Tata Consultancy Services, Asia’s largest global software solutions and consulting services company, announced the extension of its product offerings in the banking sector with the launch of credit risk model (RISKSCAN^TM), a unique banking solution for the Indian marketplace, and enterprise wide risk management (EWRM) in association with JYI Risk Management Services, Melbourne.

The newly launched offerings are designed to provide an effective solution to the increasing challenges of risk measurement and management faced by banks the world over and to facilitate the adoption of quantitative techniques and international best practices in risk management. With the product offering, RISKSCAN^TM and consulting services around EWRM, TCS will broadbase its range of offerings to cover the contemporary and future needs of the banking industry. These initiatives are in line with TCS’s endeavours for moving up the value chain.

Speaking on the occasion, Girija Upadhyaya, vice president, Tata Consultancy Services, said, "Banks and regulators are making sustained efforts to understand and measure the increasing risks they are exposed to, namely credit risks, market risks, operational risks, reputational risks and legal risks, using quantitative techniques in risk modeling. Conscious of this market need, the new TCS and JYI offerings in risk management are expected to address these needs of the banking industry in India and the emerging markets. Our endeavour has always been to offer our customers complete financial management software with unmatched benefits of using the latest technologies."

Adds Jayant Yardi, promoter, JYI Risk Management Services, "It is a privilege for us to be working with a global company like TCS. We see this association as an initiative that will optimally leverage TCS’s competence in technology and our domain expertise in the international banking sector."

RISKSCAN^TM, based on five- to 10-year historical data relating to 4000 Indian companies is believed to be the first of its kind in the market, uniquely conditioned to the Indian marketplace. The software is programmed to provide the probability of default (PD) and risk rating following the input of key financial ratios. The risk rating is based on 12-month point in time and is mapped to the credit risk grades of the user bank. The ability to calculate probability of default can enable the bank to calculate economic capital and thus economic value added, both concepts now considered at the forefront of shareholder value management.

• By calculating the probability of default, RISKSCAN^TM provides a quantitative tool for assessment of credit risk based on Indian data and conditions.

• RISKSCAN^TM permits the use of qualitative judgments such as the quality of management, industry dynamics, quality of the relationship and borrowers' resources and bank-lending experience that is vital in the assessment of risk.

• RISKSCAN™ provides a customised financial assessment module for financial analysis which will permit industry comparisons.

• RISKSCAN™ permits portfolio analysis so that risk concentration and other features of the portfolio become visible.

• RISKSCAN™ enables a customised solution for the calculation of risk adjusted return on capital (RAROC), a tool considered at the forefront of capital and risk / reward management.

• RISKSCAN™’s IT architecture is flexible and state-of-the-art, thereby enabling integration with existing bank architectures.

Future plans associated with RISKSCAN™ envisage calibrating the model to other markets. RISKSCAN™ has many other possible customised features, which can be built into it depending on the user bank’s requirements. A customised datawarehousing solution offered will enable RISKSCAN™ to link to the bank’s database and to extract information of relevance to the lending banker. Where such database is essentially manual, TCS can consider a solution designed to automate the flow of information. TCS has provided datawarehousing solutions to several Indian and international banks.

TCS has also developed a model for Indian banks to adopt enterprise wide risk management (EWRM) in a phased manner. This initiative will cover strategic consulting in EWRM, end-to-end management consulting in establishing a risk organisation for a bank and designing appropriate solutions for EWRM and the implementation and support to banks in achieving world-class EWRM.

TCS has been actively involved in the development of risk products for the banking sector. In keeping with this, TCS, over the last couple of years launched products like asset liability and management (ALM) and marketing risk solution called ALMITY™ in use in several banks in the country. The new extension of the banking product line, has been undertaken in association with JYI Risk Management Services, Melbourne. JYI is promoted by Jayant Yardi who has over 30 years banking experience in international and domestic markets.