CGC refines and enhances risk management

Embarking on a journey to achieve a refined state of risk management, Credit Guarantee Corporation Malaysia Berhad (CGC) turned to SAS® for risk enhancement. The result is a globally recognized IT solution with established risk management capabilities that handles the computations required for managing a variety of risk: credit, market and operational.

Established in 1972, CGC partners with financial institutions to guarantee loans for small and medium enterprises (SMEs) in Malaysia that lack sufficient collateral and track records to obtain credit by traditional methods.

Greater insights have been achieved, which helps expand and improve the analytical capabilities of the company.

Sathasivan Kunchamboo
Senior General Manager of Corporate Affairs

Integrated, automated

In addition to implementing an integrated system for risk management, CGC needed help with its existing processes for collating and reporting, since these processes depended on information external to its application systems.

CGC was looking for a system that facilitates data management, analysis and tracking, as well as reporting operational losses, gains and recoveries. CGC also needed to create and maintain risk indicators and controls across the corporation. It chose SAS® Enterprise GRC to handle all these jobs.

At the same time, the Risk Management Department (RMD) decided to automate computations for credit, market and operational risks so that CGC could perform analysis from different perspectives.

Better judgment, less risk

With SAS, CGC consolidates data across all core application systems into a single version of the truth. The result is a level of decision support that minimizes risk and improves the judgment of senior managers as they govern and plan the company’s direction.

The integrated system has reduced the time CGC's analysts spend creating reports and assessments, while increasing time they spend exploring the data for key insights. As a result, productivity has increased since employees are now able to focus on the direction and needs of the company.

Its newfound ability to compute an accurate need for capital adequacy moves CGC closer to Basel II requirements, which inadvertently created risk management practices that are raised to a global standard.

Outstanding relationship

The implementation required a shift in existing processes, as well as adapting best risk management practices.

"Throughout the implementation and beyond, SAS has provided encouraging support and has a good relationship with CGC," says CGC's Head of Risk Management, Perbagaran a/l K. Kupusamy. "The team has been helpful in providing assistance, advice and enablement for the corporation."

For example, SAS helped CGC overcome the inconsistencies and quirks that often arise when consolidating data from different departments.

And, using credit risk reports and simulation engine results, the head of risk management can now deliver a more comprehensive view of CGC's risks to senior management.

Since implementing SAS, CGC has made decisions and introduced policy changes that:

  • Created a workflow-approval system for all operational risk activities, using loss-event data, RCSA, KRI, and issues and action plans.
  • Introduced residual risk in addition to previously adopted inherent risks.
  • Enabled adoption of best practices for calculating capital adequacy inclusive of credit risk, market risk and operational risk.
  • Improved reporting and decision support, thanks to a parameterized simulation engine for calculating credit risk.

A catalyst for corporate change

Users adapted to the solution quickly and found it easy to use. They appreciate the decrease in manual reporting and the greater analytical insights it provides.

CGC finds the ease of use for operational risk and the structured workflow to be especially innovative components of the solution.The entire framework has been designed to minimize errors and is easy to customize. As for credit risk, CGC has been able to simulate possible outcomes and responses based on prevailing market conditions and economic cycles.

A strategic alliance

By understanding to the needs of CGC, SAS shared its experience and best practices, which helped CGC consolidate and streamline processes.

"SAS and the CGC have formed a strong partnership in terms of understanding the needs of the business, culture and value propositions for the company," says Sathasivan Kunchamboo, CGC's Senior General Manager of Corporate Affairs. "This has created mutual respect between both companies and fostered a strong bond."

Challenge

CGC was overly reliant on manual operations for collating and reporting information that was produced externally from the company's application systems.

Solution

SAS® Enterprise GRC

Benefits

With a single version of data that is consolidated across all core application systems, the company can better manage credit and operational risk, as well as govern and plan with minimized risks and improved judgment.

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

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