The IBM Banking Industry Framework · PDF fileThe IBM Banking Industry Framework Integrated...

© 2010 IBM Corporation

The IBM Banking Industry Framework

Integrated Risk Management Business Continuity Services

FINANCIAL SERVICES SECTOR – DAR ES SALAAM – 12 November 2010

Henk van WilsumPrincipal Consultant

2©2010 IBM Corporation

Agenda


Integrated Risk Management

Business Continuity

Next Steps


Integrated Risk Management Holistically manage risk across the enterprise

Banks need to:• Understand market and credit risk

exposure across multiple silos • Secure all transactions and forms of

interaction• Proactively prevent increasingly

sophisticated internal and external prohibited activities

• Effectively manage detected events• Proactively manage internal and

external potential risks• Understand and manage increasingly

complex compliance requirements at optimal cost


Automate Resolving False Positives Integrated Fraud and Financial Crimes platformCustomer Identification Entity Management Integrated Case and Investigation Management with Web 2.0 capabilities

Get Your Risk Data in OrderRisk Insight and ControlReal Time Risk Insight and ControlRisk OptimizationRisk Modeling and Scenario Analysis

Comprehensive Security Control, Enforcement, Management Trusted Identity Management Configuration/Incident/Problem/Change/Release Management Continuous, Comprehensive Fault Monitoring Data Protection Application Integrity and Security

Compliance Information Lifecycle ManagementCorporate Governance and Internal ControlSales and Market Conduct ComplianceRegulatory CompliancePrudential Compliance

FinancialCrimes

Governance and

Compliance

Financial Risk

Operational and IT Risk

Integrated RiskManagement

IntegrationOptimization

AnalyticsCollaboration

SecurityResiliency

Integrated Risk Management Framework Projects


SMART IS Having the right mix of control measures to proactively deal with financial crimes across all points of vulnerability.

SMART IS Knowing your risk exposure, across lines of business and among industry entities, across the globe, in near-real time.

SMART IS Mitigating risk by elevating and leveraging IT as the organization’s primary, systemic weapon against operational risk and its root causes.

Financial services: Delivering on integrated risk management.

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3

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SMART IS Automatically managing business processes while providing regulatory compliance reporting and monitoring at minimal cost.

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Financial institutions are looking to get a better handle on their financial risk.

33%Financial services executives recently surveyed by the Economist Intelligence Unit who think risk management principles in their businesses remain sound, with over half conducting or planning a major overhaul of operations.1

Banking and financial markets executives who see integrated financial risk management as a priority to enhance competitiveness.2

Financial services firms who say their financial risk, governance and compliance processes are still not integrated across the enterprise.3

80%73%

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Sources:• Economist Intelligence Unit Survey• IBM Global CIO Study, 2009• Governance, Risk and Compliance in Financial Services, The Economist, June 2008, IBM CRO Survey


Smart is: Knowing your risk exposure, across lines of business and among industry entities, across the globe, in near-real time.

Managing financial risk today requires more than knowing direct exposure through each line of business. A financial institution must also be able to continuously map critical relationships across activities, product classes and risk factors.

Commercial banking

Retail banking

Corporate finance

Asset management

Custody and agency services

Sales and trading

Credit ratings

Marketrates Correlation Equity

pricesEconomic indicatorsVolatility

Activities

Product classes

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This will enable the institution to know its true exposure to all relevant risk factors, regardless of the complexity of their relationships with individual products and activities.

Commercial banking

Retail banking

Corporate finance

Asset management

Custody and agency services

Sales and trading

Activities

Product classes

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By integrating data and processes—as well as analytics, reports and visualizations—the financial institution will be able to gain a single view of its complete risk exposure across all dimensions of analysis.

Activities

Product classes

Lines of business

Risk factors

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How will you do it?Increase the quality, transparency and timeliness of your risk information while proactively managing your exposure and liquidity. Recognize and predict complex causal relationships.

Steps to take:

The benefits:New compliance capabilities

Greater profitability

Increased cost containment

Enhanced business agility

Design,implement and enhance solutions to meet prudential requirements.

Gainstate-of-the-art risk management capabilities for each risk category.

Integrateindividual risk management capabilities into an enterprise framework.

Connectrisk, finance and business information systems.

Createa firm-wide risk management culture.

