Analytic Services
Utilizing tools and methodologies from our platforms, we can quickly and efficiently help our clients with the execution of projects that address immediate needs.
We have extensive experience designing, developing, implementing, customizing and testing models across:
Business areas
- Commercial (C&I, Commercial Real Estate, Business Banking)
- Consumer (Residential Mortgages, Credit Cards, Auto, Unsecured)
- Banking Products
- Risk Models (Credit, Market, Operational, etc..)
- Capital (Stress Tests, Economic Capital, Pricing)
Model types
- Credit models: PD, LGD, EAD, scorecards
- Operational risk: loss frequency, severity, structural scenarios
- Market risk: structured products (CDO, CLO, insurance structures)
Our validation process - whether recurring or one-off - is fast and consistent through a combination of:
- Proprietary algorithms that automate a large portion of the validation effort
- Validators with industry experience who stay current on the latest industry trends and regulatory requirements
All types of validations and related work are included:
- Analysis of internal and external data
- Review of conceptual design and implementation
- Full model replication (when appropriate)
- Performance monitoring, benchmarking and sensitivity analysis
We understand that much of modelers' time is spent maintaining and upgrading existing models rather than developing new ones. Since the focus of our framework is precisely to integrate analytic components and processes into a broader framework, we have structured approaches and tools to manage models that need to be:
- Upgraded to use new data that may not have been available at the time they were created
- Adapted to incorporate modern algorithms such as ML and AI
- Migrated / ported from legacy implementations into modern languages and platforms
- Integrated into a broader suite or framework (even if not ours)
- Adapted to the new post-COVID regime (learn more about our assessment program)
With seasoned team members who have been on both the client and consulting side of modeling projects we know how to successfully structure any engagement type - whether we assume full responsibility for the execution, work in partnership with internal personnel or simply provide guidance to an in-house effort
Data, Modeling, Risk & Regulatory Processes
The complexity of enterprise banking processes that aggregate low level information components from individual models or business can create operational inefficiencies that can lead to waste of resources or worse - costly mistakes. We work with clients to streamline processes such as:
Aligning model development with model risk management and governance is a key feature of our framework. The tolls built into our platforms are driven by robust processes that we have developed over years of being responsible for those functions, and we help clients implement them regardless of the technology they choose.
CCAR and stress testing involve many groups, distinct processes and stakeholders, and require a substantial level of process definition. Many of our framework components - from scenario building to model development, validation, execution and auditing to automated documentation and reporting are integrated into a structured process that can be executed using our software tools or integrated into the clients' existing setup
Strategy
Leveraging our experience in senior management roles building, leading and transforming modeling and risk programs at various organizations, we advise clients on strategic initiatives such as:
At many financial institutions model development and analytics work is scattered throughout the organization, without the organizational structure that other specialized functions such as risk, compliance or legal typically have. We help clients create and implement an organizational framework that works best within their culture but adheres to certain principles that we have found to be universally effective. Issues that often need to be thought through are:
- Centralized utility versus a dispersed / embedded approach - or a hybrid
- Roles and responsibilities within the modeling space, including changes to policies
- Integration with businesses, corporate functions and outside clients
- Optimal mix of in-house vs third party development, validation and technology
- Efficient use of high value resources
We help clients on their journey to become more data and analytic driven organizations, as well as simplifying and automating many of the processes related to modeling, analytics and reporting. These projects typically involve:
- Alignement of the modeling and risk functions with technology and data programs
- Streamling of enterprise risk and finance processes (e.g. CCAR, CECL, regulatory reporting) to efficiently utilize modeling and analytic capabilities
- Change management process to engage personel across the organization to both drive and adjust to changes
Choices made in modeling methodologies and assumptions percolate through many different processes and ultimately impact capital decisions from a regulatory as well as shareholder standpoint. Because the impact can be removed from the original decisions by many layers of various processes, we help organizations create the necessary transparency at the executive and board levels by ensuring that, for example:
- Data and modeling parameters are kept throughout the process chain so their impact can be easily understood at the highest aggregation levels
- Scenario design, model methodologies, assumptions and overlays are all consistent
- Models that are used for capital decisions (e.g. loss estimations, stress tests, economic capital) are fully consistent with those used by business units to make decisions (e.g. credit models, scorecards)
- Pricing models are reflective of true capital costs and are used as the "connection" between deal and enterprise level models