What is elanev Operational Risk Model? The elanev Operational Risk Model is an online tool designed to help you assess the capital associated with low frequency – high impact operational risks.
How is it accessed? The elanev Operational Risk Model is accessed via our secure online portal. We provide you with a simple template to capture model inputs and settings. Upload the template and get a detailed report returned in real-time. The report contains capital estimates, commentary and insights. Repeat the process as often as you like as the model is available 24x7x365.
What type of inputs does the model use? The model can be run using the results of your scenario analysis or from fitting to real data. A variety of modeling options can be selected within the template too. These are explained within an easy to understand technical document. We will support you with your initial set up and provide ongoing support. We also provide training and wider consultancy services as required.
What about our data? We do not store or back-up your data. It is only used to run the model.
Why should we use a model? Regulation requires firms to assess their operational risk related capital position as part of their ICAAP process. The capital held should be sufficient to cover low frequency but high impact events. Recognising that most firms have not experienced such large losses, regulation allows for the application of scenario analysis. Unfortunately, scenario analysis can be prone to uncertainty especially when assessing capital at the required low frequency but high impact levels. Typically, expert judgements overestimate more frequent risks and underestimate remote risk. Modeling scenario analysis outputs helps firms reduce uncertainty in their capital assessments. It provides a very effective mechanism for Risk teams to review and challenge judgements made.
What is the regulatory view on such models? Using the right scenario model to help in the assessment of Pillar 2 capital is viewed extremely positively by Regulators and meets their increasing regulatory expectations.
Is the model validated? Yes, the model is validated according:
1. The technical document contains a set of test batteries that detail the test we perform on the model and the corresponding results
2. The model results have been compared to those from an independent third-party model as part of a client take on process.
3. The model has been presented to regulators and has been party to numerous regulatory processes. All returned successful.
4. The model methodology benefits from the knowledge and understanding of some 50 plus industry models mainly in the US but also in the UK and EU. This includes model design, build, implementation, development and internal, external and regulatory audits and reviews. Indeed, our OR expert supported a leading regulator in a series of OR model reviews. Importantly, we have been party to regulatory model feedback and corresponding responses. This placed us in a unique position to develop a market leading approach to operational risk scenario modeling that meets regulatory expectations in an easy to use and informed manner.
That all sounds expensive. Is it? We base our pricing on a fraction of a single operational risk modeling FTE which would be required to maintain an internal model. What’s more, our pricing is substantially less than that of a Big-4 Professional Services firm whilst our Operational Risk modeling insights are more extensive.
Do you provide operational risk consultancy? Yes, and we can provide wider consultancy services as required.