RiskBusiness, the leading provider of proprietary risk content, information and data services to the financial services industry, today announced the release of its SaaS-based, real-time Risk Appetite Service. Over 175 of the world’s banks, insurers, broker-dealers, hedge funds, asset managers and other financial services institutions in over 30 countries, have been using RiskBusiness’ risk content, tools, information, data and advisory and education products and services over the past 10 years.
The Risk Appetite Service allows a firm to select a wide range of data inputs, define aggregation and weighting criteria for the consolidation of this data, then, using the concept of an exposure profile, to define multiple risk appetite thresholds and accompanying alert triggers per exposure point. On an ongoing data basis, as the input data changes or increases, the exposure points are continuously recalculated and as soon as a trigger condition is breached, the relevant executives and risk managers can be alerted by email, instant message or mobile phone message.
“Risk appetite is a concept that many firms have trouble quantifying and incorporating into their management activity,” says Mike Finlay, President & CEO of RiskBusiness International. “In addition to sensible business practices, there are very specific regulatory requirements around having a clear statement of risk appetite and incorporating it into business decision making. The issues have always been – ”What does this actually mean?”, “How do we do it?” Some firms have introduced checks on risk assessment asking whether the exposure is acceptable from a risk appetite perspective or not, but that is very static. For risk appetite to become meaningful, the firm needs to consolidate all of its disparate and widely dispersed risk exposure information as and when it changes, then monitor the resultant exposure against defined thresholds”.
The Risk Appetite Service allows for internal and external loss data (both public and consortium data), KRI data, audit findings, remedial actions, scenario assessments, risk and control assessments, business environment factors, litigation cases, outsourcing assessments, suspense account data, vendor management, compliance assessments, industry benchmarks and any other data that can be converted into a rating to be combined, aggregated and weighted, then compared to predefined thresholds. This implies that a change in KRI value, say error rates, within a sub-entity, could trigger a threshold at much higher level within the firm as and when it is recorded.
Peter Fiorillo, President & CEO of RiskBusiness Americas adds “ Recently, we have seen a significant increase in the number of requests from financial service institutions to provide this type of real-time Risk Appetite Service. With the increasing demand for more risk information and risk data, such as the Federal Reserve’s announcement on June 7th requiring the 7,307 banks in the U.S. to be compliant with Basel III by 2019, many smaller institutions have been inquiring about how to get this information and data on a real-time basis Two other banking regulators, the FDIC and the OCC are expected to approve similar requirements“.
The real-time RiskBusiness Risk Appetite Service leverages industry leading content including our Taxonomy Service that links process, risks, and controls driving our Key Risk Indicator and Scenario Libraries when performing risk assessments or capital estimations. This “Integrated Solution” is agnostic and will run on any GRC or other technology platform or can be hosted remotely by RiskBusiness, under a cost effective Saas/Cloud environment, making advanced risk management capability available to both the smallest and the largest financial services institution. In the same manner, it is essentially “turn-key” and can be used immediately, generating an instantaneous return on investment.