Risk Information Services Delivering value through risk and regulatory analytics

Overview

Companies are seeking greater transparency, deeper insights, and more reliable predictors to manage risk, meet regulatory requirements, and gain a competitive edge. The financial downturn and global economic turbulence has highlighted critical gaps in the way organizations traditionally approach business intelligence and whats needed to sustain a stable and growing organization. Companies face the following challenges in meeting these objectives: Performance indicators do not adequately and accurately describe how the business is doing Plans and forecasts fail to incorporate probabilities and potential internal and external threats Unidentified exposure to achieving short, mid, and long-term strategic objectives Insufficient information available to manage risk and meet regulatory requirements

Risk and regulatory analytics

Traditional Business Intelligence

Business Analytics

Analyze Understand Decision Support Standard / Canned Reports Key Performance Indicators (KPIs) ERP Data Management

Optimize Predict Action Support Ad hoc Reports and Dashboards Key Performance Predictors (KPPs) Enterprise Data Management

The traditional role of business intelligence has transformed from the standard analysis and reporting to business optimization and prediction. Analytics leverages cutting edge technologies to boost the power of data, making it a strategic tool for gleaning new insights, predicting events, addressing risk and regulatory issues, improving forecasts, and making informed decisions. Executives need to proactively identify and understand their risk exposure in order to make decisions that manage and mitigate the sources of risk. Risk analytics provides information to navigate challenging economic conditions and complex legal and regulatory environments, with the insight and foresight that only analytics can provide. Risk analytics uses a range of techniques and technologies to leverage big data to extrapolate insights, calculate likely scenarios, and predict future events.

Companies are increasingly leveraging risk and regulatory analytics to: 1. redict market trends, anticipate demand, P and react quickly to opportunities while also keeping an eye on their risk exposure and regulated business environment 2. Enable decision makers to evaluate the risks and rewards associated with strategic and operational decisions providing insights into the actions that have real and sustainable value 3. Establish effective programs that address and avoid disruptions from expanding regulatory requirements, including Dodd Frank, Sunshine Laws, Lease Accounting, and the Food Safety Modernization Act 4. Analyze the ever increasing volumes of structured and unstructured data that are available internally and externally to gather valuable information and actionable insights

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A fresh approach

Deloittes Risk Information Services takes a holistic approach to help companies integrate leading risk analytic techniques and technologies to capture, transform, and analyze big data. As a result, companies are empowered to meet the increasing risk and regulation challenges. We help organizations improve business management and marketplace competitiveness to: Empower leaders to act on industry intelligence in a timely and coordinated manner Outline applicable risk management procedures and controls Enhance forecasting and reporting mechanisms Provide operational, interactive dashboards for monitoring Key Performance Indicators (KPIs) Implement a consistent risk intelligent approach to decision making

Integrate analytics across functional areas of the organization Facilitate compliance to industry-specific regulations With leading technology capabilities, Risk Information Services offer highly specialized innovative solutions that enable an enterprise-wide approach to risk and regulatory analytics. Analytics applied addresses issues: what problem are you trying to solve? Information management provides insight: how do you aggregate, manage, transform, and retain data? Performance optimization adds value: whats happening now and how do we improve performance? Analytic insights build action plans: how do we look to the future for a forward-thinking approach?

Analytics Applied
De si
In

agement Man on ati t | Manage rm men ple fo | Im gn

Analytic Insig hts Optimize | Analy ze | Pre dic t

Per f

n ti o or m a n c e O p t i m iz a Re v ort ie w | A n aly z e | R e p

Analytic Insights Predictive models Risk measurement and dashboards Deloitte MarketPoint Cyber risk analytics

Performance Optimization Risk and regulatory analytics Internal audit analytics Compliance and attest analytics Business performance Business intelligence/finance analytics Financial instrument analytics

