Toronto, London – 14th March 2011 – The credit crisis proved that the substantial investment made by banks in IT systems, management processes and regulatory compliance was insufficient of itself to protect them from loss. In its latest paper, Algorithmics revisits the concept of enterprise credit management as the foundation for improved credit risk management throughout the organization.
David Ratnage, Head of Credit Solutions at Algorithmics, said: “Banks have made significant investments in credit risk management. However, the near-term focus of much of this investment, in regulatory compliance for example, or to address specific activities on a tactical basis, has limited the potential for enterprise-wide results by unintentionally encouraging siloed operations and systems architecture. An integrated approach to support consistent risk and reward management throughout the organization is essential to achieving successful enterprise credit management. We define this as credit risk management across the enterprise, with a focus on the specific and varied needs of individual roles whilst taking account of the need for inter-connectivity and the impact of decisions made throughout the bank.”
Algorithmics’ new paper, ‘Embrace the opportunity, address the failings: a case for Enterprise Credit Management’, discusses how a holistic approach to credit management could systematically improve transparency, confidence and ultimately profitability, through better and more efficient risk management and risk-aware decision-making.
The fundamental features of enterprise credit management include:
•    A return to basics -  a consolidated view of global risk across the banking and trading books
•    Limit allocations and distribution aligned with risk appetite
•    Limit and exposure management that addresses the interactions at all levels and between all types of users
•    Pre-decision analysis for determining risk/reward
•    Increased controls around the valuation, recording and acceptance of collateral in the adjustment of recorded exposure
•    Ongoing risk monitoring and control across legal, corporate, and financial terms and conditions
•    Reducing the administrative burden within the credit process to a minimum.
In the course of client interviews for this paper, a leading bank said: “With Algorithmics, we can integrate risk management with collateral management across our entire operation, which allows us to consolidate limits and calculate exposures in the best way possible. Simplifying complex credit origination and doing better trades in the front office are just two of the business improvements we have really noticed.”
Algorithmics has a number of clients that have embraced enterprise credit management. These clients have a single customer view of risk provided by Algorithmics’ credit solutions – something that is acknowledged as one of the greatest challenges facing relationship and portfolio management.
John Macdonald, Executive Vice President, Algorithmics, added: “We have worked closely with our clients to understand their credit management needs. Enterprise credit management is an approach that brings together several elements of credit operations and credit risk management to address clients’ organization-wide requirements – at the management, departmental and individual levels.  It enables a culture of risk-aware business decision-making by providing institutions with a complete view of their appetite for banking book and trading book credit risk.”
To download a copy of Algorithmics’ latest paper, “Embrace the opportunity, address the failings: a case for Enterprise Credit Management”, visit: http://www.algorithmics.com/EN/media/pdfs/Algo-WP0111-EnterpriseCredit.pdf
For more information about Algorithmics’ enterprise credit management systems, including credit origination and administration, limits, exposures and collateral, visit:http://www.algorithmics.com/en/enterprisecredit
ENDS
For further information please contact:
Heather Smith, Senior Communications Manager, Algorithmics (UK) Ltd
Direct line +44 (0) 20 7392 5820  Mobile+44 (0) 7515 974223
E-mail Heather.smith@algorithmics.com
Notes to Editors:
Algorithmicsis the world's leading provider of risk solutions. Financial organizations from around the world use Algorithmics' software, analytics and advisory services to help them make risk-aware business decisions, maximize shareholder value, and meet regulatory requirements. Supported by a global team of risk experts based in all major financial centers, Algorithmics offers proven, award-winning solutions for market, credit and operational risk, as well as collateral and capital management. Algorithmics is a member of the Fitch Group. http://www.algorithmics.com/
Enterprise Credit Management comprises the following Algorithmics solutions:
•    Credit Lifecycle Management– Monitors and controls credit risk throughout its entire lifecycle across the banking and trading books
•    Integrated Market and Credit Risk– Provides comprehensive instrument coverage, multi-step simulations, and high-performance analytics for accurate insights on market risk measures, credit exposures, and CVA for the front and middle office
•    Collateral Operations– Enterprise-wide collateral management solution that provides financial institutions with automated workflows, up-to-date market data, and powerful reporting tools
Fitch Group is the parent company of Fitch Ratings, a global ratings agency committed to providing the world's markets with independent, timely and prospective credit opinions. With 49 offices worldwide, Fitch Ratings’ global expertise spans across capital markets in over 150 countries. Fitch Ratings is headquartered in New York and London.
The Fitch Group also includes Fitch Solutions, a distribution channel for Fitch Ratings products and a provider of data, analytics and related services; and Algorithmics, the world's leading provider of enterprise risk solutions.
The Fitch Group is a majority-owned subsidiary of Fimalac, S.A., headquartered in Paris, France.
For additional information, please visit http://www.fitchratings.com/  http://www.algorithmics.com/ and www.fimalac.com
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