Consolidate your efforts into a single, integrated solution
Align assumptions and produce consistent results across all disciplines of risk and balance sheet management. Seamlessly and effortlessly deliver analysis to your executive team on how any change in conditions will impact earnings, enterprise value, liquidity, capital and earnings per share.
Never again feel as though you don’t have the time to effectively assess risk and recommend strategy.
Empyrean ALM®
Designed to be the foundation on which a sound balance sheet management discipline is built, Empyrean ALM® is the most efficient and intuitive cash flow, forecasting and simulation engine on the market. Having been conceived during the last financial crisis, and designed and developed in its aftermath, Empyrean has been specifically designed for the challenges of modern risk management (ie. natively modeling credit loss as part of its core). We know that how well a system performs key tasks – the right mix of speed, flexibility, transparency, and ease of use – means as much, if not more, than check-the-box functionality:
Speed. Speed. Speed.
Built on our founders’ 30-year obsession to improve every component of a simulation, Empyrean calculates orders of magnitude faster than the rest of the market. Because results arrive so rapidly, users are able to model and simulate even more scenarios to inform the decision making process. Be productive, not busy.
Inherently Intuitive
Designed by actual risk practitioners, the solution is oriented based on how practitioners think and work. Intuitive interfaces ease users through their daily activities. As a result, users are able to become productive on the system with minimal training as it feels like second nature.
Transparent model with intuitive reporting
Utilizing either Excel or SQL as the vehicle to both load data and assumptions and output results brings a natural familiarity. All information (instrument data, assumptions, results) within the system is visible either directly in the interface or through Empyrean’s intuitive Excel reporting, controlled by the user. Transparent. Easy. Powerful.
Converting is quick and risk free
We recognize that the demands of your job don’t stop when you decide to implement a new solution. Getting converted and into production as quick and as painless as possible isn’t a luxury, it’s a requirement. Because of Empyrean’s intuitive design and experienced support team, our customers go into production in a fraction of the time it takes with others.
Liquidity Stress Testing
Having a sound approach to managing liquidity risk has long been a pillar of prudent balance sheet management. It’s imperative to maintain a dynamic framework forecasting your liquidity position, its potential risks and failure points, and their impact on the performance, safety and soundness of the institution. This discipline is quickly evolving from being industry “best-practice” to regulatory requirement. How can you keep pace?
An extension of your ALM modeling
A dynamic extension of Empyrean ALM® allowing you to layer stresses of the various sources and uses of funds, borrowing capacities, and haircuts onto any ALM scenario’s balance sheet projection and market conditions to analyze its impacts.
Assess and optimize your strategy and plan
Enabling you to continuously assess the impact of stress on your funding strategy and contingency funding plan, simulate failure points and key risk metrics and ratios, and test, revise and mitigate your liquidity planning processes.
Appease regulatory demands
Designed to meet and exceed the guidelines laid out by the Interagency Policy Statement on Funding and Liquidity Risk Management SR10-6 and to eliminate the risk inherent with maintaining complex, outdated spreadsheets.
Deposit Analytics
Depositor behaviors are inherently volatile. Changes in economic conditions, pricing strategy, competitive market dynamics, laws & regulations, technology and consumer preferences can all impact an institution’s deposit base. Despite this, most institutions have a limited understanding of their depositors, hindering their ability to predict future behavior. The view deposit gatherers and product managers have on relationships and/or products often do not align with that of risk or profitability. This will undoubtedly lead to misaligned incentives. It can also lead to difficult to explain fluctuations in key risk measures, like economic value of equity. In all, it makes understanding risk and return much more difficult and could result in incorrect assertions about an institution’s projected net interest income.
Empirically-based behavioral modeling
A selection of risk-aware methodologies for estimating non-maturity deposit rate sensitivity (betas), balance decay and volatility (stable vs non-stable) behaviors, that: align with new IRBB guidance and US regulatory standards, produce conservative and defensible assumptions, and bring stability to risk measures by creating a stable balance with a buffer for volatility.
A consistent view of risk and profitability
Integrated with your ALM modeling process to create a standardization in data, product segmentation, assumptions and calculations that will foster a consistent dialogue across the institution on the value (risk vs reward) of your products, depositors and overall portfolio.
