OpenLink

Solutions

• STP Capital Markets
  • Front-Office
  • Middle-Office
  • Back-Office
• Global Front-Office
  • Front-Office
• Global Market & Credit Risk Management
  • Middle-Office
• Global Back-Office
  • Back-Office
  • Accounting
• Global Operational Risk Management
  • Back-Office
• Central Banking
  • Front-Office
  • Middle-Office
  • Back-Office
• Custom Solutions
  • Interest Rate Derivatives
  • Credit Derivatives
  • FX & MM
  • Fixed Income
  • Structured Products (MBS/CMO)
  • Equity Derivatives
  • Precious & Base Metals
  • Soft Commodities
  • Corporate Treasury
  • Operational Risk
  • FAS133/IAS39/IFRS
• ASP Services
  • Key Features
  • Awards

Market Focus

• Commercial/Investment Banks
• Central Banks
• Corporate Treasuries
• Asset Management Solution
• Other Entities

Global Market and Credit Risk Management

Beyond Aggregations

For global financial institutions, getting a firm-wide risk profile from aggregations of summary risk metrics of a wide range of disparate local systems has been a major achievement for their risk management needs. However, given the explosive growth in derivatives and the extensive range of exposures that global financial institutions must deal with, the reactive, reporting-oriented nature of the current firm-wide risk management practices needs serious revision for the new reality and challenges ahead.

OpenLink has a long-term commitment to developing next-generation firm-wide risk management solutions that users will find proactive, real-time, dynamic, adaptive, comprehensive and, above all, easy to use. Delivering on all these benefits presents a huge challenge, but we believe we have achieved these goals.

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The Instrument Modeling component is the data element of the Risk Core. Instead of just accepting dumbed-down data such as equivalent cash flows or delta positions, we support a scalable instrument model that can readily receive vanilla, aggregated position summaries, or highly structured trade details such as complex formulas, pricing tiers, multi-factor option structures, etc. This is a critical element for the High-order Risk Management (HRM) functionality. Imagine this: as you explore certain market prices and/or volatility/correlation factors within your risk universe, HRM will determine all the resulting impacts - from transmitting changes across dependant or basis markets, recalculating non-linear formulas, to triggering option payouts and other structuring-specific effects - and capture them accordingly for the firm-wide risk exposure calculations.

Another important feature: the Instrument Modeling facility also supports customized extensions to its data structure. In other words, you can create reference data structures more aligned to your internal structures. More importantly, it will also allow you to support new products "on-the-fly" without getting OpenLink involved.

Other benefits of the Instrument Modeling include the capture of full risk characteristics with no translation loss due to oversimplification of risk exposures, a common basis for trading and risk analyses, a consistent framework for ad hoc analysis and evaluation of alternative risk methodologies, and full control over risk modeling (e.g., calculation methods and risk factor definitions), and others.

Every risk management solution supports some forms of analytics. Without exception, HRM comes with an extensive library of pricing models and risk analytics as well as a robust interface for external, proprietary analytics. However, the main advantage of the Risk Analytics component stems from its architecture within the Risk Core. Unlike most solutions with "bolted-on" risk analytics, the Risk Analytics component always functions as part of the Risk Core.

To illustrate this unique advantage best, examine the way in which proprietary analytics is supported inside the Risk Core. Although most competing products do support external or proprietary analytics, you face the burdens of physically integrating the library to the system and also supplying and replacing all analytical calculations needed for specific risk exposure calculations (e.g., factor and cross sensitivities, scenario-based P/Ls and MTMs, parametric VaRs, Monte Carlo VaRs, etc.).

To leverage HRM's Risk Core, you need only supply the basic PV/MTM functions. The Risk Core will then use them for all the "down-stream" calculations in the same consistent way OpenLink's analytics are called. In other words, without doing any additional work you will get all the value-added calculations, such as factor and cross sensitivities, scenario-based P/Ls and MTM's, parametric and simulation-based VaR's, pricing model risks (great for benchmarking your proprietary models against standard, documented models), etc.

Leveraging its superior design and the Risk Core technology, OpenLink's HRM Solutions offer the most advanced "Risk Management Operating Systems" for financial institutions. These solutions support real-time, enterprise-wide position management facilities, advanced VaR exposure calculations using both parametric and simulation-based (e.g., Monte Carlo and Historical) methodologies, plus a host of other user-configurable risk analytics. These include Pricing Model Risks, Operational Risks, Stress Testing, Generation Asset Modeling and Evaluation, Volumetric VaR (for various physical exposures), Credit VaR, Cash Flow at Risk and many others.

At the trading desk level, because of the in-depth instrument modeling facility, HRM Solutions can also provide the most "tailored," market-specific trading and risk management requirements for both traders and risk managers. For instance, desk-level trading and risk management needs often differ in various financial markets. On the one hand, HRM Solutions can provide market-specific trading positions and associated factor sensitivities for traders. On the other hand, using the same consistent Risk Core technology, these solutions can generate a different yet consistent set of risk exposures for risk managers. In other words, leveraging HRM solutions will avoid system-induced arbitrages, modeling gaps, pricing inconsistency, approximation, or compromises.

Although the marketing messages from software vendors all sound similar, the key differentiating factor for OpenLink's HRM Solutions is its open, uniquely architected Risk Core technology. Unlike competing risk solutions with a "bolted-on" architecture that relies heavily on hard-coding and/or approximation formulas, HRM Solutions' Risk Core gives you an elegantly designed engine that supports "open" or user-configurable risk modeling views with a seamless integration of all exposure elements including currencies, interest rates, credit, equities, metals, energies, other commodities and operational.

Because of today's volatile and changing financial markets, the openness of HRM Solutions represents a critical facility that allows you to model your risks as known today as well as evolving hypothetical, or "doomsday" cases. This openness also gives you a valuable tool for supporting new financial products. Although it's not a 100% guarantee, leveraging HRM's Instrument Modeling (especially with the user-defined data elements) and Risk Analytics' External Pricing Model Interface facilities, OpenLink offers clients good coverage for these new opportunities. More importantly, once defined, these new products will be "automatically" incorporated into your existing production risk management framework across all exposures! No waiting for hard-coded formulas. No missed opportunities!

HRM Solutions empower you to risk-manage your activities with the most robust and advanced facilities. HRM Solutions deliver these unparalleled features:

• The Risk Core, industry-leading risk architecture that's open and integrated across all risk elements
• Comprehensive list of risk analytics and pricing models
• User-defined Instrument and External Pricing Model Interface facilities for new product and/or highly structured, customized instruments
• Real-time Market and Credit Risk Limit monitoring
• Real-time Position Management Capabilities
• Robust set of integration tools (e.g., XML, Web Services, TIBCO) so you can seamlessly integrate HRM into your existing environment, leveraging all your existing deal-capture, logistic, and accounting solutions
• Optional Grid-enabling technology for "extreme" performance and scalability.

Selecting the right risk management solutions from OpenLink's offerings and competing products resembles deciding on whether to go on to college or get a job immediately out of high school. The decision is yours!

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