Risk Management in Financial Services: Enhancing Decision-Making with Progress Corticon

See how Progress Corticon helps banks and insurance companies streamline decision-making processes and to asses risk more efficiently.

Have you ever wondered how banks and insurance companies evaluate risk to make critical business decisions? Financial institutions face numerous risks, from market volatility and credit defaults to regulatory compliance failures. You need to accurately determine how much risk the organization can take on to generate returns while avoiding losses that could threaten stability. In this piece, we’ll explore the topic and delve into how Progress Corticon plays a pivotal role in enhancing decision-making processes and contributing to efficient risk management.

Why Risk Management is Critical for Financial Services

Identifying and mitigating risks should be an ongoing process. Without effective risk management processes and tools in place, your company could face major losses from events like security breaches, operational failures or economic downturns. As a financial services company, you need to regularly evaluate risks across your organization and industry. Some of the major risks to consider include:

Cybersecurity risks: With increasing digitalization, the threat of data breaches and cyber attacks is high. You’ll need to implement strong security controls and continuously monitor systems and data for vulnerabilities.

Operational risks: Things like system failures, human errors or compliance issues can disrupt operations and damage your business. You’ll need to create comprehensive policies, controls and business continuity plans to minimize operational risks.

Economic risks: Changes in interest rates, market volatility or customer demand can impact your bottom line. You’ll need to closely track economic indicators and industry trends so you can adjust business strategies as needed.

Regulatory risks: The financial industry faces strict regulations to protect consumers, and failing to comply can lead to legal issues and financial penalties. You’ll need to stay on top of regulatory changes and make sure all policies, processes and products meet the necessary requirements.

The Challenges of Risk Management Decision Making

Making risk management decisions is tough when you have to weigh many complex factors. There are a few major challenges financial services face:

Information overload: With huge volumes of data available, it can be hard to determine what’s really important and spot key risks. You need a way to organize, filter and focus on the most critical details.

Subjectivity: Risk analysis often depends on human judgment, which can introduce bias and inconsistency. You need an objective way to evaluate risks based on facts.

Lack of transparency: If risk managers can’t explain why certain decisions were made, it undermines confidence in the process. An auditable solution that shows how risks were assessed and which factors drove decisions is key.

Outdated methods: Static risk matrices and manual spreadsheet analysis won’t cut it anymore. An automated platform with advanced analytics is necessary to gain a dynamic, real-time view of risks.

Regulatory pressures: Stricter rules around risk governance require financial firms to take a standardized, quantifiable approach. But compliance doesn’t have to mean inefficient—the right technology can help you check all the boxes in a streamlined fashion.

The Landscape is Evolving

Traditionally, risk management primarily focused on retrospective analysis and mitigation. The emphasis was often on identifying risks after they occurred and implementing measures to mitigate their impact. However, with the advent of advanced technologies and the increasing complexity of financial markets, there has been a shift toward a more proactive and forward-looking approach.

One notable trend in risk management is the integration of data analytics and artificial intelligence (AI). By harnessing the power of big data and leveraging AI algorithms, financial institutions can gain deeper insights into risks, detect patterns and make more informed decisions. This data-driven approach enables organizations to identify potential risks in real-time and take proactive measures to mitigate them.

Furthermore, there is a growing emphasis on enterprise-wide risk management. Rather than treating risk management as a siloed function, organizations are adopting a holistic approach that integrates risk management into their overall business strategy. This allows for a comprehensive understanding of risks across departments and enables better coordination and decision-making.

How Business Rules Management Systems Enable Better Risk Decisions

Business rules management systems (BRMS) allow financial institutions to build and manage the complex rulesets that govern risk decisions. Rather than hard-coding business logic into applications, a BRMS separates rules from code so they can be created and updated by business analysts. This agility and control provides many benefits for risk management. With a BRMS, you can adjust rules quickly as risk factors change. When new regulations are issued or market conditions shift, compliance and risk teams can modify rules accordingly. There’s no need to rely on IT to recode applications, allowing the business side to respond rapidly.

A BRMS also centralizes rules in one place, giving you an enterprise-wide view of risk policies and controls. This “single source of truth” helps identify inconsistent or redundant rules across systems. It also makes auditing and compliance reporting more efficient since rules and the reasons for changes are documented in one spot. Further, BRMS solutions typically include rule analysis and simulation capabilities. You can check how rule changes might impact decision outcomes before deploying them. This helps identify unintended consequences early on and check that rules are having the desired effect. Some BRMS also allow you to run “what-if” scenarios to model the impact of hypothetical events or strategic changes.

Progress Corticon: A Leader in BRMS

Progress Corticon gives business analysts and subject matter experts the power to quickly create, test, and deploy rules-based applications without needing specialized programming skills. Corticon’s easy-to-use web-based interface allows you to visually model business rules, validate them, simulate the outcomes and then deploy them as services. This agile approach accelerates application development by enabling rapid changes to business logic without rewriting code. The end result is faster time to value.

Some of the key benefits of Progress Corticon include:

• Improved responsiveness: Easily adapt applications in response to changing regulations, policies and business requirements.
• Increased productivity: Empower business users to directly manage rules and decisions, reducing reliance on IT.
• Reduced risk: Rigorously test and validate rules before deployment to promote consistent, compliant outcomes.
• Future-proofed applications: Separate business logic from underlying systems so core applications stay relevant even as rules and decisions evolve.

Corticon in Action: Real-World Customer Success Stories

This case study shows how eBay, a leading online marketplace, faced the challenge of reinforcing a responsive customer experience by quickly evaluating thousands of business rules for each transaction. To address this, they turned to Progress Corticon, a rules engine that could meet their demanding production needs.

Using Corticon’s rules engine, eBay could rapidly assess various complex variables, such as product category, seller reputation and geographical location, to determine if and how much payment should be temporarily withheld. This process involved thousands of business rules spread across multiple decision tables.

eBay selected Progress Corticon based on several key criteria. Firstly, Corticon offered the performance and scalability required for eBay’s environment, with millisecond response times and the ability to handle millions of transactions per day worldwide. Secondly, Corticon provided accuracy and integrity, producing reliable and precise results. Lastly, Corticon’s agility, facilitated by its spreadsheet-like modeling tools, allowed eBay to make constant adjustments to their business rules efficiently. By implementing Corticon’s rules engine, eBay successfully enhanced their escrow arrangement on their ecommerce website. Overall, Progress Corticon provided eBay with the performance, scalability, accuracy, integrity and agility necessary to optimize their risk management system and deliver a seamless customer experience.

Try Progress Corticon

Corticon provides enterprise-class capabilities like version control, security and auditability that give you the governance and control you need for mission-critical systems. It is highly scalable, supporting very high transaction volumes, and integrates easily with other applications and data sources.

Leading companies in financial services, insurance, healthcare, government and other industries use Progress Corticon to gain competitive advantage through faster innovation, improved operational efficiency, reduced risk and lower costs.

If you’re looking for a proven, full-featured BRMS to enhance decision making and transform your business, Progress Corticon is the ideal choice. Check out Corticon here.