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One of the world’s top global banks manages risk across the enterprise

Client Challenges• A tighter focus on retail credit risk

management at the corporate level required new centralized risk capabilities

Solution• Developed a scalable,

comprehensive risk analytics, intelligence, and reporting platform - and a streamlined process to ensure accurate data collection and management

Smarter Business Outcomes• Centralized and efficient risk analysis, intelligence, and reporting• Integration with Basel II, traditional, and emerging risk metrics• Broad, deep, and reliable view of risk from many perspectives• Risk managed at multiple levels -- from the Board of Directors to line of business

Top Global Bank


Provides industry-leading credit risk insight with specialized templates to create executive dashboards and reports

COGNOS Banking Risk Performance – Credit

Risk

COGNOS Risk Adjusted Profitability Blueprint

Provides real time identity and relationship recognition and resolution

Entity Analytics and Global Name Recognition

Blueprint for integrating risk information with enterprise-wide, distributed profitability management

COGNOS Finance & Integrated Risk

Management (FIRM)

Consolidates credit / underwriting, market, and operational risk information into an enterprise-wide view

IFW / BDW Process & Data Models

Risk-specific banking process and data models speed requirements definition and implementation

Access and identity management, change management, and fault monitoring capabilities simplify audits for IT governance, risk and compliance regulations

IBM Service Management for IRM

Integrated Risk Management Framework Extensions and Accelerators


Be confident that representations of risk exposures are consistent and reliable at every level of your organization?

Understand the complex relationships among risk factors, activity indicators and your business profitability?

Enable your business lines to understand and visualize how theirindividual decisions affect the overall risk profile and companyperformance?

How will you…


Banking Industry Framework for Integrated Risk Management: Process snapshot.

Information sourcesInternal sourcesExternal sourcesBoth structured and unstructured

Discovery and integrationETL and Quality

- Business glossary- Physical data models

Industry Models- Glossary model- Logical data models

Identify/Discover informationStandardized industry framework for data modelsLink structured and unstructured information

Risk calculatorsVaR calculationsPD, LGD, EAD calculationsSophisticated risk models provided by customers/ISVsComplex computation

- “Fat Tails” or “Black Swans”Reconciliation across asset classesComplex simulation models

Complete and trusted viewCounterparty informationRisk-related informationCapture lineage and provenanceProvide necessary ILM capabilityReal time (or near-real time)

Analytics serverConnectivity to advanced analytics

- Connectors to SAS, SPSSHigh-performance real-time processing (rules, CEP, in-memory processing)

Risk analysis (QRA) and reportingDashboards and scorecardswith drill down capabilityRisk analysis tools, e.g., credit concentration riskRisk monitoringDecision support for risk mitigationRisk-adjusted performance analysis

Interface to business processesLoan originationRisk mitigation workflows

Optimized end-to-end solutionRelationship with a broad set of ISVs

Information sources

Discovery and integration

Complete and trusted view

Risk analysis (QRA)

and reporting

Risk calculators

Interface to business processes

Optimized end-to-end solution

Analytics server


Agenda



Business Continuity

Next Steps


BCRSBCRS


… rapidly adapt and respond to opportunities, regulations and risks, in order to maintain secure, continuous business operations, be a more trusted partner, and enable growth

Business resilience is the ability to…

Growth Areas

Business dependence

Regulatory compliance

Interdependencies

CEO’s are struggling with the following areas of resilience….

- Online Trading.- Explosion of Intel and Unix systems.

- Inter application & inter system consistency.- Increased use of Tiered applications.

- Greater integration of IT within business functions.

- Regulations and compliance issues. - FSA 3rd site recommendations.


BCRS value propositionBCRS value proposition

PreventPrevent ProtectProtect ManageManage RecoverRecover

Services to recover business & technology following a negative event

Services to provide fault- tolerant, failure-resistant infrastructure with near- zero recovery times

Services to remotely store, protect & recover vital business information

Services to assess, design and plan for a resilient business infrastructure

Consulting Services

Business Continuity & Resiliency Services

Data Vaulting Service

Tape Backup Services

Replication/Mirroring Services

IT Recovery

Work Area Recovery


IBM BCRS Consultants deliver projects using the Global Delivery Methodology

Environmental Risk Assessment

Recovery Exercise

Assistance

Business Resiliency

and Continuity Manager

Business Impact

Analysis

IT Recoverability Assessment

IT Recovery Services

IT Disaster Recovery Plan Development

Recovery Solution Design

Recovery Strategy Definition

Plan for business resilience

Design enterprise resilience solution

Manage to resilience objectives

Evaluate resilience

capabilitiesPrioritise business

resilience needs

Establish risk

tolerance

Rehearse and review

resilience program

Simulation

Exercises

Work Area Recovery

Virtual Workplace Recovery

Business Continuity Plan Development

Crisis Management Plan Development


Layers of resilience within a business.Layers of resilience within a business.

• Recovery Data Centre• Recovery Office location • Continued network access to customers and suppliers.

