Insights
September 2015
Financial modelling Topical articles, tutorials, case studies and news
Welcome
As Solvency II draws
ever closer, additional
reporting requirements,
tighter reporting
timescales and
increased governance
requirements are
becoming more of a
reality. The need to
ensure processes are efficient, well governed
and robust is greater than ever.
The latest additions to the Towers Watson software
suite, Towers Watson Unify and Towers Watson
RiskReporter, have been designed with this
in mind.
“The
“
need to ensure processes
are efficient, well governed and
robust are greater than ever.”
Our first article introduces Unify, a ground-breaking
enterprise-wide risk and actuarial systems
integration platform designed to provide complete
automation of any process. The article explores
the functionality and the benefits that Unify
brings to insurers looking to automate their
end-to-end processes.
The second article presents RiskReporter, a
reporting system designed to manage data and
produce quantitative and qualitative reports in
line with Pillar 3 requirements. We describe the
reporting challenges insurers are facing in the
Solvency II world and how RiskReporter can be
used to automate data management and the
reporting workflow.
The term ‘last mile’ solution is commonplace
in our industry – to extend the sporting analogy
further, RiskReporter is a ‘last five miles’ solution
whilst Unify can be used to cover the entire
Solvency II reporting marathon.
Joel Fox
Global Financial Modelling and Reporting
Product Group Leader (Life), Towers Watson
In this issue
2
Towers Watson
Unify
8
Towers Watson
RiskReporter
Insights | September 2015
Towers Watson Unify
The challenge
Introducing Towers Watson Unify
Recent editions of this publication have detailed
significant advances within the suite of
Towers Watson software solutions. In conjunction
with improved performance and usability of
individual applications, these have gone some way
to resolve the resource and time challenges faced
by insurers. However, the business and regulatory
environments are placing ever greater demands
on insurance actuarial modelling and risk analytics
departments. They require richer and deeper
analysis, more frequently and more quickly, all
within strict governance and control frameworks.
Towers Watson Unify is an enterprise-wide risk
and actuarial systems integration platform built
on a secure, managed repository. Unify is a new
leading edge product that uses proven Microsoft
technologies to:
This creates a challenge that demands change.
Insurers need to study the entire process from
end-to-end, considering the multiple systems and
manual steps between them; ad hoc calculations
and other manual processes; actuarial interventions
and governance reviews; and the cost of errors
and repeat work. Only a holistic approach, with the
ability to bring change across the entire reporting
process, can deliver the transformation required to
meet the frequency of reporting requirements, while
saving time and reducing costs. Such an approach
should be able to work with existing systems, to
providing automated governance and workflow to
manage and automate an end-to-end process.
Figure 01. Best practice reporting process
Flexible workflows for
continuous improvement
in capabilities
Define/Refine
•• Enable integration with Towers Watson software
solutions and other third party software
•• Facilitate the design and implementation of
automated workflows
•• Provide complete automation of end-to-end
modelling and reporting processes at the press
of a button
•• Support best practice governance with an
unparalleled level of transparency and
audit readiness
The aim of Unify is to provide complete automation
of any process. It provides a link between different
systems, removes manual steps and manages any
user interactions required along the way.
Overview
Unify provides companies with the tools to develop
workflows which orchestrate their processes and
to run these workflows within a secure and fully
auditable environment. The flexibility of the software
allows for the creation of workflows that are
specific to the underlying processes and business
architecture of each company. All of the objects
used within each step of the process can be locked
down and stored within Unify. Therefore the user
can guarantee what will be run and ensure that it
is easily repeatable, both for future exercises and
to reproduce results at a later date (see Figure 01).
An audit trail is produced automatically for
inspection and the integrity of the audit trail is
maintained through tight version control of items
such as models, data and assumptions.
Secure
Lock down process, model
and data through built-in
security rights and roles
Audit
Repeat
Automatically maintain
version history of
models, assumptions,
data and processes
2 towerswatson.com
Repeat process consistently
with automation and
scheduling capability
Insights | September 2015
Figure 02. Visio process diagram and Unify workflow example
The processes modelled within Unify can range
from simply running an actuarial model to running
the entire end-to-end reporting process, that is,
data validation and review, review of assumptions,
running the models, production of results and all
of the governance steps required to produce final
reports. Figure 02 shows an example of a simple
linear process diagram in Visio and shows how this
can be developed into a workflow within Unify.
