Key Risks

 

FIS EGRC Solutions provides clients a 360-degree solution set of products and services that enable enterprise risk management, the enhancement of overall compliance programs, and mitigate risk through a best-practices-based model that ensures regulatory compliance proficiencies now and in the future.

 


Credit Risk


Credit risk is the risk of loss of principal or loss of interest stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation.

Exposure to credit risk continues to be the leading source of problems in financial institutions. The last several years are a painful reminder of the cost of poorly managed credit risk that not only subjected financial institutions to reputational risk, but resulted in many financial institutions with regulatory supervisory actions, the imposition of civil money penalties and in some cases, financial institution closures.

In today’s environment, effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any financial institution. In order to effectively manage credit risk, financial institutions need to establish a strong, scalable and sustainable risk management infrastructure for their financial institution that is in line with regulatory expectations. Regulators expect financial institutions to employ a proactive vs. reactive approach to the management of risk across their organization. Consequently, financial institutions have to take the necessary steps to implement a comprehensive credit risk management program that is practical, functional and provides sufficient risk-return discipline in their credit risk.

Financial institutions need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions. They need to ensure they have established an appropriate credit risk environment and are operating under a sound credit granting process and are maintaining an appropriate credit administration, measurement and monitoring process.

Our Early Risk Manager (ERM) product utilizes quarterly Call Reports and a series of regression models similar to what banking regulators use. However, it goes beyond the regulatory models to identify emerging risks before they happen and enables an institution to attain optimal risk management performance.

ERM provides a risk dashboard of 25 reports containing key risk management intelligence in relation to three focal points:

  • CAMELS rating
  • Probability of undercapitalization
  • Economic value
In addition, our staff of highly-trained and experienced loan experts can assist in the following credit risk management services:
  • Credit Risk Assessments
  • Credit Policy Review
  • Credit Policy Training
  • Loan Loss Reserve Analysis Review
  • Loan Grading and Pricing Review
  • Asset Quality/Loan Portfolio Review

Credit risk in loans is the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of a financial institution, including both on and off the balance sheet. Financial institutions encounter credit risk in various financial instruments other than loans, including acceptances, inter-financial institution transactions, trade financing, foreign exchange transactions, financial futures, swaps, bonds, equities, options, and in the extension of commitments and guarantees, and the settlement of transactions.

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Operational Risk


Operational risk is the risk of unexpected losses arising from deficiencies in an institution's management information, support and control systems and procedures. Operational risks are one of the major reasons for financial loss in the banking sector.

FIS EGRC Solutions partners with financial institutions to help them manage the complexities associated with operational risk. Our team is comprised of former Big Four risk management consultants and heads of risk departments within leading financial institutions. With this experience, we provide comprehensive risk consulting services that encompass the entire enterprise and operational areas specific to your institution including: interest rate risk, liquidity risk, operational risk, reputational risk and strategic risk.

Our team will assist you in creating an operation risk management framework that is practical, scalable and sustainable. The risk management framework will help in risk identification, assessment and treatment of key risks affecting your institution. Developing a formal risk management program requires collaboration between the board of directors, the management team, and all lines of business and support functions in order to be successful.

Some of the risk management activities we consider when serving our clients include:

  • Governance and Organization (including Policies and Standards)
  • People, Roles and Responsibilities, and Performance Expectations
  • Risk Assessment
  • Risk Monitoring (i.e., Risk Metrics)
  • Risk Reporting
  • Communication and Training

By teaming with FIS EGRC Solutions to develop or maintain a practical and effective Risk Management Program, you will derive the following key benefits:

  • Improved identification and visibility of risks across the organization, with linkage of risk management objectives to your business strategy and regulatory requirements
  • Increased cooperation, alignment and communication across business, operational and corporate functions
  • Improved understanding of employee roles in relation to risk management
  • Improved response to high-risk situations and more complete information provided to senior management and the board
  • Reduced amount of risk management issues, possible financial losses and reputational issues.
  • Long-term linkage between growth, risk, return and performance

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Compliance Risk



The recent influx of regulatory requirements resulting from the Dodd-Frank Act on top of the ever-demanding and complex regulations already in place put an increased burden on financial institutions. The FIS EGRC Solutions team understands compliance complexities and their implications. Our full spectrum of products and services addresses the compliance risk mitigation needs of banks, credit unions, mortgage companies and other financial institutions, and we will recommend the most effective course of action that is customized for your institution.

