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FICO® IFRS 9 Impairment Management

Accelerate compliance while adjusting credit strategies to mitigate regulatory impact and improve portfolio performance

Overview

Wherever you are on your path to compliance with IFRS 9 Impairment, FICO will help you make the deadline on time, more cost efficiently and in a better competitive position. We can not only identify what you need to do, but perform the work to get you there and deploy the solution. Along the way, we can help you transition your portfolio strategies and credit lifecycle decisions to deliver the results you want under the new accounting standard. FICO’s complete IFRS 9 Solution includes:

  1. Industry-leading predictive modeling for loss forecasting
  2. Software for high-speed model execution and loss reporting, with What-if exploration, and end-to- end process governance and transparency
  3. Consulting from advisors with extensive domain and analytics expertise. As an added value, the solution is a framework for leveraging the earlier loss visibility you gain from the new forecasting methods to drive business performance improvements that optimize capital ef ciency for higher return on assets.

Watch the FICO® IFRS 9 Impairment Management Video

The Challenge

No matter where your institution is along the path to meeting the Impairment of Financial Assets requirements of the International Financial Reporting Standard 9 (IFRS 9), you face challenges. Apart from mastering the complexities of modeling 12-month and lifetime loss estimates from day one of booking new accounts, you need the means to perform these demanding calculations — involving more data and models — within the same monthly reporting periods. You need to facilitate dialog between Risk and Finance. And while implementing your solution, you must start transitioning your credit lifecycle strategies to deliver the results you want under the new conditions.

Solution Architecture

FICO IFRS 9 Impairment Solution

The FICO IFRS 9 Impairment Solution simplifies and accelerates the compliance process from end to end. Our high-performance IFRS 9 engine ingests vast amounts of diverse data as well as other customer information. It rapidly classifies accounts as Stage 1, 2 or 3, then forecasts Expected Loss (EL) by calculating Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD) according to your chosen scenarios and probabilities for macro-economic, market and portfolio change. Using interactive tools, you can explore and adjust classification rules, scenarios and probabilities, as well as the underlying models, to assess the impact on EL. Once the forecast has been signed off on, generating financial reports is push-button easy. The entire process is transparent, documented and explainable—with drill down to the code level and unbroken lineage from raw data to published financials.

Products

FICO® Analytic Consulting

Product overview

FICO® Analytic Consulting helps you attain the best predictive models for your business needs—whether you’re new to scoring or have an experienced in-house analytic team.  FICO Analytic Consulting's predictive models provide significant benefits used on their own or as an integral part of FICO’s decision management solutions.  Use empirically derived custom models tailored specifically to proprietary product portfolios and customer bases, as well as pooled-data and expert (knowledge-based) models to reduce the time, expense and data demands of custom development.

FICO® Blaze Advisor® Decision Rules Management System

FICO® Optimization Modeler

Product overview

FICO® Analytic Consulting helps you attain the best predictive models for your business needs—whether you’re new to scoring or have an experienced in-house analytic team.  FICO Analytic Consulting's predictive models provide significant benefits used on their own or as an integral part of FICO’s decision management solutions.  Use empirically derived custom models tailored specifically to proprietary product portfolios and customer bases, as well as pooled-data and expert (knowledge-based) models to reduce the time, expense and data demands of custom development.

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Multinational Bank Gets Ready for IFRS 9 Impairment Regulations

In an effort to prevent another financial crisis, several regulations have been implemented over the past few years that require banks to operate with more transparency. This large multinational bank faced the significant challenge of developing new models required for compliance with IFRS 9 Impairment standards. The bank turned to FICO to interpret the intricacies of the new regulations and to develop predictive models that predict losses over the lifetime of an account.