Tag: Risk

Finance, Risk & Compliance – FlexFinance rounds off your core banking system perfectly

FERNBACH provides a ready-to-use solution out of the box for Finance, Risk & Compliance (FRC). FRC is a management approach that encompasses the most important activities in a company into the planning and management strategies for business operations. Hence, business processes are analysed to determine how they influence profits, show resilience to risks and conform with corporate targets and supervisory requirements.

If profit-making is introduced as the corporate driving force and further levels of activities are included, it can be ensured that the opportunities and risks generated by business operations can be analysed in equal measure in an integrated management approach. This forms the basis for a sustainable increase in efficiency and effectiveness.

By involving the sector “Finance” in the management processes, a difference is made between Finance, Risk and Compliance and the approach Governance, Risk and Compliance. (http://en.wikipedia.org/wiki/Governance,_risk_management,_and_compliance).

Business sectors

FRC covers the following three business sectors.

  1. Finance refers to the effects of corporate activity on profitability and profits, and hence the key motivation behind business activity. In particular, investment, funding as well as cost and performance accounting come under the sector Finance.
  2. Risk refers to the potential risks resulting from the way in which a company uses its capital. The integrated approach ensures that the effects from business activity on a company’s counterbalancing capacity are taken into account.
  3. Compliance: Fulfilling internal and legal requirements. For example, this involves GAAP requirements such as IAS/IFRS in the Finance sector and capital requirements in the Risk sector. These requirements may be issued by national or international supervisory authorities. IAS/IFRS are standards that specify how reference values are to be determined for the Finance sector. The European Banking Authority then used these as a basis to define reporting standards (reporting positions, layout) for Financial Reporting (FINREP).

The term Finance, Risk and Compliance covers the logical sequence of business activities that are also accounted for by the integrated approach for the analysis of business processes.

Drawing up a management strategy from all three business sectors

From the perspective of business economics, a business is an autonomous economic entity that is established with the objective of satisfying demand and making profit.  From an economic perspective, the business processes based on the principle of satisfying demands and making profits are involved in various levels of business activity.

The activities that come under the sector Finance in Finance, Risk and Compliance include the following topics:

  • investment,
  • funding,
  • cost and performance accounting,
  • accounting,

but also in the broader sense

  • organisation
  • human resources or
  • Marketing.

An integrated management strategy can only be successful if the sector “Finance” is considered in conjunction with the sectors Risk and Compliance. In order to successfully manage a business, it is simply not enough to identify and quantify risks to assess their impact on the capital used by the company. Viewing counterbalancing capacity in isolation usually leads to risk-averse behaviour.  Only by extending the analysis to include the contribution that a business process makes to profits, is it possible to weigh up the necessary opportunities and risks resulting from business operations.

Practical implementation

The FlexFinance solution for Finance, Risk and Compliance rounds off your core banking system perfectly. It organises your entire historical period management and stores the historical data sets over a number of years. All weekly, monthly and quarterly reports are archived. The data and reports are available for comparison purposes and historical analyses at any time.

An integral part of FlexFinance is a library with hundreds of ready-to-use reports. You do not have to activate the FlexFinance functions you would like to use but only deactivate the other ones. This saves implementation costs considerably. You can use the solution at our computer centre or at one of our partners’ premises (SaaS/ASP). Otherwise, we would be pleased to provide you with a typical in-house installation.

FlexFinance supports multiple accounting practices in parallel, IFRS, regulatory accounting, Basel 2, Basel 3, interest rate change management (ALM), credit risk and market risk as well as cost accounting and FTP. A workbench for models and simulations as well as a KPI library complete our solution.

The application features an autopilot which controls all operations, thus reducing the TCO (Total Cost of Ownership). Since we automate your standard daily work routines, you can save time to deal with other tasks.

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