Managing risk in an integrated environment

Cooperative Computer Society implements SAS^® for data integration and Basel II compliance

Risk management is vital to demonstrating viability and securing competitive advantage for banks (or financial services firms). It’s also essential to comply with international banking regulations and growth in an increasingly global business environment. With SAS, Cooperative Computer Society can provide Cypriot cooperative credit institutions with integrated risk management for accurate, timely automated reporting and assurance of Basel II compliance.

Cooperative Computer Society (SEM Ltd.) provides comprehensive IT services to the Cooperative Banking Movement, totalling 120 cooperative credit institutions comprising 550 branches and about 1.7 million customers. Approximately 90 percent of all Cypriots are cooperative customers.

SAS provides an integrated risk management framework for the management of credit, operational and market risk. This approach helps the Cooperative Central Bank and cooperative credit institutions comply with the Basel II accords and supports the effective analysis and reporting of risks across multiple business processes.

Unique solutions – 120 times
The challenge included providing a solution unique to the institution, not just once, but to each Cooperative Movement company. This increased the complexity of SEM’s project significantly. Risk management solutions must provide uniformity and standardization to meet the audit requirements of regulatory agencies, but the solution also needed flexibility to meet the various needs of each company.

“After the Cooperative Central Bank was established and Cyprus was included in the European Union, SEM realigned its business strategy to provide financial organizations with solutions to consolidate data and deliver results to the regulatory authorities,” said Neophytos Kleanthous, General Manager of SEM. “For Cypriot cooperative credit institutions, those include the Authority for the Supervision and Development of Cooperative Societies and the Central Bank of Cyprus.”

Facing the risks
“Using SAS, we’ve recorded, calculated and reported credit, operational and market risk to bring the Cooperative Movement in compliance with Basel II regulations and the national requirement of supervisory authorities in Cyprus,” said Mr. Kleanthous. “This is a very important project for SEM Ltd., and it was implemented successfully in an extremely short period.”

Before the implementation, the entire process was manual. “Now this process has changed radically,” said Mr. Kleanthous. “Each company within the Cooperative Movement and the Cooperative Bank has a unique system. Although each system within the movement has some unique capabilities, there is still a uniformity in that the systems are built to pull together complex compliance data from multiple systems to quickly analyze it, report on it and deliver it to regulators.

“The previous report delivery procedure took days and often weeks; today, we provide a greater amount of data to the regulators, but the process takes only an hour or so,” said Mr. Kleanthous. “The resource involvement and time consumption have been dramatically decreased. What’s more, SAS was implemented in just eight months.”

Why choose SAS^®?
According to Mr. Kleanthous, SEM had a complex shopping list to fill. The IT services organization needed an integrated risk management framework for the management of credit, operational and market risk. Mr. Kleanthous explained that SEM chose SAS because of its history in the marketplace, its position as the largest independent business intelligence vendor and SAS’ portfolio of successful implementations. The most compelling reason to choose SAS was the fully integrated framework of SAS solutions.

“Due to the uniqueness and complexity of the Cooperative Movement, SEM’s main effort is standardization of its systems,” said Mr. Kleanthous. “Ultimately, we were looking for a system that could offer us a comprehensive risk management approach. SAS is established as one of the leading technology companies in risk management, so we felt no hesitation. Although SEM is not obliged to obtain the most economic offer, in the case of SAS, we were able to get the most economical while still gaining the most comprehensive technology solution.”

Project’s status
Credit risk management, which was an immediate requirement of the supervisory authorities, has been completed for the companies of the Cooperative Movement and the Cooperative Central Bank.

According to Mr. Kleanthous, SEM is looking forward to the next two project phases, which will focus on operational risk management and market risk. “The successful completion of the first phase, in conjunction with the excellent cooperation between both sides, guarantees the success of the entire project.”

The understanding of the environment, the complexity of the task and the successful implementation were the key points that led to an excellent business relationship between SEM Ltd. and SAS. “The project plan and the deliverables were defined, so success was the only option. SAS and SEM are in a win-win relationship,” added Mr. Kleanthous.

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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