Our Compliance Risk Products can support your program in the following areas:

Risk Identification – Premium Membership keeps banks up-to-date on compliance risk, both existing and emerging, through one-to-one telephone and e-mail advisory services, webinars covering the latest compliance topics, and a variety of off-the-shelf procedures, policies, checklists and other job aids.

Risk Assessment – Compliance Risk Indicator provides banks and other financial institutions with a software platform on which to conduct a risk assessment covering consumer protection laws and regulations, BSA/AML as well as select safety and soundness laws and regulations.

Policies and Procedures – Control your compliance risk environment with policies and procedures derived from the FIS Regulatory Advisory Services Compliance Manual known as the “Big Orange Book,” as well as Quick Reference Guides that distill complex law and regulations into easily managed elements.

Training – Educate your staff with Regulatory University. Regulatory University supplies all federally required bank compliance training and is used by all five banking agencies – the FDIC, OCC, FRB, CFPB and the CSBS. In addition to a suite of more than 250 regulatory compliance courses, Regulatory University features “soft skills” training covering popular topics such as elder abuse, bank robbery, networking and business etiquette, to name a few. Further, Regulatory University features robust reporting, SCORM compliance, data feeds and other critical infrastructure that you need for effective, risk-based compliance training.

Monitoring – In addition to a custom monitoring program that can be efficiently implemented by seasoned consultants, FIS offers ComplianceAnalyzer® for monitoring compliance in the high risk area of mortgage lending. ComplianceAnalyzer is the mortgage industry’s standard for automated compliance and provides cost-effective monitoring to hundreds of institutions, including four of the top five mortgage lenders, as well as to regulators. Indeed, the Conference of State Bank Supervisors (CSBS) selected ComplianceAnalyzer to be used by state mortgage and banking regulators in the electronic examination process. In addition, FIS’ AML and OFAC compliance solutions, AML Compliance, OFAC Watch and Compliance Databank help automate the BSA compliance process.

Audit – FIS EGRC Solutions consulting is at the ready to engage in a variety of compliance audits.

Reporting – FIS EGRC Solutions’ regulatory reporting suite of products helps banks ensure the timeliness and accuracy of regulatory filings such as the Call Report, FR2900, Summary of Deposits and Y9. The regulatory reporting suite of products is the industry standard and is used by more banks than any other solution. In addition to ensuring the accuracy and timeliness of required filings, the regulatory reporting suite of products is fully supported by a team of experienced regulatory reporting professionals who are available by telephone and e-mail to provide stellar support.

R&D Center − Our experienced professionals are supported by our highly acclaimed Research & Development Center which is headed by a dedicated team of lawyers and former senior federal regulators and compliance executives. Our R&D Center continuously monitors regulatory updates and announcements and translates them into practical implementation strategies. Our Quality Assurance Division, headed by former senior federal regulator and industry expert, ensures quality deliverables are provided to clients and evaluates our products to ensure efficiency and effectiveness and to ensure that they are in line with regulatory expectations.

