Better risk management for competitive advantage

Bank Islam takes risk management monitoring from reactive to proactive

According to Jeroen Thijs, Chief Risk Officer for Bank Islam, "The risk management function is quite cyclical. When we are in boom times, risk management moves more to the background and the function becomes increasingly facilitative. We have seen this before the recent crisis, where the role of the CRO had been increasingly undermined due to the strong demands of business to grow the business at all cost and as we now know within unacceptable risk parameters. However, when crisis hits, and this is more often than people tend to think, risk management takes a much more proactive role with a stronger voice in the decision-making process."

For instance, we are now able to see that a person in a certain age bracket from a certain state, earning between x and y, renting his property and having high credit card usage and deteriorating CCRIS  record is contributing the most to delinquency levels, and as such we stop financing this client profile.
Jeroen Thijs, Bank Islam

Jeroen Thijs
Chief Risk Officer

No more 'firefighting'

Bank Islam needed to move its risk management monitoring from a reactive to a proactive function. As Thijs says, "We needed to be able to discover stresses in the portfolio before they became significant problem areas. We needed a dynamic system that is updated regularly so we could do proper analytics on our portfolio and discover red flags. If we hadn't addressed this issue, then we would be driving more or less blind and would be firefighting as we had no way to address potential problem areas proactively."

The SAS® Credit Risk Management solution was chosen by the bank to enable it to do detailed segmentation analysis across its portfolio, and discover potential problem areas before they turn into actual losses. Thijs adds, "For instance, we are now able to see that a person in a certain age bracket from a certain state, earning between x and y, renting his property and having high credit card usage and deteriorating CCRIS (Central Credit Reference Information System) record is contributing the most to delinquency levels, and as such we stop financing this client profile. Moreover, we can put extra attention to this group of customers to prevent delinquency levels from deteriorating further. This is very powerful."

Effective risk management allows the bank to be more competitive when pricing its products and services, and improves the asset base of the bank. "The challenge is to ensure that you know where your risks are in the portfolio so that you can manage them proactively. It is also important that you dynamically adjust underwriting criteria to ensure that you continue to finance the right clients," says Thijs.

The SAS solution provides regulatory reports as well as management reports for internal use. It automatically generates the monthly CAFIB (Capital Adequacy Framework for Islamic Banking) reports for the central bank. The management reports are also reviewed weekly and monthly as part of the overall management and governance of risk at Bank Islam.

Thijs says, "The system's robust analytical capabilities enable us to do granular analyses on our credit portfolios and identify potential risk areas. This proactive risk management capability will translate into improved underwriting criteria, enhancing the quality of our overall asset base and eventually moving to risk-based pricing. "He adds that the capability to do analytical reports, which slice and dice the portfolios, is a differentiator among Islamic banks and gives the bank a competitive edge.

Dashboard reporting

The power and simplicity of SAS makes it very practical for business usage, according to Thijs. "I have a dashboard that allows me personally to drill down and slice and dice information whenever I need." He adds, "We are now able to do detailed customer profile information. Moreover, through the CRO dashboard, I am receiving weekly refreshes on the portfolio and PNPF/NPF levels per risk category. The value is that I can now quickly adapt underwriting criteria to reflect new realities."

Thijs says that SAS was selected based on its outstanding data integration and data management capabilities and track record of implementation in the risk management space. He adds, "I appreciated SAS' flexibility in adapting to changing requirements during the project. There were some major unforeseen changes, but the SAS team just went on with it and still managed to deliver within the originally set deadline."

The whole implementation and the first risk management report produced by using SAS was very well-received by senior management and the board risk committee. Business users appreciate the additional capability to do enhanced customer profiling.

When thinking about the future, Thijs says that the strong data integration and data management capabilities are key strengths of SAS. This makes it an excellent foundation to serve as a risk data warehouse to provide further risk management and analytic capabilities. Other departments, such as finance, have expressed interest in using the information within SAS to supplement financial management decision making.

"SAS has delivered an excellent and robust risk data platform from where we can build additional enhanced risk functionality. I would certainly consider SAS risk functionality for risk data modeling, calculating credit risk VaR and implementing economic capital calculations and risk-adjusted performance management," says Thijs.

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Challenge

Monitor risk management from a more proactive posture to gain competitive edge and facilitate growth.

Solution

SAS® Credit Risk Management

Benefits

  • Spot potential problems before they turn into losses.
  • Price products and services more competitively.
  • Improve asset base.
  • Produce regulatory and management reports quickly and easily for improved decision making that promotes competitive advantage.

본 문서에 나오는 결과는 본 문서에 설명된 특정 상황, 비즈니스 모델, 데이터 입력 및 컴퓨팅 환경에 적합하게 되어 있습니다. 각 SAS 고객의 경험은 고유한 것으로, 비즈니스 및 기술적 변수에 따라 달라집니다. 따라서 모든 서술은 비전형적인 것이라는 점을 고려해야 합니다. 실제 절약, 결과 및 성능 특성은 개별 고객의 구성 및 조건에 따라 달라질 수 있습니다. SAS는 모든 고객이 비슷한 결과를 달성할 수 있다고 보증하거나 진술하지 않습니다. SAS 제품과 서비스에 대한 유일한 보증은 해당 제품 및 서비스에 대한 서면 계약의 보증서에 명시되어 있습니다. 본 문서의 어떠한 내용도 추가 보증을 구성하는 것으로 해석될 수 없습니다. 고객은 SAS 소프트웨어의 성공적인 구현에 따라 합의된 계약적 교환 또는 프로젝트 성공 요약의 일환으로 성공 사례를 SAS와 공유했습니다. 브랜드 및 제품 명칭은 각 기업의 상표입니다.

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