SEC Servizi, a consortium of Italian banks that provides operational and technology services to financial institutions, has selected Accenture to develop and implement a new risk calculation engine to help its clients and members assess the probability of loan defaults. Such assessments are required under international capital adequacy rules. The solution will be based on SAS's Credit Scoring for Banking software, a scoring engine, modeling environment and banking industry data model to support risk assessment and adherence to regulatory requirements..
Probability of default is a measure of the likelihood that a borrower will be unable to make necessary scheduled repayments on a loan. Banks calculate this probability for each customer based on multiple factors, including the borrower's credit history and assets and the nature of the bank’s investments and other factors. The calculation helps determine the amount of regulatory and economic capital a bank must set aside, according to the published international banking capital adequacy recommendations in Basel II.
"Our new probability of default solution will help our clients and members improve their risk assessment capability and more rapidly and cost-effectively comply with current and future Basel Committee requirements," said Luciano Dalla Riva, General Director of SEC Servizi. "With new analytic technologies, our customers will be able to create more sophisticated risk management models and translate complex and sparse data into easily accessible risk indicators."