The document discusses the challenges financial institutions face in an uncertain economic environment, termed the "New Normal". It emphasizes the importance of embedding risk management in decision making, using a common platform for risk, finance, and regulatory reporting. It also stresses the need to identify and manage various risks, from liquidity and credit to operational and compliance. Finally, it proposes that financial institutions undergo an "analytical transformation" through investments in a unified data model, infrastructure, and applications to achieve a holistic view of risk across the organization.

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“High Performing Financial Institutions and the
Keys to Success in an Uncertain Environment”

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Presentation to the Caribbean Association of Indigenous
Banks by Peter Hill, Oracle Financial Services Software
“High Performing Financial Institutions and the Keys
to Success in an uncertain Environment”
 The liquidity crisis
 Increasing scrutiny by regulators
 The importance of bringing Risk and Finance
into decision making
We describe this as the ‘New Normal’We describe this as the ‘New Normal’

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“New Normal” in Financial Services
Transformation Unfolding Now
• Sound risk management must now be embedded in all
decision making processes across the institution
• Risk and performance management, along with accounting
functions, must naturally exist within a common decision
making platform
• Compliance with advancing and more complex regulatory
mandates will trigger a shift in focus from paper
pushing/reporting driven efforts to competitive driver
• Capital adequacy and liquidity risk management will define an
institutions’ ability to not only survive, but thrive, in the “New
Normal” marketplace

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“New Normal” in Financial Services
This Transformation Means…
• Operational Risk must play a more prominent and integrated
role at the top of the institution to identify, control and
manage risk and performance issues
• Financial crime and compliance strategies are already
moving from pure regulatory compliance plays to strategic
with increased need for integrated with other risk systems
• CIOs must revisit the nature of supporting data warehouse
architecture strategies as cross functional needs drive major
change and restructuring
• Collection and distribution focused data strategies will
transform into more purpose-built and end use case
approaches

5. 5
Ever-Changing Compliance is a Big Issue
6© 2010 Oracle Corporation – Proprietary and Confidential

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Banks Face Many Different Types of Risks
Trading &
Model
Risks
Business
Continuity
Legal
Risks
Outsourced
and Supplier
Risks
Compliance
Risks
Financial
Crime
(AML, Fraud,
Rogue Trading)
Product
Risks
Market
Risk
IT Governance
and Information
Security
Documentation
Risks
Reputational
Risks
Risks need to be
identified and evaluated.
What controls are in
place? Do they work?
What happens in stress
scenarios?
Credit Risk

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Worst-Case Workshop Scenarios
Identify, examine, and consider action about risks at a strategic level:
 External threats e.g. competition, loss
of key staff, weather issues, terrorism
 Temporary issues e.g. loss of
electricity, public transport, medical
pandemic, IT or communication failure
 Market disruption e.g. lack of liquidity,
changes in economy
Consider scenarios as:
1. Consider relevance and
potential impact
2. Determine necessary action
3. Periodically review
Record outcome of workshops:
Use workshops
and a moderator

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ERM & Capital Adequacy
Liquidity Risk Management
8

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ERM & Capital Adequacy
Enterprise Stress Testing
9

10. 10
ERM & Capital Adequacy
Risk Adjusted Performance Measurement
10

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ERM & Capital Adequacy
Risk Materiality Assessment
11

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ERM & Capital Adequacy
Capital Planning
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A Strategic Approach to the Risk Analytical Challenge
Begin with Firm Foundations
v061510
A Financial Services data model, an ‘intelligent’ infrastructure,
and a BI reporting layer used to drive all of our risk analytical
solutions representing a one-time investment.
13

14. A Strategic Approach to the Risk Analytical Challenge
Then Add Applications as Required
UnifiedAnalyticalMetadata
FINANCIAL SERVICES ANALYTICAL APPLICATIONS DATA MODEL
FINANCIAL SERVICES ANALYTICAL APPLICATIONS INFRASTRUCTURE
FINANCIAL SERVICES BUSINESS INTELLIGENCE
Data
Sources
Reports Alerts Dashboards Embedded
Computations Common Tools Business Rules Stochastic Modeling
Common Objects Common Dimensions
Pre-Integrated/
Extensible
High Volume
Liquidity
Risk
Capital
Adequacy
Credit
Risk
Market
Risk
14
Operational
Risk etc.
A one-time investment in analytical and reporting infrastructure
that is leveraged by all analytical applications.

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A “Joined Up” IT Strategy Potentially Allows:
• Stress testing of key risks
• Scenario analysis to see how ‘prepared’ the
organisation is for the ‘unexpected’ event
• Satisfy regulators with comprehensive risk
assessments across the enterprise
• Compliance risk is another type of operational risk
• Internal Audit are partners with Compliance Managers
with Operational Risk Managers to ensure compliance
with internal standards and external regulations
• Failure to comply with AML regulations adequately is a
Compliance and Operational Risk
• Fraud and cyber crime are both growing threats
This “New Normal” requires a state of
‘Analytical Transformation’
This “New Normal” requires a state of
‘Analytical Transformation’

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What this means:
• You don’t have to throw out your existing software
• It does mean you need to think whether or not you
really have a ‘joined-up’ IT strategy capable of
delivering a ‘joined-up’ risk view
Oracle Financial Services Analytical Applications Infrastructure
and the necessary applications to fill the gaps
Import Data Financial data warehouse

17. The following is intended to outline our general
product direction. It is intended for information
purposes only, and may not be incorporated into any
contract. It is not a commitment to deliver any
material, code, or functionality, and should not be
relied upon in making purchasing decisions.
The development, release, and timing of any
features or functionality described for Oracle’s
products remains at the sole discretion of Oracle.