Integrated performance and risk management solution

Kachel Referenz Bank für Sozialwirtschaft

The Bank für Sozialwirtschaft AG (BFS) is a modern universal bank for health and social care institutions. Through its subsidiaries, it also offers various management services in addition to its banking operations.

Initial situation and project assignment

In order to meet strategic and regulatory requirements, BFS intends to completely remodel both its operational system and its analytical IT landscape and to achieve an excellent strategic position for the future by implementing an integrated performance and risk management solution. A credit institution’s integrated performance and risk management takes into account all relevant dimensions as well as the strict additional requirement of compliance with supervisory law. BFS’s fundamental decision to change its analytical systems was driven on the one hand by the introduction of a new SAP core banking system by July 2006 and the associated need to ensure a regulatory reporting interface. On the other hand, the increasing regulatory requirements, not least due to Basel II, and the constantly growing demands in the area of internal bank management make it necessary to develop adequate systems for integrated performance and risk management.

Project content and approach

At the technological level, BFS has decided to implement state-of-the-art software systems for a comprehensive solution. To comply with regulatory law including Basel II, BFS implements the ABACUS/DaVinci software from BearingPoint. For the purpose of managing earnings, costs and risks, BFS decides to migrate and extend the integrated profit and risk management software zeb.control which is already partly in operation. For analytical data management and pre-processing activities in the area of Basel II, BFS will use zeb.control - warehouse, an integrated, centralized data platform that ensures the data supply to zeb.control and ABACUS/DaVinci and meets all requirements of modern data management.

Business support is also provided for the introduction of the zeb.control software modules as part of a complementary business management project. Furthermore, the project content includes the conceptual design of risk-bearing capacity calculation and risk capital allocation as stipulated by MaRisk.

Integrated performance and risk management solution


Project results

Upon completion of the project, BFS is equipped with standard interfaces of zeb.control - warehouse to the SAP core banking system and the ABACUS/DaVinci reporting software. The implementation of the data warehouse for the entire bank provides an ideal analytical IT infrastructure that fully covers all management and reporting requirements. Furthermore, implementing a Basel II loss database in zeb.control - warehouse fulfills an essential prerequisite for IRB reporting.

After the migration and extension of the zeb.control system software, the following modules can be used for business management and control

  • Customer business management
  • Credit risk management
  • Managing operational risk
  • Market risk management in the interest rate portfolio
  • Market risk management in trading

Thanks to the implementation of an integrated performance and risk management, BFS is also able to carry out a combined analysis of business and regulatory KPIs. In order to measure the risk situation in the area of credit risk, for example, the unexpected loss calculated using a portfolio model can be compared with the corresponding regulatory Principle I and Basel II figures.

On July 1, 2006, BFS replaced the current core banking system with SAP in a “big bang” implementation and launches the integrated performance and risk management solution. The reporting capability of BFS and thus the functionality of zeb.control - warehouse is an essential prerequisite for the go-live of the new core banking system. Besides the required condition of integrating the reporting system, both the standardized approach and the IRB approach for credit risks as well as the loss database, an important prerequisite for the IRB approach, was implemented in July 2006 and the technical implementation of all submodules of zeb.control is realized. Thus, in mid-2006, BFS had in place all the tools required for a modern integrated performance and risk management.

By introducing the software solution, BFS achieves an excellent strategic positioning that is further underpinned by the system’s flexible extensibility which allows future developments such as the regulatory requirements of IAS/IFRS to be integrated. The implemented solution is thus designed for a period beyond the next decade, which was one of the reasons for deciding on an integrated performance and risk management solution.

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