This calculates risk provisions for portfolios containing assets with similar risk attributes (stages 1 and 2). The ready-to-go solution contains an easy-to-use UI that a business department can use without IT support.
A workbench, which assists the capture, simulation, monitoring and correction of the expected cash flows from non-performing financial assets, is available for the individual risk provisions needed for stage 3. Intra and inter-departmental processes are digitalised by the Impairment Workbench and thus made more transparent and traceable.
The application can be integrated into the FlexFinance Import. The workbench entails a work flow which helps to manage and control the actions to be taken with regard to the score and category of the early warning trigger. These actions can be configured to reflect the bank’s policy and then traced to ensure an effective early warning system.
Based on deep learning processes and artificial intelligence the application identifies criteria which point to a business distress.
IFRS 9 requires the segmentation of financial assets based on similar credit risk characteristics. For each segment the expected credit loss needs to be calculated taking probability weighted macroeconomic scenarios into account.
Too much risk provision will reduce the income in the income statement. This will reduce the capital in the balance sheet and finally the capital in legal reporting. Less capital finally limits the entity in doing new business which will have impact on future profit and loss.
In contrast to the classic segmentation/portfolio formation of loans, artificial intelligence each loan with another and calculates it on the basis of ECL.