Unify is a web based system designed to work with
many devices from a desktop to a mobile phone. On
a day-to-day basis, users can access the system via
the web interface to run the workflows as ‘jobs’
and to monitor and review progress of these jobs.
The web interface allows users to navigate easily
around the system, with a user-defined folder
structure providing access to the secure repository.
In addition to the web-based interface, there is also
a desktop application (Unify Workflow Designer)
used to design and build the workflows but also
providing the ability to adapt existing workflows
as processes change.
towerswatson.com 3
Insights | September 2015
Web user interface
Within the web interface, the dashboard (see
Figure 03) provides a clear indication of which jobs
are running, what is scheduled to run and details
of the recent jobs that have been run.
All objects that are used within a process can
be stored in Unify in the central repository.
These include:
•• Models or applications, for example RiskAgility
FM solutions, STAR ESG
•• Documents of any type (for example, Word
documents, Excel files, text files, pictures)
•• The workflows used to model the processes
Users can view the components stored within the
repository by navigating the folder structure through
the Explorer. A combination of role-based and
folder-based permissions using Active Directory
control the access rights of the user.
All components stored within the repository are
locked down and any changes are automatically
versioned, with all versions maintained and
accessible within the system along with details
of who created each version and when.
Figure 03. Unify dashboard
4 towerswatson.com
Using the Unify Workflow Designer, workflows can
be created to fully automate an end-to-end modelling
and reporting process which can be executed at the
press of a button. This button press can even be
replaced with sophisticated scheduling capabilities
that allow workflows to be started automatically at a
single predefined future date, or repeatedly at regular
intervals between two predefined future dates, or on
delivery of one or more files (see Figure 04).
Each workflow which is run in Unify creates a detailed
audit report of the activities performed along with the
inputs to, and outputs from, those activities.
Real time monitoring of individual jobs through
graphical displays, along with automated user
notifications, such as through email, present progress
against predetermined milestones and projections of
expected completion times (see Figure 05).
Insights | September 2015
“Using
“
the Unify Workflow Designer, workflows
can be created to fully automate an end-to-end
modelling and reporting process which can be
executed at the press of a button.”
Figure 04. Unify scheduler
Figure 05. Velocity graph
towerswatson.com 5
Insights | September 2015
Workflow Designer
The Workflow Designer enables the user to design
bespoke workflows including software calculations,
user review, interaction and approval. It is a graphical
‘drag and drop’ tool (see Figure 06) that allows for
common insurance company processes; including
polling a location to search for a particular file,
executing macros, executing command line and
PowerShell, and the ability to transform data using
SSIS packages.
Towers Watson has deeply integrated Unify with
applications such as RiskAgility FM and STAR
ESG. Using the ‘Execute Model’ activity, Unify is
able to understand and control the execution of
the application in a high level of detail. The other
‘Execute’ activities available provide an option to
run other third party software as long as they have
accessible API’s.
In addition to the activity library, users also have
access to the standard control activities containing
options to build parallel and conditional workflows and
include parameters as arguments within the workflow.
Figure 06. Workflow Designer
6 towerswatson.com
Tailored governance protocols, including user
reviews, approvals and other interactions can be
designed into workflows. Requests for interactions
can be directed to individuals or Active Directory
groups, with each group member receiving a
notification that an action is required.
Properties of request response activities are fully
configurable in terms of the recipient, question
and list of possible responses (see Figure 07).
Conditional workflows can be designed around
user responses to interactions, with different paths
followed through the workflow depending on the
specific response received. All user interactions are
subject to the same level of transparency and audit
readiness as other tasks. These capabilities enable
the user to incorporate best practice governance
into highly automated processes.
A sample workflow showing the flexibility of the
flowchart options within Unify is shown in Figure 08.
Insights | September 2015
Figure 07. Example of a ‘Request Response’ activity
Figure 08. Example of a flowchart
In summary
Towers Watson Unify is an enterprise level platform
providing a secure, governed, automated and
auditable reporting environment. Unify will enable
companies to fundamentally change their financial
modelling and reporting processes by implementing
an automated, comprehensive integration process
management and governance solution. This will
allow staff to spend less time on routine production
tasks and more time using the results to deliver
value added insight and competitive advantage.
