Profitability analysis program allows banks to compare existing risk assessment methods with enhanced analytics and cashflow simulation, says consultancy
Risk Integrated, a consulting and technology firm, has launched a profitability analysis program for commercial real estate.
The service will allow banks or lenders to evaluate the risk in their portfolios and the effectiveness of risk decisions made using their present assessment methodologies, said the consultant.
The consultant added that the service will also help financial institutions to assess whether they are prepared to meet Advanced Basel II capital adequacy requirements, due to be introduced by US regulators in January 2009.
The profitability analysis program will allow lenders to evaluate a block of ten commercial real estate investment deals, both as a portfolio and as individual deals.
Chris Marrison, chief executive of Risk Integrated, stated: “This is an easy way for banks to gain a fast and effective insight into the nature of the risks in their portfolio and how those risks can be mitigated through careful deal restructuring. Following our success in Europe showing banks the way to gain Advanced Basel II compliance, we have extended our services so that other banks can also benefit from Risk Integrated’s expertise and technology. Regulatory issues aside, it has never been more important for lenders to have a deep insight into the overall risk of a basket of deals in order to see how market stresses can affect not just one deal, but the whole portfolio.”
Risk Integrated’s CTO, Dr. Yusuf Jafry, believes profitability analysis program to be a natural evolution of Risk Integrated’s specialized finance system (SFS) product set: “For four years we have had SFS installed on clients’ banking systems and recently have also given access to the system via ASP. By adding this service we are widening our reach to offer invaluable stress testing and cashflow simulation technology to all commercial real estate lenders. With Basel II and the current flux in the real estate markets, the service is a quick and easy way to test the adequacy of existing risk measurement systems and to understand how to make their portfolios more profitable.”