Solutions for Financial Risk Management from Fiserv support asset liability management, market risk, credit risk, liquidity risk, interest-rate risk and funds transfer pricing capabilities to give your organization a truly enterprise view of risk.
Every balance sheet is exposed to risk. Since financial services professionals do not have psychic powers, you must evaluate multiple balance sheet structures under alternative interest rate scenarios. Why? Financial institutions need to understand how much risk exposure is embedded in their balance sheet.
Certain balance sheet compositions perform better in rising rate environments, and others in falling rate environments. Whether you choose to actively assume financial risk for income opportunities or minimize financial risk by immunizing it, you must be able to assess the embedded amount of risk in your balance sheet. This allows your organization to adjust and/or control the risk to suit business goals and plans.
Financial institutions require measurement and assessment systems to oversee the net-interest spread, the principal driver of operating earnings. To create a favorable environment for achieving return on assets or EPS growth goals, managers need powerful asset/liability management, income simulation and transfer pricing tools to help budget the interest margin. At the same time, the assumption of some degree of credit, liquidity and interest-rate risk are unavoidable consequences of lending, investing and funding activities. Organizations need scenario analysis to help reveal the nature and amount of embedded exposure and to limit risk to acceptable levels.
To meet these needs, Fiserv offers strategic financial risk management tools that have powerful capabilities to:
- Measure and manage interest rate risk and accurately model income and economic value
- Simulate accruals, cash flows and defaults for all instruments
- Define prepayment assumptions, as well as product and organizational-level structures to support reporting
A better understanding of your risk position will equip you to plan more effective, and ultimately more successful, performance management strategies that benefit your entire organization. Some of the benefits your get with Financial Risk Management from Fiserv include:
- "What If" scenarios to weigh the risks and rewards of different interest-rate scenarios for individual balance-sheet components or the balance sheet as a whole
- Integrated budgeting, planning, risk management, analysis, reporting and profitability measurement to help institutions centrally coordinate and control vital business data and processes
- Integrated ALM, market risk, credit risk, liquidity risk, Basel II/III and IAS 39 to help correlate and model risk factors through the economic cycle
- Accurate measurement of net-interest margin for each unit, product and customer by reflecting its specific economic characteristics. Provides a comprehensive set of allocation techniques for a better, more objective understanding of profit sources and performance measurements