Unify is designed specifically for the insurance
industry, leveraging our experience as market
leaders in actuarial software and financial reporting
to enable it to orchestrate the most sophisticated
risk and actuarial processes.
For more information on Unify, please contact
your local Towers Watson consultant or visit us at
www.towerswatson.com/unify
towerswatson.com 7
Insights | September 2015
Towers Watson RiskReporter:
Automating the final Solvency II
reporting miles
Producing the necessary Pillar 3 Quantitative
Reporting Templates (QRTs) for regulators is among
the final steps of the Solvency II implementation
marathon. Towers Watson RiskReporter is designed
to give insurers extra help to avoid stumbling over
the line.
In this article we explore some of the Pillar 3
challenges facing insurers and discuss how
RiskReporter can assist them to implement a
pragmatic but yet robust and repeatable reporting
process that is cost effective in both the short and
longer term.
Challenge 1 – The reporting requirements
Given that over 8000 different data items,
2000 validations and over 100 different reports
are required with data sourced from multiple client
systems, the principal challenge is how to transform
the source ‘raw’ data into the reporting system’s
required level of granularity and consistency.
For example, the technical provisions (TPs) shown
on the balance sheet need to match the TPs
shown on the currency, product type and risk type
breakdown reports. This typically requires sourcing
data from multiple actuarial and risk systems,
aggregating the values at the balance sheet level,
and having different disaggregation routines by
currency and product and risk type.
“The
“
(EIOPA XBRL Tool)
will generate the needed
XBRL but it won’t prepare
the good quality or appropriate
data to submit to the supervisor
– that is where the difficult part
is on the undertaking’s side.”
EIOPA August 1, 2014
8 towerswatson.com
Challenge 2 – Operationalising the process
Pillar 3 reporting is at the end of the overall
quarterly and annual reporting process. Given
the ever shortening reporting window (that will
be as short as five weeks by 2019) the need to
operationalise the process by reducing (and ideally
eliminating) manual ‘cut and paste’ is evident.
Further, the greater the degree of automation and
process control, the easier it will be to meet audit
and sign-off requirements.
“...
“ the PRA stressed that
insurers must have the right
governance arrangements in
place about the preparation
and submission of the
templates.”
InsuranceERM.com August 1, 2014
Challenge 3 – Value add beyond compliance
Whilst not a direct requirement of Pillar 3, many
insurers are investigating how they can add value
beyond pure compliance by leveraging the vast
volume of collated data, seeking to produce, for
example, additional management reporting such
as balance sheet comparisons between quarters
or extended data analysis.
Another consideration is the ability to ensure
consistency between quantitative QRT reporting
and qualitative disclosure reporting such as the
Solvency Financial and Condition Report (SFCR)
and the Regular Supervisory Report (RSR).
Challenge 4 – Resourcing and infrastructure
Insurers need to consider resourcing both the
initial implementation exercise as well as the
ongoing reporting process. This goes beyond the
core reporting and actuarial teams. It includes IT
resources to produce the data and maintain any
system infrastructure, third party data providers
(for example, asset managers) and other internal
producers and consumers of the data and reports.
Insights | September 2015
The last five miles
To date, much of the discussion around Pillar 3
has been about producing the XBRL to send to the
regulators once the data has been collated into the
correct format. In industry jargon this is referred to
as ‘the last mile’.
However, as evidenced by the challenges identified
above, at its heart Solvency II Pillar 3 is really about
data management and reporting workflow. It is about
the process, governance and tools required to produce
the required reporting data. It is about bridging the gap
between the source data and report output.
This is increasingly being referred to as ‘the last
five miles’ of the reporting marathon.
Generically there are two ways to look to at the last
five miles:
•• Bring the data to the system – which involves
internal IT or manual processes to extract and
aggregate data into the correct format to match
the data model of the last mile product, or
•• Bring the system to the data – in which the last
five mile functionality of the system is configured to
use ETL (extract, transform and load) scripts to map
the source data to the specified reporting model
and a reporting engine to process the reports via
aggregating data, validating the data and performing
any additional calculations required.
Towers Watson RiskReporter
Towers Watson RiskReporter is one such last five
mile product. Utilising the latest Microsoft technology,
it has been specifically written to meet the unique
Solvency II Pillar 3 challenges as summarised in
Figure 09 below.
