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Integration Points and Challenges in Risk Transformation Initiatives

Guest post by
Sukruti Suresh, Senior Associate Consultant, Infosys

 

Across the financial institution sector, banks and insurance providers are faced with changing regulatory environment. The need of the hour is to align the risk and finance systems to the changing business and regulatory conditions. In order to optimize the IT infrastructure, financial institutions are in the process of undertaking transformation programs to integrate the intertwined functions of Treasury, Risk and Finance. Traditional legacy General Ledger (GL) systems, reconciliation systems and Risk Management systems operate in silos.

In order to achieve complete integration following deliberations must be taken into account:

  1. Achieve operational efficiency by de-duplication of data in the To-Be design of system architecture
  2. Ensure data downstream and upstream impacts are addressed while designing the To-Be architecture
  3. Provide multi-level unit specific security parameters to ensure data security at unit and group level
  4. Minimize the manual intervention in the integrated To-Be architecture design
  5. Ensure future scalability to meet any changes in forthcoming regulatory requirements
  6. Active stakeholder engagement and hand-holding from Finance, IT, Risk and Treasury
  7. Effective documentation management to capture key challenges, resolution and mitigation strategies

While the aforementioned consideration aspects makes for a good set for an ideal finance transformation program, there are multiple operational, IT and business challenges financial institutions are facing globally. Few common challenges are:

  1. Conflict of ideas between business and IT with respect to the data requirements, flow and design
  2. Multiple vendors from consulting and IT domain handling fragmented pieces of program
  3. Lack of experienced resources with good understanding of both business as well as systems
  4. Challenges in articulating business requirements in system terms causing continually changing requirements
  5. Compatibility issues of newer systems with legacy systems

In order to achieve complete integration, Infosys offers a comprehensive Finance Transformation Solution. This enables an organization to outline the optimum finance and risk architecture by analyzing current requirements and providing sufficient cover for the future. This is done by leveraging the OFSAA Data model & the product stack offering. Infosys FT Solution covers an end to end coverage of process extending from data extraction from source system to Management Reporting. It uses product components like Financial Accounting Hub (FAH), General Ledger (GL) & Hyperion Financials Management (HFM), OBIEE etc. along with tools and accelerators like FinRECON, Pre-Defined Repositories for Rapid Implementation, tools and accelerators etc.

Infosys Finance Transformation Solution helps in addressing issues in areas like Finance Management, Governance Risk & Compliance Management and Performance Management. The selling point of this solution is the point that it is highly customizable. Based on business needs, it can be tailored to fit the requirement perfectly. It includes several use cases, documents, process flows etc., Pre-defined Accounting rules library for multiple representations across products and enhanced OFSAA data model for accounting requirements, Pre-defined reference model to enable easy integration with existing applications and create a common operating environment that minimizes operational risk.

The above mentioned considerations and challenges form a good snapshot of the ongoing Risk Transformation projects. In my opinion, integrating finance, risk and treasury systems has the potential to generate synergy to achieve process, operational and business efficiency. Some mitigating measures that can potentially reduce the risks emanating from challenges can be in the form of fit-gap assessment, system architecture study, encouraging cross stream discussions, proper assessment of business and technical requirements. The benefits of integrating risk, treasury and finance system can be expected in the form of process optimization, lower total cost of ownership and dependable data interpretation across the board.

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