In addition, our staff of highly specialized compliance individuals of former federal regulators and bank compliance officers can help you manage the complexities associated with regulatory compliance with services including:

  • Compliance Consulting
  • Customized Compliance Programs
  • BSA/AML/OFAC Compliance
  • CRA Compliance
  • Fair Lending
  • Information Technology Compliance
  • Mortgage Quality Control
  • Compliance Training
  • State-of-the-art Compliance Risk Assessment models in the fields of Compliance, BSA/AML/OFAC, Fair Lending, ACH, Remote Deposit Capture, Foreclosure, Security, Information Technology, ID Theft/Red Flags, etc.
  • Policies and Procedures Development/Review
  • Targeted Reviews
  • Control Enhancements
  • Enforcement Action Assistance/Remediation
  • Bank Holding Company Program Design
  • New Product Development
  • Due Diligence
  • Investigation and Forensic Capabilities
  • Efficiency Studies

Our Compliance Disciplines include:

  • Consumer Compliance
  • Fair Lending
  • Community Reinvestment Act
  • BSA/AML and Sanctions
  • Foreign Corrupt Practices Act
  • Privacy and Information Security
  • Identity Theft − Fair Credit Report Act (FCRA Compliance)
  • Remote Deposit Capture
  • Disaster Recovery and Business Continuity Planning
  • Transactions with Affiliates
  • Vendor Management

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Market Risk


The financial crisis experienced in the last several years is evidence of how market conditions can affect a bank’s financial condition and viability. In order to reduce the impact of market conditions, banks must begin by first assessing their risk profile and determining their risk tolerance.

Let our staff of industry experts assist you in taking the necessary steps to build a risk management framework that is commensurate with the bank’s size, complexity, business activities and overall risk profile. The stress tests we design for your bank will be tailored to the relevant level of aggregation, capturing critical risk drivers, internal and external influences, and other key considerations at the relevant level. We will assist you with the implementation of a practical risk program that is functional and provides real-time information to senior management and the board.

FIS EGRC Solutions offers market risk management services including:

  • Stress tests:
    − Transactional stress testing
    − Portfolio stress testing
    − Enterprise-level stress testing
    − Reverse stress testing
    − Scenario analysis
    − Sensitivity analysis
    − Ad hoc risk analysis
  • Safety and Soundness consulting including gap analysis/simulation analysis, interest rate risk management with VaR models
  • Enterprise Risk Management Design and Assessments

 



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Liquidity Risk


Liquidity is the risk that a financial institution will be unable to meet its cash and collateral obligations without incurring unacceptable losses. The recent instability in the financial industry underlines the significance of liquidity risk management for the safety and soundness of financial institutions.

To effectively manage funding and liquidity banks must implement a well-developed liquidity plan. A bank's liquidity policies and liquidity management approach are key elements of the institution's general business strategy. The framework for assessing and managing bank liquidity has three major dimensions: (a) measuring and managing net funding requirements (b) managing market access and (c) contingency planning for alternative scenarios.

Our Early Risk Manager product utilizes quarterly Call Reports and a series of regression models similar to what the banking regulators use. However, it goes beyond the regulatory models to identify emerging risks before they happen and enables an institution to attain optimal risk management performance.

ERM provides a risk dashboard of 25 reports containing key risk management intelligence in relation to three focal points:

  • CAMELS rating
  • Probability of undercapitalization
  • Economic value

Our Liquidity Risk Services include:

  • Cash flow projections
  • Stress testing
  • A formal, well-developed contingency funding plan for measuring, monitoring and managing liquidity risk
  • Funds Management Review
  • Financial Risk Assessments
  • Enterprise Risk Management Design and Assessments

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Fraud Risk


Fraud has not only financial and legal ramifications but can give rise to operational risks resulting in the institution’s inability to deliver products or services. The key to controlling operational risks from fraud-related activities requires effective policies, procedures, and controls to meet these risk exposures. Basic internal controls including segregation of duties, dual controls, and reconcilements remain important. Information security controls, in particular, become more significant requiring additional processes, tools, expertise and testing.

FIS EGRC Solutions’ full spectrum of products and services provided by highly skilled industry experts addresses the fraud risk mitigation needs of financial institutions.

Our Early Risk Manager product utilizes quarterly Call Reports and a series of regression models similar to what the banking regulators use. However, it goes beyond the regulatory models to identify emerging risks before they happen and enables an institution to attain optimal risk management performance.