Early warning system
A continuous back-test of predicted behaviors against actual behaviors presented through dashboards that illustrate deviations from expectations resulting from possible misaligned incentives, changing market dynamics or changing customer behaviors.
Funds Transfer Pricing
Net Interest Income is the main performance metric for most financial institutions. Is the bank earning enough income to justify the capital allocated by shareholders? How much will NII be impacted by changes to interest rates and liquidity premiums? These are questions an institution must be able to answer in order to effectively manage NII across the various lines of business and through different rate cycles. This is done most effectively through introducing a funds transfer pricing process that is both robust and effective in immunizing the business units from interest rate and liquidity risks while transferring them to the mis-match center, where ALCO can effectively manage it.
Consistency across all disciplines
As an extension of the ALM model, Empyrean’s FTP calculations will leverage the same data, behavioral settings, interest rates, other assumptions and calculation engines as all the other balance sheet management functions.
Comprehensive list of methodologies
Empyrean supports virtually every methodology for calculating the base funding rate for every instrument on the balance sheet as well as any addon charges or credits required by the institution (ie. liquidity premium, OAS, etc…).
Foundation for sound performance measurement
Let Empyrean form the foundation for your performance measurement efforts as the solution simulates and can export FTP rates at the instrument level for all current position instruments and for all forecast periods in every scenario.
Capital Planning & Stress Testing (DFAST)
When done properly, capital planning and stress testing can be an indispensable management tool informing senior management as they set balance sheet strategy. To move beyond a pain-inducing compliance and model risk management exercise and become part of balance sheet management best-practices, operating efficiency must be achieved. Empyrean was designed for this purpose.
Native credit modeling
Empyrean was created in response to the wave of regulation resulting from the most recent financial crisis, as such, capital planning and stress testing is a native part of Empyrean’s DNA.
Operational efficiency
Increase operational efficiency through tailor-made functionality: simulate and report at the legal entity level, build parallel account hierarchies (ie. product vs call code), model for credit losses and recoveries using a multitude of methodologies and approaches, forecast scenarios of macroeconomic variables, incorporate capital actions and calculate capital ratios.
Straightforward and defensible modeling
Straightforward, defensible, empirically-based modeling capabilities to predict credit losses and volume levels under any user-defined forecast or macro-economic conditions.
CECL Calculator
Transitioning to the new CECL accounting standard brings with it a host of challenges. For one, accounting and credit groups are not accustomed to the modeling and forecasting techniques required by CECL that are routinely used by balance sheet managers today. With the CECL process often owned by accounting and/or credit, it becomes difficult to maintain consistency with the assumptions and systems used in alternative forecasting arenas. In addition, balance sheet managers require estimating CECL in their forecasting and simulation processes to assess its impact on balance sheet strategy.
Sophisticated calculation engine
Empyrean contains a calculation engine aligned with the idiosyncrasies of CECL (ie. allows for multiple credit models for “reasonable & supportable” period and tail period) able to export info into any external system and/or process.
Cash Flow and modeling consistency
Let Empyrean be the single calculation engine for all instruments/portfolios where consistency in modeling of behaviors and assumptions is critical.
Bring CECL into the forecast
Empyrean enables you to define your CECL methodologies within the model for use in the balance sheet management processes, even though the formal CECL calculation may be done elsewhere. In addition, you can leverage Empyrean as a challenger model to validate your production CECL calculations.
Macro-Economic Credit & Volume Models
Both capital stress testing and CECL require an institution to be able to quantitatively predict loss rates and volume levels under assumed economic conditions. Performing this function in a cost effective way while producing comprehensible, defensible and supportable models can be a challenge. Institutions very rarely have the data and/or the expertise to confidently develop these models themselves.
Cost-effective solution
Allow Empyrean to execute a cost-effective, established and logical statistical modeling exercise that will deliver understandable and maintainable models for predicting loss rates and balance sheet levels.
Based on available data
Empyrean will use whatever data is relevant and available and can rely entirely on publically available national and peer group data in the absence of institution historical data.
Expansive model documentation
Includes expansive model documentation, support and ongoing recalibrations that will alleviate audit, validation and regulatory pressures.
