The existing procedures for multi-GAAP derivation as well as the generation of additional accounting entries, derived from product and customer data, have been the foundation for the development of an early integrated solution for IAS accounting.
Financial institutions around the world - including several of the leading names in the industry such as ABN AMRO, Euroclear, Dexia, HSBC, BBVA, NIBC, State Street and Fortis Bank - use FinArch's flagship products FinReporter and Financial Studio today, addressing their internal and external reporting needs for legal reporting as well as for internal group reporting, including financial accounting, profitability, solvency and risk calculation.
"Financial Studio gathers both internal and external current and historical data and supports the identification, gathering and calculation of the key risk components required for the IRB methods. The system also holds a wide range of financial indicators for operational risk management " comments Dirk De Beule. "FinArch collaborates already today with several financial institutions in different countries on the design, implementation, modelling and validation of the specific architecture and technology they require to align their internal processes with the external compliance standards".
Banks have taken the opportunity to combine their preparations for Basel II and IAS in one single approach, Financial Studio brings a single answer to these challenges.