Accelerating Gap Analysis and Project Risk Mitigation for a Global Health Insurance and Health Service Company. Reporting cycles are notoriously time consuming and stressful, so I’m pleased to bring you an example of a financial services institution that identified a way to improve its reporting times by over 30%. Whether it’s regulatory reporting, period-end closing, the production of business analytics, or an enterprise-wide stress test, financial groups struggle to meet deadlines and smoothly manage data, calculations, aggregation and analysis. For most firms it is a challenge to identify and enable the optimum reporting processes to satisfy the many recipients of reports. I invite you to read a project case study in which SecondFloor recently helped an institution find a way to improve reporting cycles by 30% . Whether you are a banker or insurer, or trying to win weeks or days within your reporting timeframe, the SecondFloor approach can be applied to provide you with actionable insight into improving your reporting processes. Please read the case study and contact SecondFloor (info@secondfloor.com) to discuss how you would benefit from applying SecondFloor’s approach and by enabling the identified improvements to be embedded into your business as usual operations.

1. Accelerating Gap Analysis and
Project Risk Mitigation for a Global
Health Insurance and Health
Service Company
A semi-automated discovery tool from SecondFloor
enabled this global insurer to quickly identify the gaps
and weaknesses in its data gathering and reporting
processes for Solvency II compliance.
The This global health insurance and health
service company wanted to use its internal
Problem
economic capital allocation model as part
of its framework for Solvency II compliance.
It estimated that by taking a partial internal
model approach, it would be able to free up
more capital than if it chose to use the EIOPA’s
Standard Formula to calculate its capital
requirement.
However, dry runs carried out in 2011 revealed
a serious shortfall between the quantity and
quality of the data it was gathering for its internal
and standard model calculations, and the data
it would be required to submit in Solvency II’s
comprehensive Quantitative Reporting Templates
(QRTs).
March 2013 | www.secondfloor.com

2. Success The pressure of a looming
compliance deadline
Criteria With a Solvency II compliance deadline of 1st
January 2014 then on the horizon, the company
had to act fast to identify where the gaps
were, and to understand the effort that would
be involved in bringing its data aggregation
and reporting processes into line with the new
regulations.
At this point, a large insurer might traditionally
bring in a team of management consultants to
analyse current systems and data gathering
processes, and produce a report on where the
gaps lie. But such a project can take several
months, and the client did not have the luxury
of time. It needed to get started fast on closing
the gaps, and couldn’t waste six months on the
discovery phase.
The Rapid discovery with Analyzer
Fortunately, the company had learned of a
Solution much faster way to analyse its current situation.
It approached SecondFloor, developers of
a software-based solution for mapping the
current systems and data, reporting hierarchies,
processes, people and responsibilities within a
complex organisation. SecondFloor’s Analyzer
“
software is unique in its ability to map, analyse
and visualise all aspects of the organisation to
uncover inefficiencies, gaps and dependencies.
It’s like taking a photograph of And it can do so in a matter of weeks.
the organisation as it currently SecondFloor consultants, led by project
exists,” explains Marcel de manager Marcel de Lange, modelled the 13000
Lange. “You don’t have to data points in Analyzer required for the QRTs,
physically go around the then deployed the software to discover and map
organisation and ask people where each of those data points currently existed
(or should exist) within the organisation, and the
what systems they’re running
role of the person responsible for supplying each
and what data they have. It’s one. Using a similar approach, the SecondFloor
also much less expensive than consultants were able to model reporting
a manual discovery exercise.
”
hierarchies and reporting processes and identify
gaps.
March 2013 | www.secondfloor.com 2

3. Results Eye-opening results
After just two months, the SecondFloor team
had the results of the discovery exercise to
show to the client’s Solvency II steering group,
comprising executives from its actuarial, risk and
finance divisions.
The findings were eye-opening. The data
needed for the QRTs was available within
the organisation, but not all of it was where it
needed to be. A lot of it existed only on paper,
filed away in policy documents that had never
been digitised. Some of it was in spreadsheets
maintained by individuals and departments,
which never entered the enterprise data
warehouse that was the main source of the
insurer’s risk and capital data. And some was
held as unstructured data: mainly as notes and
comments in freeform text fields that were also
not consumed by the data warehouse.
Risk of missing reporting deadlines
One of the most worrying aspects of Solvency
II for many insurers is its aggressive reporting
deadlines. This client needed to know whether
its existing systems and processes would enable
the QRTs to be fully and accurately populated
and submitted ultimately within 14 weeks of its
financial year-end.
From the findings, SecondFloor’s consultants
were able to estimate the length of time it would
take to get each data point from its source,
through the relevant calculation engines, and into
the final QRT to be submitted to the supervisor,
with appropriate sign-off and validation at every
stage.
The results were not promising: with so much
critical data residing outside of the organisation’s
structured systems, the SecondFloor team
estimated that meeting the 14-week reporting
deadline would be impossible without a major
system and process overhaul: with the current
systems and processes in place, it would even
not be possible to meet the 20-week deadline as
set forth by EIOPA for the first phase in 2014.
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4. A roadmap to compliance
The discovery exercise had quickly confirmed
what the insurer had suspected all along: its
existing data, systems and processes were in no
fit shape to deliver full and accurate disclosures
within Solvency II reporting deadlines.
Analyzer also enables the “ideal” environment
to be modelled, in order for an action plan to be
drawn up to get the organisation from the current
environment to the ideal situation. That meant
SecondFloor’s consultants could identify the
critical paths needed to get the QRTs completed
on time, and identify the processes that needed
to be changed in order to achieve that.
A message from the company’s Chief Risk
Officer congratulated SecondFloor on the speed
and efficacy of its findings, but acknowledged
that there was now an enormous amount of work
to do in order to become Solvency II-compliant.
Summary Fortunately, the introduction of the Solvency II
regime was delayed, leaving the insurer
more time to get its house in order. But the
results of the discovery exercise have put it in a
great position to understand which processes
need to be changed, and which data sources
need to be brought into the analytics and
reporting environment so they can contribute to
the efficient and automated production of
Solvency II reports.
It now has a solid baseline from which to plan the
transformation, a clear view of where it needs to
get to in order to be compliant, and a roadmap
for making the necessary changes. All achieved
in a matter of weeks using Analyzer.
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5. For more details please contact
SecondFloor.
About SecondFloor
SecondFloor helps firms to comply and produce
regulatory information efficiently, consistently.
Companies that turn to SecondFloor’ solutions
benefit from timely, complete, accurate,
traceable, auditable and repeatable reports and
analytics. Facilitating stress testing, economic
capital calculations, and regulatory reporting
in complex environments are key elements of
SecondFloor’s credentials that have established
it as a successful enabler of business analytics.
eFrame®, SecondFloor’s software application,
reflects best practice approaches and project
accelerators learned with clients during years
of experience. SecondFloor is also an IBM risk
analytics reseller.
For more information
contact us on +31 (0)20 6589 700
email us at info@secondfloor.com or visit our
website at www.secondfloor.com
Request a full demonstration
Would you like to have a personalized
demonstration of the eFrame® Analyzer?
Please contact us at info@secondfloor.com
or simply visit www.secondfloor.com
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