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Delivered in an easy-to-use web-based front end, ScenarioFrontier provides users the flexibility to create customized scenarios, the power to analyze strategic plans and the oversight to monitor budget performance.
Since the start of the downturn, stress testing moved from being a secondary element of Pillar 2 frameworks to a central means of determining capital needs for financial institutions.
The industry response to this requirement has been a frantic development of capabilities, focussed primarily on the methodological techniques that underpin robust financial projections.
However, limited progress has been made in industrializing stress testing processes and infrastructure.
ScenarioFrontier is a powerful tool for day-to-day strategic planning and capital management, permitting companies to identify and quantify risks and opportunities across a wide range of potential economic environments. ScenarioFrontier integrates budget, risk, and macroeconomic variables for regulatory compliance and management action planning.
Core Benefits
Budget Tracking
Budget plans are made based on perceived assumptions of economic growth. ScenarioFrontier helps intensify or dampen growth targets, by identifyng risks associated with overheated markets that need to be avoided and opportunities that exist in under-valued markets.
Compliance
ScenarioFrontier is designed to meet regulatory requirements as outlined in Basel Committee's Principles for Sound Stress Testing Practices and Supervision. The platform ingests raw data and assigns risk-adjusted capital based on macroeconomic scenarios, using Point-in-Time approach.
Scenarios Library
ScenarioFrontier clients receive quarterly scenario forecasts developed by BBA's experts. The platform also provides access to a scenario library to eligible clients to customize scenarios and simulate their impact on capital.
Stakeholder Requirements
Other uses of ScenarioFrontier include: help management make decisions based on the organization’s capacity, risk appetite, and actual risk level; plan for dividend distribution, develop capital headroom and monitor premiums for depositor insurance.
KEY METRICS
Risk Management
- Default, loss rates and capital attribution attached to each credit transaction
- Value-at-risk for tradeable securities and investments
- Capitalization of operational risk
- Liquidity risk modelling based on imperfect correlation of the rates received and paid
- ALM risk due to parallel shift in yield curve
- Concentration or event risk due to large exposure or sectoral concentration
- Business risk to model earnings volatility
- Cyber risk modelling
Capital and profitability management
- Current and projected capital sources and uses
- Dividend distribution planning
- Headline earnings and projections
- Earnings impact by risk type
- Management action plan
MODULES ORGANIZED AROUND HOW YOU WORK ON REGULATORY COMPLIANCE
Budget and financial projections
Quarterly budget and financial forecasts, covering asset and liability growth forecast, income statement, capital management and dividend plan
Scenario library
A macroeconomic scenario simulation module to analyze the impact of macroeconomic variables on capital
Financial and non-financial risks
ScenarioFrontier comes equipped with best practice risk measurement models
Management dashboard
Monitor risk appetite, generate automated report packages and download directly to PPT, Word or Excel for analysis and presentations
Archiving
Sotre and acceess historic regulatory filings and create a single goto source for audit purposes