Risk Information ServicesDelivering value through risk and regulatory analytics

2

Overview

Companies are seeking greater transparency, deeper insights, and more reliable predictors to manage risk, meet regulatory requirements, and gain a competitive edge. The financial downturn and global economic turbulence has highlighted critical gaps in the way organizations traditionally approach business intelligence and what’s needed to sustain a stable and growing organization. Companies face the following challenges in meeting these objectives:

•Performanceindicatorsdonotadequatelyandaccurately describe how the business is doing

•Plansandforecastsfailtoincorporateprobabilitiesandpotential internal and external threats

•Unidentifiedexposuretoachievingshort,mid,andlong-term strategic objectives

•Insufficientinformationavailabletomanageriskandmeet regulatory requirements

Risk Information Services Delivering value through risk and regulatory analytics 3

The traditional role of business intelligence has transformed from the standard analysis and reporting to business optimization and prediction. Analytics leverages cutting edge technologies to boost the power of data, making it a strategic tool for gleaning new insights, predicting events, addressing risk and regulatory issues, improving forecasts, and making informed decisions.

Executives need to proactively identify and understand their risk exposure in order to make decisions that manage and mitigate the sources of risk. Risk analytics provides information to navigate challenging economic conditions and complex legal and regulatory environments, with the insight and foresight that only analytics can provide. Risk analytics uses a range of techniques and technologies to leverage big data to extrapolate insights, calculate likely scenarios, and predict future events.

Risk and regulatory analytics

Companies are increasingly leveraging risk and regulatory analytics to:

1.Predictmarkettrends,anticipatedemand, and react quickly to opportunities — while also keeping an eye on their risk exposure and regulated business environment

2. Enable decision makers to evaluate the risks and rewards associated with strategic and operational decisions — providing insights into the actions that have real and sustainable value

3. Establish effective programs that address and avoid disruptions from expanding regulatory requirements, including Dodd Frank, Sunshine Laws, Lease Accounting, and the Food Safety Modernization Act

4. Analyze the ever increasing volumes of structured and unstructured data that are available internally and externally to gather valuable information and actionable insights

Analyze

Understand

Decision Support

Standard / Canned Reports

KeyPerformanceIndicators(KPIs)

Traditional Business Intelligence Business Analytics

ERPDataManagement

Optimize

Predict

Action Support

Ad hoc Reports and Dashboards

KeyPerformancePredictors(KPPs)

Enterprise Data Management

4

A fresh approach

Deloitte’sRiskInformationServicestakesaholisticapproach to help companies integrate leading risk analytic techniques and technologies to capture, transform, and analyze big data. As a result, companies are empowered to meet the increasing risk and regulation challenges. We help organizations improve business management and marketplace competitiveness to:

•Empowerleaderstoactonindustryintelligenceinatimely and coordinated manner

•Outlineapplicableriskmanagementprocedures and controls

•Enhanceforecastingandreportingmechanisms

•Provideoperational,interactivedashboardsformonitoringKeyPerformanceIndicators(KPIs)

•Implementaconsistent“riskintelligent”approachtodecision making

•Integrateanalyticsacrossfunctionalareasof the organization

•Facilitatecompliancetoindustry-specificregulations

Withleadingtechnologycapabilities,RiskInformationServices offer highly specialized innovative solutions that enable an enterprise-wide approach to risk and regulatory analytics.

•Analytics applied addresses issues: what problem are you trying to solve?

•Information management provides insight: how do you aggregate, manage, transform, and retain data?

•Performance optimization adds value: what’s happening now and how do we improve performance?

•Analytic insights build action plans: how do we look to the future for a forward-thinking approach?

Asusedinthisdocument,“Deloitte”meansDeloitteLLPanditssubsidiaries.Pleaseseewww.deloitte.com/us/aboutforadetaileddescriptionofthelegalstructureofDeloitteLLPanditssubsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Analytic Insights

• Predictivemodels

• Riskmeasurementanddashboards

• DeloitteMarketPoint

• Cyberriskanalytics

Performance Optimization

• Riskandregulatoryanalytics

• Internalauditanalytics

• Complianceandattestanalytics

• Businessperformance

• Businessintelligence/financeanalytics

• Financialinstrumentanalytics

Information Management

• Dataquality

• Datagovernance/management

A

naly

tic

Insi

ghts

®

Information M

anagement

Opt

imiz

e | A

naly

ze |

Pred

ict

Design | Implem

ent | Manage

Review | Analyze | Report

Performance Optimization

Analytics Applied

Risk Information Services Delivering value through risk and regulatory analytics 55

Deloitte’sRiskInformationServicesprovidesriskandregulatory analytics with technology services to improve how companies understand, define, communicate, and manage their data assets to meet present and future business needs.

