SAS Grabs Win in Compliance Category

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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