• Server and storage virtualisation• Rapid Server provisioning • Specialist Recovery Expertise

• Mirroring for critical data• Remote backup facilities• Backups of workstation data for mobile workers / branches

• Identify most critical processes• Contingencies integrated into all critical processes • Key links with external companies

• Command center identified• Geographic diversity of staff• Defined roles and responsibilities

• Crisis management process• Articulated governance model• Resilience used as competitive advantage

Continuity Plan

IT Recovery

Resilience Strategy

Work Area & Data Centre

Data Management

Photographs: © Jupiter Images

ProcessesProcesses

TechnologyTechnology

OrganizationOrganization

FacilitiesFacilities

StrategyStrategy

Applications and Data Applications and Data

Business Impact Analysis


Managed Delivery Trailer

Infrastructure

Consumers

Integration

Data A

rchitecture

Business Processes

Services

Service Components

QO

S Layer

Data & Applications

Fixed Site Data Centre :

Dedicated or Shared Inventory

Data Vaulting Data Replication/MirroringTape

Recovery of IT Systems can be broken down into two layers:Recovery of IT Systems can be broken down into two layers:


Managed Delivery Service: Managed Delivery Service: recovery technology quickrecovery technology quick--shipped when you need itshipped when you need it

• Provides an easily deployed flexible and rapid shipment of IT equipment to the location of your choice.

Service Benefits :• Fully configured recovery systems delivered to your designated location within 24

hours.• Dedicated technical and engineering team available to facilitate fast and effective

recovery• Offers the convenience of business recovery at an affordable price. • Enables element recovery at site in the event of Individual server failure.• Servers are packed in specially designed flight cases to ensure the equipment is not

damaged in transit. • Virtualised servers, storage, SAN & LAN fabrics preconfigured within each flight case

to enable rapid deployment.


• Mobile trailer-based data centre and preconfigured servers delivered to a location of your choice.

Service Benefits:• Provides replacement Data Centre at your location within 24 hours and includes office space for 10 people.• Data Centre equipped with fully configured recovery systems• Enables staff to remain on site within a self contained environment • Annual test included in the service to ensure that the recovery process works. • Dedicated technical and engineering team available to facilitate fast and effective recovery.• Removes need for expensive Network connectivity between sites thereby offering the convenience of business

recovery at an affordable price • Contains a 100Kva generator and own power supply providing self supporting environment

Mobile Data Centre: replacement data centre shipped to your locMobile Data Centre: replacement data centre shipped to your locationation


Comprehensive recovery capabilities at specialized, strategically located IBM facilities.

Service Benefits:Access to enterprise systems that can not be delivered by mobile or

managed delivery.Virtualised scalable infrastructure fabric provides fast response and

recovery times– servers, SAN and storage available in 4 hoursAccess to advanced recovery tools and techniques.Dedicated technical and engineering team available to facilitate fast and

effective recoveryOn site storage of Operating System images and LPAR configurations

reduces set up time.Option to use either dedicated or shared servers.Option to store and rotate recovery tapes in Media Library at recovery

location.

Fixed Site Recovery: comprehensive restorative capabilities at Fixed Site Recovery: comprehensive restorative capabilities at specialized IBM business resilience centersspecialized IBM business resilience centers


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Replication / MirroringReplication / Mirroring

• Replication of customers data synchronously or asynchronously to a secure remote location.• In the event of a disaster this provides the customer with a facility to recover their data more quickly than by traditional recovery methods and with minimal data loss.• Option to use either shared or dedicated servers to recover production systems.• Provides a cost effective utility based recovery service based on the amount of data being replicated.• Solutions are multiplatform and cater for multiple disk technologies.• Gives a range of costed Recovery Point options based on the network bandwidth.• Data consistency guaranteed (volume level or application level).

Dedicated Disk at remote IBM Recovery Centre

Asychronous replication of data

Wide area network (WAN)

Customers Data Centre

Shared or Dedicated Recovery Servers


IBM Business Continuity & Resilience for IBM Business Continuity & Resilience for Work Area RecoveryWork Area Recovery


… rapidly adapt and respond to opportunities, regulations and risks, in order to maintain secure, continuous business operations, be a more trusted partner, and enable growth

Business resilience is the ability to…

Growth Areas

Business dependence

Regulatory compliance

Interdependencies

CEO’s are struggling with the following areas of resilience….

- Online Trading.- Explosion of Intel and Unix systems.

- Inter application & inter system consistency.- Increased use of Tiered applications.

- Greater integration of IT within business functions.

- Regulations and compliance issues. - FSA 3rd site recommendations.