 

 

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  • Enterprise Risk Management Design and Assessments
  • Sound and Comprehensive Banking Policies and Procedures Development and Review
  • Development of Customer Information Security Programs
  • Information Security Risk Assessment and Review
  • External Security Assessment
  • Network Vulnerability Assessment and Penetration Testing
  • Social Engineering Testing
  • Unlawful Internet Gambling Enforcement Policy Development
  • Unlawful Internet Gambling Enforcement Review
  • Identity Theft − Fair Credit Report Act (FCRA Compliance)
  • Internal Audit Services to periodically assess effectiveness of internal controls







 


Information Technology Risk


Given the complexity of information systems and heightened regulatory scrutiny, it is more important than ever for financial institutions to manage technology risk.

We understand your business and the regulations of your industry. Our Technology Risk Management team has many years of experience working in bank technology areas, as IT examiners, or as consultants for financial institutions. We can help you manage risk in your IT control environment, and further develop that environment into a strategic resource and source of competitive advantage.

Our risk-based independent testing procedures are customized to your institution’s size, complexity, scope of activities, risk profile, quality of control functions and use of technology. Our Technology Risk Management team can benefit your institution.

Technology Compliance Services include:

  • Customer Information Security Programs/Gramm-Leach-Bliley Act (GLBA)
  • Information Security Risk Assessment
  • Information Security Policies and Procedures
  • Vendor Management Program Development/Remote Deposit Capture/Risk Assessment/ACH Risk Assessment
  • Vendor SSAE 16 Review
  • Electronic Banking Risk Assessment
  • Disaster Recovery/Business Continuity Planning
    − Pandemic Preparedness
  • Network Vulnerability Assessment/Penetration Testing
  • Social Engineering Testing



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Third-party Risk


In today’s economy financial institutions’ reliance on third parties to provide various products and services has significantly increased. However, the use of third parties gives rise to additional risks. Improper management of third-party risks can lead to problems including, but not limited to financial loss, reputational risk, regulatory actions and loss of customers.

The effective management of the risks associated with third parties requires implementation of a comprehensive risk management process.

FIS EGRC Solutions’ Third-party Oversight Services include:

  • Vendor Management Program Development
  • Vendor Management Risk Assessment
  • Third-party Due Diligence
  • Third-party Contract Review
  • Vendor Management Policies and Procedures Development
  • Vendor SSAE 16 Review


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Transaction Risk


Transaction risk is the current and prospective risk to earnings and capital arising from fraud, error, and the inability to deliver products or services, maintain a competitive position and manage information. Transaction risk is present throughout the institution as it can encompass product development and delivery, transaction processing, systems development, computing systems, complexity of products and services, and the internal control environment. Planned conversions, merger integration and new products and services are especially susceptible to transaction risk.

Prevent losses and know your customer with FIS EGRC Solutions’ suite of account opening products:

Debit Report – Helps credit issuers gain deeper insight into a consumer’s financial behavior using our robust data repository. Debit Report can help credit issuers who want to increase their overall customer base and grow without increasing overall risk.

DebitBureau – Contains information on consumers’ handling of deposit accounts. Combining applications for account, account openings, account closures, retail point-of sale payments, and many other behaviors, information from financial institutions, retailers and other providers is combined to form complete views of consumer behavior.

ID Verification and ID Authentication – Helps financial institutions comply with the USA PATRIOT Act and “Know Your Customer” regulations. Together, the robust solutions help clients to quickly verify the identity of applicants by using both data matching and out-of-wallet questions.

QualiFile® – Provides real-time, account opening decisions using FIS DebitBureau data and other external data sources for demand deposit accounts. Available in Advantage and Premier editions, QualiFile helps ensure that a bank or credit union is less likely to turn away potentially profitable customers and more likely to turn away risky applicants.

Our Transaction Risk Services include:

  • Stress Testing
  • Knowledge Risk Indicators (KRIs)
  • Risk Design and Control Assessments
  • Disaster Recovery/Business Continuity Planning
  • Fraud Prevention
  • Identity Theft Prevention
  • Vendor Management
  • Change Management


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