Axe Scoring and Provisioning
It offers a robust platform for improving your organisation’s competitive advantage and reducing inefficiencies and costs through centralized management & oversight of the credit rating analytics and approval processes.
All inputs and steps leading to how credit decisions are made are completely transparent.
Risk Rating Models
A variety of internal rating scorecards and models for all types of customers and asset classes can be delivered through ACP. This can cover retail as well as SME and corporate and include Probability of default (PD) and Loss Given Default (LGD) for Basel II Standardized and Advanced IRB Approaches.
The Facility Risk Rating (FRR) and Loss Given Default (LGD) modules allows banks to put in place a true two step or dual rating process (Obligor Risk Rating (ORR) and PD for customer rating and FRR/LGD for facility/transaction rating) in line with Basel II requirements.
A configurable ratings workflow forwards preliminary ratings to designated credit staff for peer review, override or final approval, storing historical rating data for follow-on analysis.
Ratings Data Management
Obligor financial and qualitative information is captured manually or automatically from another data source within or outside the bank. ACP can connect two-ways with such systems and in real time if needed so data from rating agencies and credit bureaux can be used.
Within ACP you can also configure detailed criteria, weightings and analyst guidance for qualitative scoring. ACP thus facilitates a systematic ratings process based on analysts’ objective opinions that best predict default events.
Ratings can be based on any data or risk parameters stored within ACP’s credit data mart. This can include obligor specific and transaction specific risks such as loan data and loan purpose.
Rating Workflow and Approval Process
Scoring models can be embedded in a comprehensive risk rating workflow as sub-process of a wider credit approval process. The workflow process assigns the correct rating model to be used depending on customer or facility characteristics..
Rating reviews can be anticipated and triggered ahead of rating expiry via automatically generated workflows that assign tasks to the appropriate analysts.
ACP users therefore benefit from the extended features of a full Credit Rating Analytics and Approval System, fully integrated with the automated credit approval/follow up processes.
Ratings Monitoring and Management
Ratings are stored in a relational database and can be used for ongoing risk reporting purposes and managed at the customer of facility level. Ratings can be easily accessed from profile-based screens according to analysts’ access rights.
Besides key data, various meta-data elements are stored such as the name of the credit analyst, the rating timestamp and the rating model used. All data is stored in a relational database and can be used for ongoing risk reporting purposes.
In line with the Basel II requirement for an annual review of customer and facility ratings, ACP can set alerts and trigger corresponding rating workflows which create tasks for analysts and automatically change the status of a rating if it has not been revised.
Provisions
ACP can calculate individual or collective provisions for performing, doubtful and impaired assets...
ACP captures all the inputs required for calculating expected loss and provisions.
Provisions’ calculation time can typically be reduced from 3-4 weeks to less than one hour.
Standard inputs into such calculations are stored within ACP such as ‘type of exposure’, ‘impairment status of the counterparty’, ‘number of days and amount of past due’, ‘credit events/types’, ‘probability of default (PD)’ and ‘loss given default (LGD)’, ‘exposure interest rate’, ‘contracted cash flows’...
The provision amount will be determined as the difference between the amount of the exposure as carried in the book and its economic value as calculated within ACP according to the implemented rules.