28©2010 IBM Corporation28

Be Prepared for the UnexpectedBe Prepared for the Unexpected

Notable Disasters1994 Merriespruit tailings dam disaster

1996 IRA attack on Docklands, London

1997 Munitoria fire, Pretoria

2001 Attack on the World Trade Centre, New York

2001 Ellis Park Stadium disaster

2001 Explosion of the AZF factory, Toulouse, France

2002 Main power cut to UK Bank’s Docklands data centre

2003 Major Power Outages in New York and London

2006 Table Mountain fire

2005 London 7/7 – Major terror incidents

2007 Durban oil refinery fire

2009 Tracker fire

2009 Table Mountain fire


Optimise your Work Area Recovery strategyOptimise your Work Area Recovery strategy

Business is dependent on people

Flexible Work Area Recovery Services tailored to you

Innovative approach to meet your business needs

Layers of resilience

Mitigation of business risks for today and tomorrow

Engage IBM to strengthen your Business Resilience

New Work Area Recovery solutions, Innovation for today and tomorrow


Work Area Recovery Service ComponentsWork Area Recovery Service Components

WorkArea

Recovery

Technology• Desktop and Server PCs• Networking• Voice communications

Buildings\Location• Resilience• Secure Environment

Support• H\W, Software, Recovery, Configuration• Preventative Maintenance

Service Management• Invocation, Testing• Change Management• Implementation• Project Management

Ancillary Services• Data Centres• Meeting Rooms• Post Rooms• Car Parks• Storage Rooms• Rest Areas

Related Services• Internet Access• Market Data Services• Managed Recoveries• Assisted Server Recovery• Consultancy


IBM Disaster Recovery Services for Work Area Recovery IBM Disaster Recovery Services for Work Area Recovery –– Touchdown Recovery SpaceTouchdown Recovery Space

Helping you prepare for a significant workforce disruptionBusiness benefits

Mitigates risk caused by events not covered by traditional DR contracts e.g. transport problemsLow cost access to usual office services printer/fax/photocopier, meeting rooms etc.Small groups of staff working in the same location

FeaturesTouchdown recovery is a Hot Desk type facility designed to provide additional resilience to your work force Geographical flexibility; selected site(s) to suit staff demographics ie between their normal office and home locationsProvides a low cost way of providing resilience against short-term, short-duration business interruptionAccess to Printers, Fax machines and Photocopiers Internet Provision with firewallUse of meeting rooms, rest areas etc.Option to use desktop PC or own laptop

Improved Business Resilience, Innovation for today and tomorrow


IBM Disaster Recovery Services for Work Area Recovery IBM Disaster Recovery Services for Work Area Recovery –– Shared Recovery SpaceShared Recovery Space

Helping you prepare for a significant workforce disruptionFeatures

Full function office environmentConnectivity to your corporate network at Test and InvocationDesktop PC image managementVirtualised PC recoverySyndication risk management through contractual Exclusion ZonesIBM’s unique Equitable Sharing policy Front Office and Back Office positionsCall centre recovery

Business benefitsCost effective way of providing full office recoveryHelps mitigate damage to revenue and reputation caused by significant disruptionsProvides security and 24x7 support for your physical workplace solution

Risk mitigation thorough cost effective resilience solutions


Business benefitsWork with other businesses with a similar profile to optimise on your overall solution Suggested multiple locations increases flexibility and overall risk mitigation Provides security and 24x7 support for your physical workplace solution

FeaturesIBM will establish suitable collaboration groups Designed for 2, 3 or 4 businesses to share equitably Provides a good balance between the optimal solution of Dedicated space and Shared spaceFull function office environment to agreed specificationConnectivity to your corporate networkDesktop PC image managementSyndication risk management defined by the members of the Collaboration GroupShared Financial Market Data ServicesFront Office, Back Office and Call centre recoveryIBM Service support to facilitate ongoing collaboration

IBM Disaster Recovery Services for Work Area Recovery IBM Disaster Recovery Services for Work Area Recovery –– Collaborative Recovery SpaceCollaborative Recovery Space

Helping you prepare for a significant workforce disruption

Improved Business Resilience, Innovation for today and tomorrow


Agenda



Business Continuity

Next Steps


Financial organizations benefit from added speed, choice and flexibility, along with lower levels of risk

Speed: Pre-configured solutions can be implemented faster than ever.

Choice: Banks choose the solutions that provide the most value to them, in the order and at the pace that makes the most sense.

Flexibility: Techniques built on business process management and service-oriented architecture means easier deployment and interoperability of solutions.

Lower risk: Incremental projects, each with a defined payback period, are more easily scoped and implemented—and build on infrastructure deployed in previous phases.


Only IBM can provide you with the unique combination of tools and expertise you need, across all elements of business and technology risk, to build a proactive integrated approach to risk management—enabling cost avoidance in compliance spend and redeployment of existing resources to higher-value initiatives.

Why IBM?


Know future legislation and requirements

Prioritize near-term benefit, high-value projects.

Business focus areas:– Financial Risk– Financial Crimes– Operational and IT Risk – Governance and Compliance– Single view of a Customer

Use project to justify the start of a risk data platform.

Apply analytics to support performance management.

Integrate analytics results into your business processes.

Actions to take:

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