Figure 09. How RiskReporter meets the Solvency II Pillar 3 challenges
SaaS service.
Integration with other software.
Consulting expertise to
implement solution aligned
to your business model.
Output validation and BAU
support services.
RiskReporter provides an
‘out of the box’ Solvency II
Pillar 3 data model, validations
and reports.
Maintained in line with
regulatory changes.
Moving target
of reporting
requirements
Client configurable workflow
and data mappings.
Dashboard monitoring of
reporting process.
Data warehouse, audit and
version control.
RiskReporter
Operationalising
the process
Resourcing
Fast track implementation
service to design workflows
and map data.
RiskReporter can readily
leverage your existing efforts
to map and produce data.
Repeatable robust BAU process.
Value beyond
compliance
Custom data model, validations
and reports.
RiskReporter can embed
QRT data within qualitative
disclosure reports.
towerswatson.com 9
Insights | September 2015
It is designed to help companies implement a robust
and repeatable process that sources, collates,
aggregates and validates the large volumes of
source data from actuarial, risk, financial, asset
management and other data providers into the
XBRL formatted reports specified in the Solvency II
Pillar 3 requirements.
Given that not all clients may wish to initially
implement a full workflow-based solution,
RiskReporter offers a simpler ‘Spreadsheet+’ version
which provides for Excel-like data entry and reporting
with enterprise data storage and a reporting engine.
Extending usage over time is easily facilitated with
no loss of functionality or data.
The reporting cycle manager dashboard shown
in Figure 10 provides an overview of progress in
preparing the required reports.
Towers Watson RiskReporter is designed for
either standalone use or as part of an enterprise
modelling and reporting solution. It is written to
work with either Towers Watson’s own or other
vendors’ upstream systems.
Clients can also customise RiskReporter by adding
their own data model items, validations and reports.
Disclosure documents such as the SFCR and RSR
can be edited by RiskReporter and directly linked
to the QRT data to ensure consistency between
quantitative and qualitative reports.
Figure 10. Dashboard view to monitor reporting cycle process
Implementing RiskReporter
Dependent on the level of functionality implemented,
an initial implementation project can be as simple as
entering values into the Excel-like interface, uploading
pre-mapped data already prepared or configuring a
standard set of workflow tasks and data mappings
to existing data extracts.
10 towerswatson.com
Existing investments and data sourcing extracts
can be readily leveraged allowing for incremental
adoption working up to a fully automated solution.
For more information on RiskReporter please
contact your local Towers Watson consultant or
Martin Sher ([email protected]).
Insights | September 2015
New life software releases
Towers Watson vGrid is a virtual grid
solution that provides RiskAgility FM
clients with flexible on-demand computer
power to run financial models and comply
with regulatory demands.
Towers Watson DataValidator is a data
validation and transformation solution
that helps insurers use their data more
efficiently across financial modelling
analytics, pricing applications and
risk management.
MoSes and RiskAgility FM training dates
We are pleased to announce details of the following MoSes and RiskAgility FM courses that we will
be running in December 2015. These are public training dates, open to all licensed software users:
MoSes Intermediate Course
30 November and 1 December RiskAgility FM Users Course
2 and 3 December
MoSes Users Course 7 and 8 December
MoSes Foundation Course
9 and 10 December
If you wish to register to attend any of these courses please contact:
[email protected] on +44 1737 284954, or
[email protected] on +44 1737 284720.
Training dates for 2016 will be advised in due course. Alternatively, if you would like to speak to
someone please call Merryl Elliott on +44 20 7170 2537.
Courses may also be arranged in other territories. Please speak to your local representative for details.
Recent Towers Watson publications
Insights: 2014 Life supplementary reporting
This is the latest article in the supplementary
reporting series. This edition showed the 2014 life
insurer reporting season continuing the emphasis
on supplementary information, including embedded
value and related metrics, cash flow, economic
capital and IFRS profit drivers.
Insights: The future of appraisal value reports
The impending arrival of Solvency II and, looking
further ahead, IFRS updates, has meant that some
in the industry question whether there is a still a
role for the traditional actuarial appraisal value
report. This article explores this question.
Emphasis
A global quarterly magazine providing thought
leadership for the insurance industry.
towerswatson.com 11
Insights | September 2015
Contacts
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Sherry Du
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