IBM Unveils Cognos Analytic Software

Cognos, an IBM company and a provider of business intelligence and performance management, unveiled analytic software designed to provide retail banks with access to accurate, timely and transparent credit risk information across their loan portfolios.

IBM said its Cognos 8 Banking Risk Performance - Credit Risk is a packaged business intelligence (BI) application that gives bank executives and risk managers an immediate view of their credit portfolio across products, geographies and business units. Built on an open, services-oriented architecture platform, the solution plugs into an organization's existing technology environment.

"Credit risk management in the banking industry has become increasingly complex due to financial deregulation, weakness in the economy, financial product complexity and the recent and unprecedented turmoil in the financial services industry," said Craig Focardi, research area director for TowerGroup. "In addition to strengthening credit risk policies and processes, it has become a business imperative for banks to invest in systems and analytic applications that can harness their disparate risk data, and provide the ability to assess risk scenarios in real time to ensure ongoing alignment with policy and achieve profitability goals." Leveraging the IBM Banking Data Warehouse, or the bank's existing credit risk warehouse, the analytics application offers users a single, standardized source of enterprise-wide credit risk information from which pre-built dashboards and packaged reports can provide visibility into five areas:

- Originations - to assess the volume and characteristics of loan originations, such as credit scores and loan-to-value calculations across the portfolio - Front-end Performance - to better gauge delinquencies, 2+ delinquencies, delinquency roll-rates, and vintage information - Back-end Performance - to quantify gross and net charge-offs, repossessions, foreclosures, and bankruptcies - Financial Oversight and Profitability - to measure risk-adjusted return on capital (RAROC), net interest margin, and forecast vs. actual comparisons for metrics including receivables, delinquencies, and charge-offs - Basel II - to facilitate compliance reporting on key Basel II metrics such as Probability of Default, Loss Given Default, Expected Loss, Exposure at Default, and Capital Ratios

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