Information management

•Data quality: assess, measure, and improve the quality of data for analysis

•Data governance/management: monitor, maintain, and protect data

Performance optimization

•Risk and regulatory analytics: adoption of and compliance with regulatory standards, reporting requirements, responses to regulator inquiries and managing government sponsored programs

•Internal audit analytics: monitor internal controls to prevent fraud and expose risk

•Compliance and attest analytics: determine financial statement and regulatory reporting risk

•Business performance: improve performance with analytic modeling for forward-looking scenarios

•Business intelligence/finance analytics: increase operational productivity and process efficiency

•Financial instrument analytics: access and analyze quantitative modeling of financial instruments

Analytic insights

•Predictive models: leverage big data to model outcomes about current conditions and future trends

•Risk measurement and dashboards: evaluate risk with metrics and visualizations

•Deloitte MarketPoint: gain market insight via analysis of methodologies that drive market conditions

•Cyber risk analytics: analyze external data to identify information and technology risks

Risk Information Services analytics technologiesRISleveragesabroadarrayofleadingtechnologiestodeliver reliable and sustainable solutions. A sampling of these tools includes:

IBM

•CognosBusinessIntelligence

•CognosTM1andFSR

•OpenPages

•SPSS

•InfoSphereDataStage

SAS

•EnterpriseBIServer

•EnterpriseMiner

•TextMiner

•DataFlux

•FinancialManagement

•ABM

Microsoft

•SQLServerandAnalysisServices

•SharepointServer

•.NETFramework

SAP

•SAPBW

•TreasuryManagement

•LiquidityPlanner

•CrystalXcelsius

Oracle

•HyperionStrategicFinance

•HyperionCrystalBall

•FinancialCloseand Disclosure Management

Others

•Tableau

•TIBCOSpotfire

•Qlikview

6

Risk Information Services in actionDeloitte professionals have the advanced analytic capabilities that help companies transform everyday information into useful and actionable insights. Our RiskInformationServicespracticepridesitselfon delivering value-added solutions to our clients. Some examples include:

•A large mortgage organization was developing a loan stratification and reporting program to comply with making home affordable guidelines. Deloitte produced models to classify delinquent loans in order to prioritize and remediate loans requiring specific and measurable actions, identified leading risk indicators of troubled loans and monitor business impacts, and defined remediation steps to facilitate timely loan decisions.

•A global financial services institution was developing an integrated risk analytics and information management approach to comply with data quality compliance. Deloitte analyzed the transfer of private investment managementandPremierAssetManagementaccountholdings, categorized the various move types, and researched findings to properly capture and reconcile the conversion. Claims were analyzed to check if the trustee held enough positions from various Trustee Control Depository accounts to cover claims. Deloitte identified and examined corporate actions to define and monitor business impacts, and implemented a data infrastructure to support accurate data transfer and ongoing support for the organization’s data.

•A wholesale electric power supplier facing new power-supply requirements engaged Deloitte to leverage cutting edge risk analytics methods and tools to analyze the costs and risks of investing in new forms of power generation. As a result, the supplier produced new, more

rigorous analyses enabling faster turnaround times for critical decision-making information, better informed investment decisions, and increased long-term savings.

•A leading global pharmaceutical company made a major acquisition. Deloitte performed valuation andrelatedaccountingservices.Usingacustomizedpurchase-accounting tool, the company was able to make accounting adjustments to manage the transition more effectively and understand tolerance for risk, resulting in a smoother integration.

•A large retail client wanted to develop an integrated master data management solution for two key data domains – suppliers and stores. Deloitte worked with the retailer to improve pricing management across its supplier base.

•A consumer products company was yielding lower gross margins due to its method of recording inventory and costs of goods sold. Deloitte developed a cross-functional solution allowing the company to identify margin variances through detailed transactional analyses to improve its inventory/cost of goods sold workflow.

•A purchase credit card company needed to mitigate potential revenue recognition risks. Deloitte implemented an analytics solution to reconcile customer transactions againstcardmemberagreements.Usingthetool,thecompany was able to monitor exceptions on a regular basis, identify customers who were undercharged for servicesprovided(tothetuneof$4millioninasingleyear),andminimizedtheirriskofmisstatingrevenue.

Deloitte’sexperiencedRiskInformationServicesprofessionals provide technology solutions and risk analytics services to help companies achieve their short- and long-term goals and objectives.

The Deloitte difference

Risk Information Services Delivering value through risk and regulatory analytics 7

ContactsVivek KatyalPrincipalDeloitte&ToucheLLPvkatyal@deloitte.com

Jeff TorstensonDirectorDeloitte&ToucheLLPjtorstenson@deloitte.com

Andrew NippertSenior ManagerDeloitte&ToucheLLPanippert@deloitte.com

This document contains general information only and Deloitte is not, by means of this document, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis foranydecisionoractionthatmayaffectyourbusiness.Beforemakinganydecisionortakinganyactionthat may affect your business, you should consult a qualified professional advisor.

Copyright © 2012 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited