CASE STUDY

About the ClientBarwa Bank the newest Islamic bank in Qatar, is licensed and regulated by the Qatar Central Bank.With an Issued Capital at QAR 3 billion, Barwa Bank provides a full range of Shari’ah compli-ant banking services including retail, corporate and commercial banking, business banking, private banking, real estate finance, structured finance, investments and asset management. In the last 3 years the Bank has also made significant acquisitions in consumer financing and investment banking.

Barwa Bank operates in an environment that has witnessed rapid changes in customer expectations and the regulatory environment and these have required technological innovation. Barwa Bank has adopted a pro-active approach in managing these challenges. One of the key focus areas for the Bank is Enterprise Risk Management (ERM) in general and Operational Risk in particular. The Bank has seen a significant expansion in its operations in the last 3 years and has also made several acquisitions in consumer financing. This led to an increasing requirement for the efficient and systemic management of operational risk.

In 2012, the Bank selected Oracle for a complete Enterprise Risk Management solution and Techlogix as its implementation partner. The first phase of the project focused on Operational Risk to be followed by the implementation of Basel II and Market Risk. In the second phase, additional risk modules will be implemented. Techlogix has successfully delivered and taken live the Operational Risk module with Basel II and Market Risk following in September 2013.

CustomerBarwa Bank, Qatar

IndustryFinancial Services

OfferingRisk Management

Harmonizing People | Process | Technology

Techlogix delivers Operational Risk solution for Barwa Bank, Qatar

The ChallengeBarwa entrusted Techlogix with the challenge of automating its existing operational risk management process that had key functionality missing and suffered from the following shortcomings:

◉ The mechanism to capture operational risk losses was manual with little automation. This resulted in fragmented information without any logical relation-ships and linkages between entities such as risks, controls, risk issues etc.

◉ In the absence of a system, there was no central repository of risks, controls, compliance obligations and other risk related functions. This lack of informa-tion made the process of root cause analysis, identifi-cation of control gaps and its reporting cumbersome

◉ An elaborate risk issue creation process was in existence. However, due to lack of automation, this process was not fulfilling the desired objectives

◉ The communication channels used were emails with almost no possibility of systematic tracking and linking to the issues at hand

◉ Risk reporting is an integral part of any operational risk framework. Due to a manual process for managing operational risk, there was a lack of meaningful data to apply any analytics, thereby defeating the purpose of management reporting

◉ The operational risk framework needed to be applied at the group level, including three financial subsidiaries, thereby complicating the compilation and arrange-ment of information in a useful manner

Techlogix Case Study

Operational Risk Management Solution Implementation02

The SolutionTechlogix completely automated the operational risk management process by implementing the Oracle Financial Services Operation Risk Management solution. The solution offers the following functional features:

◉ RCSA: Risk and Control Libraries, Assessment Methods

Risk and Control self-assessment is administered in the solution by a Library based approach. A library of risks and controls are set up by Central Opera-tional Risk Team (CORT). A subset of risks and relevant controls is then associated to a defined key business dimension e.g. Business Line / Location / Risk Category / Process.

◉ Incident Management

The Incident or Loss Management module captures the loss information and evaluates operational incidents. These include all incidents which result from inadequacies or failures in internal processes (flow of work) or controls, caused by personnel-related, technological, organizational or external factors and which have a financial impact (profit/loss) on the organization

◉ Key Indicators

The Key Indicator Function gives the flexibility to capture and assess the Key Indicators, which can either be Risk Indicators or Control Indicators. The use of indicators allows the identification of changes in the bank's risk profile at an early stage and helps to initiate counter acting measures by warning and escalation procedures.

Business Flow Diagram

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◉ Issues & Actions

The Operational Issues & Action Planning Module is an integrated solution for planning measures against Issues caused by operational losses, risks or breakage of indicators. This means issues identified in other modules - like RCSA, Loss database or Risk indicators - can be captured in this module and appropriate risk reducing actions can be planned. It is also possible to create issues and associate actions to them indepen-dently from the Issue Action module.

◉ Planning and Scoping

The Planning and Scoping function will allow Barwa Bank to standardize operational risk management, which will reduce the burden of creating similar/identical Assessment Plans for multiple entities. It allows the user to set up plans and scope for a particular Entity as a whole, bringing in uniformity in assessment throughout the organization. This simplifies tracking Assessments, Attestation, and Certifications. The user sets the periodicity of the assessment, (for example: weekly, monthly, quarterly, semi-annually and yearly). The periodicity of assessment may also be set on a random basis, belonging to any other category other than those mentioned in the field options, or on a custom basis.

Solution ArchitectureTechlogix team designed, developed, and deployed the solution on a network of clustered SUN Solaris & Linux Red Hat servers supporting fault tolerance. OFSAAI 7.3 was deployed in a single tier environment mode on a Linux Red Hat Server with Weblogic 11g. OBIEE was used as the reporting and analytics server which was configured on an Active-Passive SUN cluster for high availability. Oracle 11g as

the database for both ATOMIC & CONFIG schemas of OFSAAI & Operational Risk Solution was also configured on an Active-Passive SUN cluster.

The solution also required interfacing with Bank’s current LDAP server, which in this case was Microsoft’s Active Directory Server, to authenticate the users from a single repository. OFSAAI also used Bank’s SMTP server to send out notification and alert email messages generated by Operational Risk Solution.

BenefitsThe Operational Risk Solution implementation at Barwa Bank Group will provide the following key benefits:

◉ Work with an enterprise-wide view of all operational risk data to ensure a single and consistent view

◉ Eliminate redundant efforts and inconsistent results through a common, pre-built Operational Risk framework

◉ Identify, measure and mitigate all types of opera-tional risks across the entire business

◉ Confirm that the enterprise is optimally insured and identify cost saving opportunities through over-insured risks

◉ Establish and maintain controls to keep operational risk levels aligned with financial risk appetite

◉ Demonstrate improvement in control effectiveness to key stakeholders

◉ Reduce cost of ownership and improve efficiencies with user interface, workflows and reporting

◉ A user-friendly and interactive interface allows easier navigation

About Techlogix

Techlogix is an IT Services, Consulting and Business Solutions company that helps its global clientele achieve enterprise transformation by harmonizing people, process, and technology. Techlogix builds high performance solutions using practice-specific delivery methodologies that utilize its globally distributed development teams. Our people combine the spirit of engineering excellence with a strong commitment to end-to-end customer experience. Techlogix employs approximately 300 people in 5 delivery centers worldwide.

Visit us online at www.techlogix.com

ContactFor more information, contact info@techlogix.com

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Financial Serviceswww.techlogix.com/financialServices

Techlogix implements a full range of solutions for the Financial Services industry focusing on Commercial, Islamic and Microfinance Banks. Our implementation portfo-lio includes FLEXCUBE Core Banking, Risk Management solutions, Compliance and Anti-Money Laundering and Reporting and Data Warehousing. We also provide Application Management Services for these solutions with both onsite and offsite models. We also implement BPM and workflow solutions which automate and improve operational processes within Banks.

“Implementation of the OFSAA system is a strategic decision by Barwa Bank that aims

to roll out best market practices for Risk and Finance departments. Automation of

Operational Risk is of particular significance as it would assist in implementing a control

framework and help monitor issues / control breaches and take timely corrective

actions to save the bank from potential losses. OR module was implemented within the

timelines and budget committed to the management largely due to excellent support

received from Techlogix, Barwa Bank’s implementation partner for OFSAA.”

Risk Management Department, Barwa Bank