Solution Architecture for the IRB approach

With FlexFinance, FERNBACH offers a solution portfolio for IRB. Every step of the process – including parameter estimation, result calculation, report generation as well as stress and back testing – is covered.

FlexFinance Rating is a rule-based rating and scoring solution covering various segments including corporate, retail and SME customers. The solution’s templates are embedded in an intuitive user interface and can be easily adapted to fit the bank’s risk policy.

Based on a flexible modelling platform, the IRB parameters are seamlessly estimated, validated and back tested. FERNBACH also offers ready-to-use templates for estimating the PD, LGD, and CCF and all models are open for customisation on the end-user level. The modelling platform itself is fully integrated with FlexFinance Rating to ensure sound calibration of all rating systems.

The FlexFinance Basel solution calculates the capital adequacy ratios for all types of risk and automatically generates all specific reports to local regulators based on result data – without any manual interference. Furthermore, requirements for ad-hoc reporting and management information purposes are covered.

FlexFinance Stress Testing calculates the effects of various stress scenarios on regulatory credit risk. The solution helps the bank’s risk management area implement the individualisation of banking supervision required by the second pillar of Basel.