Overview of the Specialized Finance System

Our main product, the Specialized Finance System, or SFS, is a credit risk management system designed to handle large, complex deals with multiple tranches and currencies. It is an integrated, completely customizable solution for measuring, managing and reporting on the risk and performance of specialized finance assets including commercial real estate and project finance from both a debt and equity perspective.

Main Benefits of the SFS

Consolidation of Loan Information

The SFS credit risk management system allows a bank to properly consolidate all loan data into an integrated system, beginning with initial structuring, through pricing, and continuing on to maturity. After initial data entry, either manually or electronically, the bank will be able to put to good use everything known about the collateral, borrower, or changes in valuation. Information from multiple banking systems at an institution are customarily fed into the SFS.

Structuring & Pricing

As the most flexible and effective credit risk management system available for loan origination, the SFS collects and makes use of the rich data to price and structure deals in complex asset classes.

Risk Analysis

The SFS provides a complete structure for consolidating all known loan information, thereby streamlining the risk management process. It is capable of slicing the portfolio to separate the assets by credit exposure in a geographic area, LTV, size, margin, maturities and other variables.

For each loan in your portfolio, the SFS models the cashflow—allowing any amortization structure—and uses cashflow simulation to generate all necessary risk metrics for a single investment or portfolio as a whole. Risk metrics include probability of default (PD) and loss given default (LGD) at the loan and portfolio-level. The SFS is also widely used for grading, structuring and pricing loans still in the pipeline.


The SFS easily generates risk reporting and graphical representation of the analytics for both internal and regulatory reporting, including those required for Advanced Basel II compliance. It is also used to calculate economic capital.

Stress Testing

The SFS is used for regulatory stress testing. It provides an intuitive open system that is completely configurable to your institution’s assumptions and macroeconomic outlook. Future assumptions used in cashflow models can be easily updated in the system, making stress testing a matter of selecting parameters and then running the whole portfolio again. The stress testing batch runs can use the same detailed models and data as used for grading, or it can flexibly use a more limited set of data such as the 14Q.

Implementation & Customization

For more than 10 years, Risk Integrated has refined and enhanced the SFS to meet the evolving needs of large banks and asset managers. During each implementation, we apply our knowledge and experience to accurately assess your bank’s exact requirements and customize the SFS, sometimes markedly, to meet those needs.

Three Delivery Options for Implementation

Fully Outsourced Portfolio Analytics

The client sends the loan-level data to Risk Integrated and receives back a set of detailed portfolio projections for grades, losses and cashflows. The analytics are by far the most detailed available in the market for commercial real estate lending. The requirements for the input data per loan are extremely flexible and range from half a dozen to a thousand unique fields depending on the deal's complexity and the institution's current state of data availability. This service is provided on a one-time or quarterly basis.

Hands-on Analytics with Outsourced IT Infrastructure

This approach is applicable both for portfolio analyses such as stress testing and deal-level analyses such as grading, structuring and pricing. In this approach the client has full access to all the risk models and documentation. After training, if desired, the client can define their own stresses, parameters and even alter the model structure to suit their institution’s business and view of the market. For rapid and flexible implementation, the software is accessed securely across the web and run on dedicated servers in Risk Integrated's data centers. This means that there is no requirement for an initial in-house IT implementation.

Hands-on Analytics with In-House IT Infrastructure

This approach is applicable for portfolio and deal-level analysis and, again, the client has full access to all the models. After the initial trial on Risk Integrated's servers, the software in installed in-house and fully embedded in the client’s IT infrastructure and data flow.