Audit, automation and acceleration of your IFRS 17 Solution · Audit, automation and acceleration...
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Audit, automation and acceleration of your IFRS 17 Solution Rakesh Patel and Dan Wainwright 15 May 2019
Transcript of Audit, automation and acceleration of your IFRS 17 Solution · Audit, automation and acceleration...
Audit, automation and acceleration of your IFRS 17 SolutionRakesh Patel and Dan Wainwright
15 May 2019
Agenda
14 May 2019 2
Background
Change drivers
Operational challenges of IFRS 17
Delivering an effective IFRS 17 solution
Long term benefits
Conclusions
Background
14 May 2019 3
Technology
IFRS 17
Solvency II
• Provides significant operational challenges, which will put significant additional pressure on already challenging processes
• Companies did the best they could with the Working Day Timetable (WDT) given the available tools and technologies with incremental changes every year to further speed things up
• Increasingly unsustainable since less focus on long-term efficiencies and process improvement
• Modern technology now within reach (e.g. RPA and Cloud)• More progressive companies have started investing in these
technologies to deal with these challenges
IFRS 17 provides a great opportunity, combined with other strategic imperatives such as data analytics, to implement a solution which is cost-effective, scalable and future proof
Change drivers Using IFRS 17 as a catalyst for finance and process transformation
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Organisational Goals
Finance, Risk and Actuarial Goals
Cover more regulation with less
Better quality MI for business steering
Increased agility and better working conditions
Reporting time line constraints
More granular regulatory and accounting standards
Greater value for the business and the customer
Faster
Better
Cheaper
External Reporting
Sustainable Profitable
Regulatory Requirements
Capital and accounting standards
Commercial Pressures
Competition and economic environment
Internal Reporting
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
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Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
01 May 2019
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
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1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
01 May 2019
1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
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1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
01 May 2019
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
8
1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
3 Business use
• Projection capability required for business planning.
• Results need to be available to the wider business for decision making e.g. product pricing.
• “What if” analysis and investigation.
01 May 2019
3 Business use
• Projection capability required for business planning.
• Results need to be available to the wider business for decision making e.g. product pricing.
• “What if” analysis and investigation.
3 Business use
• Projection capability required for business planning.
• Results need to be available to the wider business for decision making e.g. product pricing.
• “What if” analysis and investigation.
Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
9
1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
3 Business use
• Projection capability required for business planning.
• Results need to be available to the wider business for decision making e.g. product pricing.
• “What if” analysis and investigation.
4 IFRS 17 adoption
• Reconciliations with familiar metrics such as Solvency II.
• Analytics on results and “what if” scenarios to help management gain comfort on results.
• Greater investor scrutiny on Solvency II results.
• The role of IFRS 17 within the investor story.
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4 IFRS17 adoption
• Reconciliations with familiar metrics such as Solvency II.
• Analytics on results and “what if” scenarios to help management gain comfort on results.
• Greater investor scrutiny on Solvency II results.
• The role of IFRS 17 within the investor story.
4 IFRS 17 adoption
• Reconciliations with familiar metrics such as Solvency II.
• Analytics on results and “what if” scenarios to help management gain comfort on results.
• Greater investor scrutiny on Solvency II results.
• The role of IFRS 17 within the investor story.
Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
Some of the operational challenges of IFRS17Increased demands put increased strain on existing processes, systems and people
10
1 Data “slicing and dicing”
• Cohort grouping of data.• More granular actual
revenue data• Tighter data validation.• Consolidation of results for
reporting.• Granularity of results to aid
understanding.
2 Finance and Actuarial Calculations
• Actuarial calculations fed by accounting data
• Multiple sets of cashflows required to produce results.
• Multiple systems.• Full auditability required
across the entire end to end process.
3 Business use
• Projection capability required for business planning.
• Results need to be available to the wider business for decision making e.g. product pricing.
• “What if” analysis and investigation.
4 IFRS 17 adoption
• Reconciliations with familiar metrics such as Solvency II and cash.
• Analytics on results and “what if” scenarios to help management gain comfort on results.
• The role of IFRS 17 within the investor story.
Proof of capability exercise
• Multiple years of income statements for several scenarios including actual experience and assumption changes.• Multiple sets of model runs and cash flow output files needing careful orchestration in order to generate an income statement.• Operational challenges are going to be just as difficult, if not more so, as the methodology challenges.
Companies are really going to struggle to produce results right first time within the constraints of a WDT without automation and controls
Pressure on WDT systems and people
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Source Data Cashflow Models Sub-ledger ReportingCSM Engine General Ledger
Delivering an effective IFRS 17 solutionChanging the way we work and deployment of technology will be key to success
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Flexible infrastructure(including the Cloud)• Increased commercial pressure • Flexible, scalable and on demand• Shift to PAYG and XaaS• Focus on customers and core competencies
not running computing infrastructures • Cloud computing enables the above and much more• Operational resilience
Automation (RPA)• Automation (including data management
and controls and governance) needs to a significant component of the solution
• Increasing use of automation• We have provided automation to
support the production of £400bn of technical provisions in the UK Life market for YE18 Effective
IFRS 17 solution
Deep integration• Closer working between actuaries, accountants
and data managers• Adapting departmental structure
• Greater trust and respect in information
• Hand-offs between systems and departments
• Technology platform needs to be aligned
Auditability• Completely different income
statement to current IFRS• More granular data so increased controls
and governance - “get it right first time” • Interaction between actuarial and finance
numbers – more scrutiny • Business use requires confidence in the
numbers.
Achieving this requires a significant change to the Operational Model
Long-term benefits realisedOpportunity to achieve far more than regulatory compliance
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Stakeholder benefits• Better value for
money• More tailored services• Faster delivery• Richer information• Reinforce the investor
story
Operational benefits
• Reduced costs • Better MI to run the business• More time for strategic thinking
and business steering
Quality benefits
• Reduced risk• Increased audit confidence• Better governance• Future proof
processes
People benefits• More motivated and loyal
workforce• Actuarial/finance
people get closer to business decisions
• Opportunities to re-skill
Using mandatory regulatory change for wider business benefits
Conclusions
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Technology“Status quo” not sustainable
Mandatory change
We believe IFRS 17 presents a great opportunity for the business to get far more than compliance, if embraced in the right way
Opportunity
Thank you
15 May 2019
