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    Asia Risk Awards 2020: ALM Product of the Year

    October 2020

    Asia Risk Awards 2020: ALM Product of the Year

    Asia Risk Awards 2020

    ​Written by Infopro Digital.

    Moody's Analytics has been a market leader and multiple award winner in asset liability management (ALM) solutions for some time, and it comes as no surprise that it has taken home this year's Asia Risk Award for ALM product of the year. The RiskConfidence ALM system goes well beyond what traditional ALM products offer, as an efficient, cost-effective and modern ALM solution that puts the clients at the forefront of the solution, giving them strategic control of the platform and how they use it. 

    Cayetano Gea-Carrasco, management director of product management at the firm, explains a bit about what makes the RiskConfidence ALM solution so unique in its market: "Banks are continually looking for ways to include credit loss estimates in their balance sheet forecasts and what-if scenarios. Interest rate forecasts aligned with our broad, award-winning economic variable forecasts are a unique component of our ALM offering.

    "Our ALM suite allows customers to easily integrate credit content, data and models from Moody's Analytics to provide a comprehensive solution for customers – closing the loop between the CFO and CRO and providing a single source of truth for balance-sheet calculations."

    The solution covers a multitude of industry risk criteria including interest rate risk, liquidity risk, foreign exchange risk, options risk, behaviour modelling, balance sheet forecasting, street testing, funds transfer pricing, stochastic scenarios and credit risk. It also covers many of the key global risk compliance requirements, such as Basel III, European Banking Authority and other national requirements for around 30 supervisors. With solutions hosted both on-premises or in the cloud, there is a great amount of flexibility and scalability, as well as the potential for a lower cost of implementation and ownership. 

    Gea-Carrasco says the fallout from Covid-19, combined with a low interest rate environment, has reinforced the value the ALM solution brings, "helping CFOs and treasurers make better business decisions in this uncertain environment".

    Moody's Analytics has made significant enhancements to the RiskConfidence ALM solution over the past year, with a focus on more tailored solutions for its clients, more streamlined features for clients with straightforward requirements and more user-friendly, predefined templates to help guide users through the system. 

    Gea-Carrasco also notes the "Moody's Analytics ALM solution has integrated liquidity and ALM calculations in a single process, allowing customers to perform integrated balance-sheet analysis using consistent inputs and metrics". 

    The streamlined system and ease-of-use is what enables Moody's Analytics to continue to be market leaders in this industry.

    Looking specifically at Asian markets, Gea-Carrasco explains how "our customers in Asia value the ability of our solution to tackle market risk for the banking book and the liquidity integration. In addition, the modular architecture and API design allows customers to add regulatory reporting capabilities and analytics to perform business analyses". With such disparate regulatory frameworks across Asia-Pacific, users of this solution can be assured that they're covered with all key regulations in the regions in which they do business.

    Moody's Analytics notes a case with one of its Hong Kong-based clients, Chong Hing Bank, which was working to achieve regulatory compliance in line with best practice for the Hong Kong Monetary Authority's new Interest Rate Risk in the Banking Book (IRRBB) regulations. With data sourcing all the way through to the implementation of the RiskConfidence ALM solution and then the development and integration of IRRBB behavioural models to finally regulatory reporting, Moody's Analytics was able to provide end-to-end delivery of the key data necessary for the HKMA's regulation. It completed the project under an incredibly tight time frame and provided a robust platform integrating key IRRBB models from across all of the bank's different locations under scrutiny of the regulator.

    As we move towards the end of 2020, Moody's has some serious plans to further enhance its offerings to the market. Gea-Carrasco notes: "We are very excited about the future of our balance sheet management solution suite and forecasting capabilities. We are incorporating dynamic liquidity risk stresses and non-regulatory liquidity analytics. 

    "We will enhance our solution suite with credit risk and liquidity risk optimisation, plus stress-testing. This allows us to truly integrate credit and liquidity risk stress-testing in a combined solution – a functionality that banks highly demand. We are also launching investment portfolio analytics."

    Further, he explains how "we are moving our solution to the cloud and we will have a cloud-hosted version by the end of this year, with additional analytics to be launched in 2021". 

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