B-RACE Tools®

B-RACE Tools® includes a series of information models that conform to international standards and are generally accepted management and control practices. With this, your company can manage the inherent risks in its business activities.

The scope of the solution is structured according to the generally accepted large risk divisions. Currently, the solution incorporates the requirements for the management and administration of market risk, liquidity risk, credit risk and operational risk; providing the necessary facilities for its monitoring, impact analysis, trends and a range of specialized reporting, simulation and analysis mechanisms.

B-RACE Tools‍ - VaR Calculation

Value at Risk is a methodology used to quantify exposure to market, credit or liquidity risk, using statistical techniques. In simple terms, the amount or percentage of loss that an investment portfolio will face in a given time horizon is quantified.

One of the main objectives of the functionalities of the Market Risk and Credit models is to obtain the data of the value at risk (VaR)for the Liquidity risk model is to obtain the main liquidity indicators of the financial institution and to have tools to manage the potential effects of an impairment on the liquidity of the Entity. B-RACE Tools®  incorporates three simulation methods for measuring VaR:

1. Historical simulation method
2. Delta method
3. Monte Carlo method

B-RACE Tools® – Back Testing

This contrast test can be carried out in B-RACE Tools®for parametric and historical calculation methodologies. A Back-Testing test is a statistical technique that validates the accuracy and calibration of the VaR model used.

B-RACE Tools® records the failure rate of the VaR model used, whether historical, parametric, or Monte Carlo, and presents the VaR in absolute and relative terms.

B-RACE Tools® – Stress Testing

Stress Testing is a complementary tool to VaR which does is to analyze different scenarios under stress conditions and atypical market situations. This tool is very necessary because:

• It points to the impact on a portfolio resulting from exceptional but plausible events.
• Check whether the capital buffer is sufficient in stressful conditions.
• It supports portfolio allocation decisions beyond the range of normal working conditions.

B-RACE Tools‍® - Indicators and Information Analysis

It presents the indicators by type of currency and deadlines from 1 to 3 months or configurable according to the tolerances of the Financial Institution, operational and structural indicators, as well as the liquidity coverage index or coefficient (LCR) and the cash flow of the financial institution which during the implementation process can be adapted to the nature of the Entity.

The B-RACE Tools® - Market Risk model is supported on the QlikView® platform which is a powerful program for visual analysis and business intelligence sufficient and necessary for decision making. The greatest strength of this platform is its motor of associative and neural analysis, similar to the behavior of the human brain; since it analyses the information and explores the associations between the data. Its inference engine maintains associations between data automatically.

B-RACE Tools® - Market Risk allows the development of Market Risk Management: it considers the possibility of suffering losses in the asset or investment, product of fluctuations in the market. These fluctuations can affect three different factors, the Investment Price Risk, Interest Rate Risk, and Foreign Exchange Rate Risk.

The B-RACE Tools® - Credit Risk model is supported on the QlikView® platform. This is a powerful program for visual analysis and business intelligence which is sufficient and necessary for decision making. The greatest strength of this platform is its motor of associative and neural analysis, similar to the behavior of the human brain; since it analyses the information and explores the associations between the data. Its inference engine maintains associations between data automatically. The B-RACE Tools® model manages Credit Risk by analyzing the possibility of losses that a Financial Institution may face as a result of default in the payment of contractual obligations assumed by debtors.

B-RACE Tools‍® - Credit Risk uses the Value at Risk (VaR) methodology, which is a method used to quantify credit risk exposure by using statistical techniques. In simple terms, the amount or percentage of loss that a portfolio may face in a given time horizon is quantified. In a Financial Institution, the members of the Senior Management are responsible for defining two fundamental aspects for the VaR calculation: the level of confidence they want to have to determine the VaR and the time horizon with which it will be measured.

VaR does not provide certainty regarding the losses that could be suffered, but offers an expectation of possible results based on data series over time, making use of statistics.

B-RACE Tools® - Liquidity Risk model is also supported on the QlikView platform. This is a powerful program for visual analysis and business intelligence which is sufficient and necessary for decision making. The greatest strength of this platform is its motor of associative and neural analysis, similar to the behavior of the human brain; since it analyses the information and explores the associations between the data. Its inference engine maintains associations between data automatically.

B-RACE Tools® Liquidez, permite la Gestión del Riesgo de Liquidez: el cuál considera la posibilidad de que una Entidad Financiera, no sea capaz de atender a sus compromisos de pago a corto plazo. Para esto la herramienta proporciona una serie de indicadores y el cálculo del VaR de liquidez, con la finalidad de contar con la información suficiente para que la Entidad Financiera pueda mantener la cantidad de dinero en efectivo para atender todas sus obligaciones a tiempo.

The main goal of the solution is to provide facilities to risk managers for the calculation of Liquidity Risk, which is achieved by combining its components of calculation and visual analysis of information. Value at Risk is generated through the combination of a series of indicators and alerts related to:

• Liquidity coverage index
• Coverage and Stability Indices

It develops a real picture of the risk environment and empowers, in opportunity and information, decision-making. Risk teams with B-RACE Tools® can spend more time on value-generating activities and less time on repetitive activities.

Implementation activities:

• Operational Risk
• Incidents and loss events
• Information Security
• Business continuity
• Management Systems
• COBIT
• SOX
• Basel III
• Data Privacy
• Banking Regulations
• International Standards