Introduction to Financial Risk Management (FRM)

The FRM application is integrated with Temenos Transact and is delivered as a pre-packaged and upgradeable risk management software. It enables the clients to:

• Measure and monitor financial risks
• Reduce cost of capital and compliance
• Improve profitability in lending

The FRM application consists of three modules and they are:

The modules are segregated to various features. The below capture illustrates:

• Features of FRM modules
• Functional areas supported by each feature
• Various approaches or methodologies for risk management

Credit Risk Overview

The Credit Risk module is a comprehensive Basel II and Basel III analysis and reporting tool, which calculates Risk Weighted Assets (RWA) and capital ratios through Standard Pack edition.

The module has a pre-configured interface with Temenos Transact that supports both the Internal Rating Based Approaches (IRB- Foundation and IRB- Advanced) through Advanced Pack edition. The module also calculates Probability of Default (PD) and Loss Given Default (LGD) using various models as per the International Financial Reporting Standard - Nine (IFRS9) requirements.

The below screens capture illustrates Basel II and Basel III framework and various approaches supported by the FRM modules.