Leading North American bank uses risk analysis tool to help predict IT risk and prevent potential business problems
Ensuring that banks use technology to help run their operations as efficiently as possible and provide the best customer service is a priority for all IT directors. But new technologies and IT projects have an inherent risk to the smooth running of any business operation. With a low tolerance to any failures, finding ways to predict and prevent risk has become paramount for a leading North American bank. Agena's risk analysis solution, AgenaRisk, is helping this bank find an innovative way to forecast risk and achieve business continuity.
The Technology Development Group at the bank manages 400 new technology changes every week, from small maintenance releases to major upgrades. In addition, it approves or declines hundreds of proposals from other departments suggesting new technology advances or wanting to use technology in different ways to achieve new goals. The group's ultimate criteria for every proposal assessment is to be assured that a new project will not have a negative impact on existing systems.
The responsibility of the group is to find ways of avoiding IT risk. But it is not as simple as testing, testing and more testing - perfect testing isn't always possible and at some point the bank needs to implement. In this situation the bank needed an intelligent approach to assessing IT projects to be able to make more informed judgements.
For each project assessment, there is data involved from each project manager who puts forward their case. There is also considerable expert judgement involved. The challenge was to capture all the relevant information to support the decision making process, in order to achieve the most positive outcome for the organisation when new IT changes are introduced.
The bank wanted to be able to predict risk in a more automated process. One approach they considered was to find indicators of IT risk which would highlight the probability of a project going wrong. The group could then take appropriate action to avoid any negative impact. This prompted the team to carry out research to find out what other people were doing and find a solution which could manage this for the bank.
The bank carried out research with a range of companies including NASA, who view operational IT risk assessments as a strategic part of everyday business practice. It found the best solution to be from Agena.
Agena's solution is based on Bayesian models, a technique that helps account for uncertainty, which traditional statistical analysis often neglects. Agena uses all the information that traditional business intelligence tools use, but then combines this with innovative Bayesian networks and advanced predictive analytics. Its risk analysis and decision support software tool, AgenaRisk, analyses all the variables and predicts possible outcomes and assess their chances for a positive outcome. This helps organisation' achieve business continuity with an approach that is consistent with the IT infrastructure library (ITIL).
There is a lot of software addressing project risk but very little focus on the area of operational risk. Agena recognises that many companies need to address the area of operational risk and have worked with its customers to build models to make more accurate assessments of operational risk across the business. This expertise gave the bank the confidence to move ahead with the project.
Following the success of a small prototype model, the bank decided to move ahead with Agena on a full proof of concept phase for using AgenaRisk to assess all new IT projects.
This phase involved building an automated scoring capability model, which scores the forecast risk of a project against the actual result. By comparing the two, the group will be able to ensure the feasibility of moving to an automated decision making process.
The proof of concept phase of the project started in November 2006 and is on schedule to be completed in July 2007.
Ease-of-use and integration
One of the first benefits which the bank realised was the ease-of-use of the AgenaRisk model. The model integrates with the bank's existing database to source data from the system. It can integrate with the rest of its existing IT infrastructure at a later stage to allow all enterprise-wide data to be incorporated.
It was important to the bank that AgenaRisk was easy-to-use. The entire project was introduced easily without impacting existing systems while the 'proof of concept phase is underway.
As with all business intelligence tools, good quality business data is a critical input to effective decision making. The bank is currently refining the AgenaRisk model as it sources the data points which are the most 'predictive'. This includes identifying the potential impact as well as the potential risks, and finding the corresponding data points.
Business Benefits of Successfully Predicting Risk
Although the project is still in the early stages, the bank confirms that it is on the right tracks to reliably and accurately predicting risk. They have looked back at some of the IT changes that they have implemented which were successful, and run these through the AgenaRisk model, which highlighted the same areas of risk and success.
The bank is excited about the future business benefits which AgenaRisk offers. It has the potential for highlighting areas of risk and preventing problems, which would be of huge benefit to the bank.
To find out more about Agena's Business Continuity and Operation Risk Services contact:
Ed Tranham, Commercial Director
T: + 44 20 7404 9722
32-33 Hatton Garden London