Information Management Data quality Data governance/management

As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. 4

Deloittes Risk Information Services provides risk and regulatory analytics with technology services to improve how companies understand, define, communicate, and manage their data assets to meet present and future business needs. Information management Data quality: assess, measure, and improve the quality of data for analysis Data governance/management: monitor, maintain, and protect data Performance optimization Risk and regulatory analytics: adoption of and compliance with regulatory standards, reporting requirements, responses to regulator inquiries and managing government sponsored programs Internal audit analytics: monitor internal controls to prevent fraud and expose risk Compliance and attest analytics: determine financial statement and regulatory reporting risk Business performance: improve performance with analytic modeling for forward-looking scenarios Business intelligence/finance analytics: increase operational productivity and process efficiency Financial instrument analytics: access and analyze quantitative modeling of financial instruments Analytic insights Predictive models: leverage big data to model outcomes about current conditions and future trends Risk measurement and dashboards: evaluate risk with metrics and visualizations Deloitte MarketPoint: gain market insight via analysis of methodologies that drive market conditions Cyber risk analytics: analyze external data to identify information and technology risks

Risk Information Services analytics technologies RIS leverages a broad array of leading technologies to deliver reliable and sustainable solutions. A sampling of these tools includes: IBM Cognos Business Intelligence Cognos TM1 and FSR OpenPages SPSS InfoSphere DataStage SAS Enterprise BI Server Enterprise Miner Text Miner DataFlux Financial Management ABM Microsoft SQL Server and Analysis Services Sharepoint Server .NET Framework SAP SAP BW Treasury Management Liquidity Planner Crystal Xcelsius Oracle Hyperion Strategic Finance Hyperion Crystal Ball Financial Close and Disclosure Management Others Tableau TIBCO Spotfire Qlikview

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The Deloitte difference

Risk Information Services in action Deloitte professionals have the advanced analytic capabilities that help companies transform everyday information into useful and actionable insights. Our Risk Information Services practice prides itself on delivering value-added solutions to our clients. Some examples include: A large mortgage organization was developing a loan stratification and reporting program to comply with making home affordable guidelines. Deloitte produced models to classify delinquent loans in order to prioritize and remediate loans requiring specific and measurable actions, identified leading risk indicators of troubled loans and monitor business impacts, and defined remediation steps to facilitate timely loan decisions. A global financial services institution was developing an integrated risk analytics and information management approach to comply with data quality compliance. Deloitte analyzed the transfer of private investment management and Premier Asset Management account holdings, categorized the various move types, and researched findings to properly capture and reconcile the conversion. Claims were analyzed to check if the trustee held enough positions from various Trustee Control Depository accounts to cover claims. Deloitte identified and examined corporate actions to define and monitor business impacts, and implemented a data infrastructure to support accurate data transfer and ongoing support for the organizations data. A wholesale electric power supplier facing new power-supply requirements engaged Deloitte to leverage cutting edge risk analytics methods and tools to analyze the costs and risks of investing in new forms of power generation. As a result, the supplier produced new, more

rigorous analyses enabling faster turnaround times for critical decision-making information, better informed investment decisions, and increased long-term savings. A leading global pharmaceutical company made a major acquisition. Deloitte performed valuation and related accounting services. Using a customized purchase-accounting tool, the company was able to make accounting adjustments to manage the transition more effectively and understand tolerance for risk, resulting in a smoother integration. A large retail client wanted to develop an integrated master data management solution for two key data domains suppliers and stores. Deloitte worked with the retailer to improve pricing management across its supplier base. A consumer products company was yielding lower gross margins due to its method of recording inventory and costs of goods sold. Deloitte developed a crossfunctional solution allowing the company to identify margin variances through detailed transactional analyses to improve its inventory/cost of goods sold workflow. A purchase credit card company needed to mitigate potential revenue recognition risks. Deloitte implemented an analytics solution to reconcile customer transactions against card member agreements. Using the tool, the company was able to monitor exceptions on a regular basis, identify customers who were undercharged for services provided (to the tune of $4 million in a single year), and minimized their risk of misstating revenue. Deloittes experienced Risk Information Services professionals provide technology solutions and risk analytics services to help companies achieve their shortand long-term goals and objectives.

Contacts Vivek Katyal Principal Deloitte & Touche LLP vkatyal@deloitte.com Jeff Torstenson Director Deloitte & Touche LLP jtorstenson@deloitte.com Andrew Nippert Senior Manager Deloitte & Touche LLP anippert@deloitte.com

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This document contains general information only and Deloitte is not, by means of this document, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

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