SAS Grabs Win in Compliance Category

Datamation readers chose SAS Institute's Credit Risk Management software as the winner in the Compliance category in our 2005 Product of the Year competition. This comes at a time when compliance spending is expected to take off.
Posted February 10, 2005

Lynn Haber

For Datamation readers, the choice was clear: Garnering twice as many votes as its closest competitor, SAS Institute's Credit Risk Management software was voted first place winner in the Compliance category for our annual Product of the Year competition.

Readers voted Cognos Controller from Cognos Inc., the number two product in the Compliance category, while Enterprise Configuration Manager from Configuresoft grabbed the third-place finish.

With compliance mandates in the forefront of most business decision-makers minds, industry watchers expect IT spending on compliance solutions to soar in 2005. Targeting the financial industry in particular, SAS Credit Risk Management enables users to assess and report the risk of potential credit losses and calculate capital reserves required to cover that risk. Without the appropriate controls in place for credit risk management, financial institutions risk regulatory noncompliance and financial instability.

''The benefits of credit risk management is that this type of solution gives a company a better understanding of risk and the ability to analyze risk,'' says Mary Knox, a research director at Gartner Inc., adding that, in short, this enables the company to conduct better business.

While this type of product is not new, the nature of credit risk management is changing.

According to Knox, the direction of this type of software is shifting to an enterprise focus from a departmental focus; product extensibility from a single application to other systems within an organization; and, towards including proactive kinds of capability.

''The objective is not just to review risk after the fact, but to identify patterns and trends and support predictive risk management,'' she says.

According to SAS, Credit Risk Management enables users to access and aggregate credit data across disparate systems and sources; integrate credit scoring/internal rating with credit portfolio risk assessment; forecast, measure, monitor and report potential credit risk exposures across the entire organization, both on the counterparty level and portfolio level; evaluate alternative strategies for pricing, hedging or transferring credit risk; optimize allocation of regulatory capital and economic capital; and, facilitate regulatory compliance and risk disclosure requirements for a wide variety of regulations, such as the New Basel Capital Accord, or Basel II.

In a recent report on effective credit risk management, produced jointly by SAS and Lepus, a U.K.-based investment banking management consultancy, industry participants agreed that technology played a key role in effective credit risk management.

However, Gartner's Knox notes, ''Technology alone won't take care of risk, but it is an important piece of an overall credit risk management strategy.''

Having a credit risk strategy in place is not new at Lloyd's TSB, the U.K.'s largest consumer bank, with assets of about $407 billion. In fact, the financial institution has had such a strategy in place for about a decade. Today, the bank uses SAS Credit Risk Management, as part of a new initiative, prompted by Basel II, to enhance its existing risk management systems while also enhancing the bank's reputation and reaping financial value.

Basel II also prompted Australia's BankWest to implement SAS Credit Risk Management. According to the vendor, the solution will help BankWest not only meet compliance requirements under international banking regulations, but gain competitive advantages in its industry.

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