Use of OmniFi reduces operational risk and increases productivity
Challenges
The risk management team produced a number of regular reports via largely manual processes for collection, compilation and distribution, which were both error-prone and time-consuming. In seeking to automate the production and distribution of these regular reports, the client’s priorities included: leveraging the system’s existing reporting capabilities; reducing operational risk; and providing easy access to reports, notably for senior managers.
The client wanted to automate three types of report: summary reports for senior managers (one or two pages, including data visualisation elements and commentary); operational reports (covering risk management issues such as changes in limits and exposures, plus more advanced analysis); and operational controls reports (essentially ‘sanity checks’ that provide data on system operations, including statistics such as transaction volumes).
Solution
On being approached by the client, SkySparc proposed a phased project for automating five reports (daily and weekly management reports; a daily operational control report; and two value at risk (VaR) reports) via OmniFi. The project would start with report development, followed by training and implementation, resulting in the generation of reports (both scheduled and on demand) on OmniFi, with augmentation, verification, and distribution to all recipients via its web portal. OmniFi would source data via the system’s APIs, report engine and its database. Senior executives would access the reports via OmniFi’s web portal or by email.
Historically, the daily operational controls ‘checklist’ report was prepared by manual interrogation of activity logs to ensure smooth running of the system overnight and the previous day, for example checking for evidence of price input errors or limit breaches. It typically took around 30 minutes to prepare. Only once this checklist report had been conducted and verified could other types of reporting or analysis take place.
Under the new process, risk department analysts need only review automatically generated reports within OmniFi rather than prepare them manually. Analysts may only access reports for which they are permissioned, via OmniFi’s reports tab. Scheduled in advance, OmniFi compiles reports from activity logs in multiple modules, plus other external sources, to flag any errors or other systems issues, as well as overnight changes in exposures (e.g. downgrades), essentially for position management purposes. Any new transactions are reported with full details, e.g. size, yield, etc., including any impacton key risk metrics. The OmniFi reportstructure is also flexible enough to highlightissues in areas that the bank wants tomonitor particularly closely, such as FRNswith negative coupons.
While the weekly senior management report also includes some automatically generated elements, its OmniFi template allows greater scope for risk analysts to intervene in order to draw executives’ attention to particular ‘headline’ issues or concerns, which may differ from week to week. Reports that are scheduled, but need different approval levels prior to distribution, are clearly marked on OmniFi’s web-based interface, via an approvals tab. This particular report is configured to contain two components: an email message containing key metrics, e.g. weekly and annual returns, totalinvested amount and VaR per portfolio; and an attachment containing fuller details behind these key performance indicators, all drawn from multiple modules. The report also contains commentary from analysts who are more able to concentrate on contextualising and explaining the trends behind the raw data, now that they spent less time compiling it.
We are now able to generate better quality reports, with less operational risk and with reduced calls on internal resources.
Senior Risk Manager
Results
The critical first stage of this report automation project involved SkySparc’s consultants understanding and refining the client’s requirements on an iterative basis, with feedback continuing throughout the report-building process. The process went smoothly in part because the client was the risk management rather than the IT department and so staff were very clear about their needs, and partly because they had a ‘hands-on’ attitude to providing feedback, engaging in constant dialogue throughout this phase. Equally important was the second training stage, in which the risk analysts develop the skills to build their own reports on a self-piloting basis into the future. Partly because of their deep involvement in the report-building phase, the bank’s risk analysts quickly achieved a very good knowledge of OmniFi. In addition, the central bank also has plans to extend use of OmniFi’s reporting capabilities to other areas of the bank, including accounting.
“We are now able to generate better quality reports, with less operational risk and with reduced calls on internal resources,” a senior risk manager at the bank said. This has also added to the productivity of the risk management department as risk analysts have switched attention from report creation and data collection to analysis, interpretation and recommendation.
SkySparc has also leveraged the experience gained on the project to the benefit of all OmniFi users, for example by enhancing certain workflow capabilities and improving web preview functionality. And due to the central bank’s wish to send reports to certain external counterparts, SkySparc developed the ability to generate and send password-encrypted files, which is now a standard part of OmniFi functionality available to all users.
