Portfolio's Risk Data Strategy Kevin Bodie Agenda Background The - - PowerPoint PPT Presentation

A Revolution of a Large Commercial Portfolio's Risk Data Strategy

Kevin Bodie

Agenda

• Background
• The Problem
• The Solution
• The Benefits

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Comerica Bank Background

Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $62.9 billion at June 30, 2013

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How Did We Get Here?

• Comerica Bank first started submitting the FR Y-14 schedules in 2012
• We were able to get some of the data that we had in our accounting systems
• In addition, we built a website for data collection for any missing data in the C & I

schedule, and had spreadsheets that the field filled out for missing data in the CRE schedule

• Execution
• Quarterly process (Monthly for Retail Schedules)
• Huge effort from field personnel to collect and input the required data
• Huge IS effort to prepare the submission
• No error checking prior to submission
• Schedule maintenance

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Challenges With How We Do It Today

• Manual input fraught with potential for keying issues or incorrect values raising

concerns around data integrity

• Some data sources use old technology hampering our ability to leverage them
• Systems not accessible or linked forced to rekey many data items already stored in a

data source

• Frequent FRB requirement changes will require us to go through the traditional IS

support model

• Inefficient, costly, time to market concerns
• These challenges are linked to other challenges we face with
• Validating Retail and Commercial PD and LGD models
• Ad-hoc reporting
• Audit Issues around data reconciliation
• Enabling complete view of customer

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Challenges with How we do it today

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Financial Statement Spreading Risk Rating Creation Loan Origination Loan Boarding Regulatory Reporting

• Current Environment (Loan Origination and Regulatory Reporting Processes)

Loan Accounting Systems

A Strategy Emerged

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• Our largest inefficiency to be remedied was the issue of not being to access financial

statement data in an automated fashion

• Undertook a due diligence exercise to find a suitable replacement for our spreading

system

• During this process we learned that there were solutions that could not only replace

spreading as well as

• Provide a central repository for not only regulatory data, but all data used in credit processes
• Allow for system configuration enabling faster implementations with fewer customizations to

maintain

But We Still Had a Problem! No good way to link data sources to create the complete view we needed

What are we doing

• First phase: Implementing RiskOrigins for Financial Statement Spreading
• Establish a key that can be used across our systems by integrating RiskOrigins to our Customer

Information System at the time of an initial spread

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Risk Origins

Financial Statement Spreading Risk Rating Creation Loan Origination Loan Boarding Regulatory Reporting

Loan Accounting Systems Customer Information System

What are we doing

• Second phase: Implement FR Y-14 Regulatory Reporting via RiskOrigins
• M and Q schedules in scope. All provide data for creation of FR Y-9C (Call Report)
• Automate and consolidate manual data collection processes
• Load data from accounting systems to RiskFoundation to create a single source of truth

Risk Origins

Financial Statement Spreading Risk Rating Creation Loan Origination Loan Boarding Regulatory Reporting

Loan Accounting Systems Customer Information System

How it will help

• Reduce manual entry by leveraging the RiskFoundation database populated from our

source systems

• Reduce effort to track and update regulatory reporting templates by leveraging

Moody’s Analytics RiskAuthority Regulatory Reporting Tool subscription service for regulatory schedules

• Leverage edit reports provided and maintained by Moody’s Analytics to assess issues

in schedules prior to submission to the data aggregator and / or the FRB

• Simplify the reconciliation process between submission files for FR Y-14 and FR Y-9C

(Call Report)

• Enable strategic aggregation of key Credit data to create other efficiencies

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Future Plans

• List of other projects we want to implement in RiskOrigins
• Risk Rating Creation
• Retail Regulatory Reporting
• Loan Origination Integration
• Other Commercial Regulatory Schedules

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• Policy Exception Tracking
• Stress Testing
• Limits tracking

Risk Origins

Financial Statement Spreading Risk Rating Creation Loan Origination Loan Boarding Regulatory Reporting

Loan Accounting Systems Customer Information System