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SOFTWARE PRODUCTS

The firm's innovative products set a new standard for ERM software solutions. The four products that comprise this comprehensive toolset include the industry's first risk-based business decision analysis tool as well as the first stress economic capital model - which can accurately incorporate the impact or the rare (black swan) events. These tools can be used by practitioners across all industries including: banking & finance, construction, manufacturing and transportation, etc. They are the only tools that can combine hard data, soft data and expert opinion in an objective, transparent and theoretically valid manner. As a result they transform risk management from a compliance exercise into a process that legitimately supports (ex ante) risk based decision analysis. Our products are based on actuarial science theory - which has been used by the insurance industry for decades, however, our advanced toolset follows an entirely new application of this theory.

Key features include:

A methodology for measuring risk that specifically incorporates the contribution to risk from the rare (black swan) events. This represents a major advantage over all other risk models which systematically underestimate risk because they cannot accurately incorporate the impact of the tail in a theoretically valid manner.
A robust method for conducting risk-based decision analysis, based on the “total cost of risk” approach. This allows practitioners to accurately calculate risk-adjusted profitability. The increased transparency therefore reduces the potential for “risk-reward arbitrage” and mitigates “principal-agent risk.”
A highly intuitive methodology. The overall approach and the meaning of the output can be explained to non-technical personnel without resorting to complex language. As a result, most senior executives, C-level staff and boards of directors can validate the business assumptions underlying their companies’ risk models.
The first set of products that can model economic capital for all risks across the enterprise under a uniform approach.
An ultra high-speed Monte Carlo simulation engine, which can support real-time decision making.

ABOUT OUR PRODUCTS

Business Decision Analyzer

The Business Decision Analyzer (BDA) allows managers to assess the feasibility of business propositions on a risk-adjusted basis. Specifically, this tool allows managers to conduct risk-reward, risk-control and risk-transfer optimization at the tolerance level of the stakeholders after factoring the total cost of risk into profitability analysis.

The BDA can be used to analyze the feasibility of new business opportunities (risk-reward optimization) as well as investments in risk mitigation (risk-control optimization) and insurance (risk-transfer optimization). Its many innovative features include the ability to incorporate hard data, soft data and/or "expert opinion" in a theoretically valid manner. The advanced version can be used to model multiple risks simultaneously over a multi-year period under varying business assumptions (e.g., cash flow, insurance value).

The BDA also includes a newly developed ultra high speed Monte Carlo simulation engine that can produce virtually instantaneous results. This makes the BDA ideal for real-time use in strategic planning and related business applications. The risk management function can also use the BDA to confirm that risk is being managed in conformity with the risk tolerance standards of the stakeholders or to uncover potential evidence of "principal-agent" risk.

Stress EC Assessor

The Stress Economic Capital Assessor (Stress EC Assessor) is the industry's first tool for measuring market and credit risk where the full impact of the rare (tail) events can be incorporated into economic capital. The underlying methodology is actuarial science theory; however, this tool is based on an entirely new application of actuarial theory. Unlike many existing Value at Risk models, this tool produces results that are expressed as annualized loss exceedence values, e.g., a one-day decline in stock prices of 15% will take place once every year (on average).

By expressing results in this manner the Stress EC Assessor helps answer many important risk questions, for example, what is the chance of my losing 40% of my portfolio value in any ten-day period over the next five years. It is also much easier for C-level executives and corporate board officers to understand the results as well as the business assumptions upon which their models are based.

In addition, the Stress EC Assessor is the first economic capital model that can be used to conduct practical "what if" scenario analysis which describes stress scenarios in terms of both frequency and severity, e.g., suppose a 10%+ one-day decline in stock prices is expected to take place once every fifteen years, what does that imply about the true 99% level exposure on an annualized basis. The tool is so user friendly it can be used by senior executives who have very little knowledge of advanced modeling techniques.

Model Researcher

The Model Researcher allows a quantitative analyst to conduct advanced research in actuarial science - for use in modeling all risks across the enterprise - without any knowledge of software programming. It features an intuitive and user-friendly GUI and a comprehensive set of command functions. This allows users to generate multiple loss data sets from a variety of frequency and severity distributions as well as fit the resulting data to a range of probability distributions using advanced distribution fitting techniques modified to accommodate censored data (i.e., where a portion of the data is not reported). Comprehensive statistical and graphical analysis functionality is also included. The tool also allows users to conduct "scenario analysis."

OpRisk Modeler

The OpRisk Modeler allows a user to model operational risk on a stand-alone basis. It includes all the features of the Model Researcher as well as many methodological features specific to operational risk modeling, such as trending annualized frequency parameters and combining internal and external consortium data through proportionality. It also includes a robust method of incorporating information from external public loss data.