Embedding Risk factors to build Strategies for Higher Performance of Financial Services
Guest post by
Vandana Vasudev Nayak, Consultant, Infosys
In today's global financial markets, financial institutions are hard pressed to monitor and analyze performance data from multiple sources. More essentially, the challenge lies in generating a combined view of risk and performance. The outlook of Financial Institutions in evaluation of performance is changing; both financial and non-financial aspects like risk are in focus. Financial Institutions are looking for a strong basis and approach that can drive performance smoothly with due consideration to associated risk factors.
The shift towards inclusion of enterprise risk management into performance management is necessitating well-controlled, consistent data at a sufficiently quick pace. To deliver value to customers and continued business growth by enhancing profitability, it is important to leverage information from single reliable source, for high value strategic decisions. The financial perspective of any Financial Institution with an eye on risk factors is an important component for strategy formulations and assessment.
From an analysis viewpoint, the need for single view of Key Performance Indicators with supported capabilities for further analysis including regular forecasting, sensitivity analysis and scenario planning has become prominent. Key performance indicators are risk metrics and/or ratios that provide insight into a bank's performance and potential loss due risk exposures. Few of the common financial measures for Financial Services that matter include asset quality, capital adequacy, Earning at Risk, Loan loss and Risk Adjusted Return on Capital (RAROC).
Risk Adjusted Performance Analytics, part of Infosys Finance Transformation solution provides single integrated platform for financial management and helps maximizes shareholder wealth. This analytics is based on best of breed functionality from Oracle Financial Services Analytical Applications (OFSAA) and Oracle Business Intelligence Enterprise Edition (OBIEE). Up-to-date and actionable KPIs allow management to track developments and avoid any bottle necks. These KPI can be linked policy thresholds which can act as an early warning system when performance levels swing or thresholds breaches or limits and prompt mitigation plans. In order to benefit from the exercise, financial executive can use drill down feature, to analyze data for any shortfalls at a more granular level and build cause and effect relationship.
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