Advanced risk management

Skandinavisk Data Center

Affecto took part throughout the implementation of SDC’s risk management solution, assisting in all aspects of the project. With their Advanced Risk Management platform SDC banks have gained a competitive advantage.

Future-Ready Risk Management

In the midst of the credit crunch, banks are focussing on risk management more than ever before. At the same time, regulators are tightening their supervision of banks, demanding evermore extensive documentation on capital adequacy. For these reasons, Skandinavisk Data Center A/S (SDC), a supplier of IT solutions to over 140 Nordic banks, knew that its new and advanced risk management platform had to be comprehensive as well as supremely adaptable.

Not only did the platform have to let SDC member banks analyse and report their data to the financial authorities in compliance with Pillar 1 of the Basel II accord. It also had to be easy to adapt to Pillar 2 and 3, as well as any other regulatory demands that might be added in future. The more flexible the platform, the better for SDC’s member banks, who might gain a competitive advantage. In turn, this would benefit SDC, as the company would be able to use the new platform to attract more members.

Banking IT is still largely fragmented in the Nordic area with a number of independent suppliers in each country.But national consolidation is gathering pace, and, at the same time, more and more Nordic banks are switching to suppliers outside their own country. If SDC were to benefit from this trend, the company had to offer the best possible IT solutions to banks, including a second-to-none risk management system.

RiskPro solution with consultancy from Affecto

Following extensive market research, SDC chose to base its advanced risk management platform on RiskPro software, developed by Swiss company Iris, now part of the FRSGlobal group. Affecto assisted in the implementation of the solution, including its adaptation to a multi-bank environment, testing and adjustments to comply with the specific national requirements of Norway, Sweden and Denmark, as well as any changes to regulation.

SDC’s risk management platform went live early in 2008, allowing Danish Swedish and Norwegian member banks to analyse and report their data in compliance with Basel II Pillar 1. Specific reporting requirements on market risk were added for Danish banks in September.

Currently, SDC is working with Affecto and its member banks to extend the platform to Basel II Pillar 2 and 3 as well as additional legal requirements in the individual Nordic countries. This will happen during the course of 2009.

SDC gains a competitive advantage

SDC is extremely satisfied with its RiskPro solution. The new platform works well, and no significant problems have been reported by the member banks. What’s more, the platform is based on a very extensive data set, which makes it relatively easy for SDC to adapt the platform to new applications and legal requirements. And Affecto’s practical understanding of risk management in the banking sector has helped ensure that any changes can be implemented quickly.

This means that SDC can provide its members with an industry-leading risk management system. As an example, when a government support package for Danish banks was announced in the autumn of 2008, SDC was able to adapt the risk management platform to reflect the changes in a matter of just two weeks. SDC is expecting to adjust its platform to Pillar 2 and 3 of Basel II in 2009, faster than other Nordic IT suppliers. This means that banks who belong to SDC will be ready to comply with the latest legal requirements much sooner than other banks, giving them a competitive advantage.

Working with Affecto, SDC has also made it easy to add new member banks to the system. Two Swedish banks who left their previous IT supplier for SDC in 2007 were able to make their first report to regulators within just six weeks, using SDC’s risk management platform. This is a significant advantage to SDC, as the company seeks to benefit from Nordic consolidation within banking IT by adding more clients across the area. Being able to offer a highly attractive risk management platform that is easy to join could help persuade more banks to convert to SDC.

“Nordic banks are prioritising risk management more than ever before. To be able to respond by offering them a platform this fast and flexible is extremely important to us”, says Klaus Laforce.

Affecto and the SDC solution

Affecto took part throughout the implementation of SDC’s risk management solution, assisting in all aspects of the project. Affecto’s risk management consultants have many years’ experience from the financial services industry. Thus, in cooperating with SDC and its member banks, Affecto was able to contribute with, not just technical expertise, but a comprehensive understanding of how the Nordic banking sector works. This helped SDC to get the most out of the RiskPro software.

“We were very impressed with Affecto’s competence and professionalism”, says Divisional Director, Klaus Laforce from SDC.