For all global financial institutions, managing economic capital
is critical to success. Not only are regulatory pressures more substantial
than ever, competition in this new environment is fierce. Many institutions will expand their
economic capital function because of the Basel II regulations. However, even those institutions
not subjected to the rules set forth by Basel II must recognise the strategic value of efficient
and appropriate measurement and management of economic capital to overall institution performance.
Understanding the amount of economic capital required and aligning that to specific risk for
specific activities is critical to growth and long-term success.
Financial institutions need a fully integrated risk management platform to fully benefit
from the power of risk and return analytics. Using separate systems for the various types
of risks means that rate risk measurement is run on the assumption that credit and liquidity
risk are constant and credit risk measurement assumes that rate and liquidity risk are constant.
A fully integrated system allows for the comprehensive measurement of all risk, to result in
comprehensive and accurate economic capital calculations.
IPS-Sendero KRM provides industry-leading risk analysis and management functionality for
assessing and managing economic capital. The system provides solutions that allow your institution
to determine the overall minimum capital requirement as well as available capital and capital
surplus. Maximising the use of your institution’s available capital is key to meeting your
institution’s growth objectives. IPS-Sendero KRM allows you to fully understand your capital
requirements so that you can both meet regulations and maximise your surplus for optimum performance.
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