Risk & Compliance Panel

1. Risk & Compliance Panel Event Processing Symposium March 15, 2006

2. Risk & Compliance • CEP is about incrementally building pre-built domain knowledge and adding a learning model (e.g., key indicators and analytics). • The context is events that occur in time and space and are linked by analytics, data and process models in order to convert data to information • "Complex Event" Processing versus Complex "Event Processing" • CEP is not about low latency. • We need to focus people/users on the issues and what they should do • Katrina: “Sense” is not the issue; respond is • Fraud: “Sense” is the issue; response is not • Best phrases of the session: • "Looking at the forest to provide feedback to the trees“ • “Reducing entropy” • “Events without business knowledge have no meaning” • Panel Mantras: "It is all about domain knowledge" "Top down not bottom up"

3. Financial services: an interlocking system of risk management Control evaluation (SOX) Operational Risk (Basel II) Business Continuity Planning Active risk assessment & management Privacy Security Outsourcing

4. IBM: Resiliency The ability of an enterprise to sense and respond to any internal or external adverse, fast changing or unexpected condition, as well as opportunities, in order to maintain continuous business operations, be a more trusted partner, and enable growth.

5. Accounting Systems RTGS Gateway Payment Systems SWIFT Gateway Lending Systems Settlement Systems The Aleri Liquidity Management System (ALM) • 30+ different systems • Streaming and static • Real-time position management • Actual and forecast positions with drill-down • Payment flow control • Highly customizable Authoring Environment Streaming Output On-Demand Queries Aleri Streaming Platform INPUT STREAMS Data Migration OLAP Database Clearing Data • Real-time OLAP • Queries across operational and historic data

6. P1 Process/Sub-Process RootOrg Business Unit Hierarchy • Risk/Control Matrix • Testing procedures BU1 BU2 BU3 SP1 SP2 SP3 SPn • BASEL • Governance • Process • G/L accounts • Taxonomies • Policies D1 D2 Financial Line#1 Financial Line#2 Financial Line#3 Objectives Risks Controls Actions O1 O2 R1 R2 R3 R1’ R4 R5 C1 C2 C1’ C3 Action#4 Action#5 Action#6 Action#1 Action#2 Action#3 COSO Best Practices FRS: Modeling and Maintaining Context Current Data Import infrastructure Import documentation & assessments Once the institutional framework is established, roles are assigned to users that limits their access to either processes, business units or to risks and controls

7. Online Fraud Prevention • Business problem: Online Fraud Losses increase, Confidence declines Sample clients: • Solution: Monitor transactions, detect ~90% of fraud attempts, provide risk scores and fraud alerts in real-time before the money goes away • Key features: Pre-built knowledge of Bill-Pay, ACH, ICT, Wires, Trading, ETC; Passive device fingerprinting, IP Geo-location and Velocity • Benefits: Best catch-rate with lowest false-positive rate • Actimize combines Technology with Industry Knowledge

8. TM Digital Harbor Event Detection: Compression is the basis for value An event provides the starting frame of reference A person needs auxiliary information about the event • People think in • Business terms: • Who • What • When • Where • Why • How • An event could be anything: • Request for intelligence on a • target • Alert on compliance • Power outage • Customer calls with complaint • Advisor places a trade • A settlement throws • an exception First level(3-5 direct links) Second level(3-5 indirect links) Knowledge Work is Hard to Repeat and even hard to Replicate

9. TM Digital Harbor Event Processing: Expansion is the basis for value Cost When done Who approved Who serviced What project What munitions Customer Patient Product Project Outage Asset Target Compliance Event Master Controller Detail View Cust Service Req Patient Record Product Parts Equipment Out Billing Info Nearby Planes Relevant Metrics Industry Adoption FT Adoption Attached Documents Drag an Email Attach Excel, PPT, Word Text Details with Annotation/Attachments Chart Parts by supplier, cost Patients by ins co Drug interaction history This circuit board design requires a special type of transistor. Geospatial Visualization Misc (e.g. Live Status Updates) Could be a CAD + Map Could be GANTT Could be an Image Could be historical chart Could be a search comp Could be their app Could be a portlet Industry Adoption When is the truck scheduled, Initiate new process Assign new actor, ASK on a process step. Get live update of status Action Industry Adoption Map CAD MRI Satellite Toolkit Submit Approve Escalate Save Schedule Order Task

10. TM Digital Harbor The Lifecycle for Knowledge Work Detection: Filtering & Recognition Event Resolution: Decision & Action (Composite Apps) Collaboration & Communication(Composite Reports) Understanding & Investigation (Composite Dashboards) Composite Case Management

11. Attendees • Bill Hobbib, Streambase Systems bill.hobbib@steambase.com; • (P) Ed Shea, FRS Edward.shea@frsglobal.com • (P) Jerry Baulier, Aleri Labs jerry.baulier@aleri.com • Tim Bass, Tibco tbass@tibco.com • (P) Rohit Agarwal, Digital Harbor ragarwal@dharbor.com • Asaf Adi, IBM adi@il.ibm.com • (P) Ido Ophir, Actimize ido.opher@actimize.com • Susan Malaika, IBM malaika@us.ibm.com • (P) Jonathan Rosenoer, IBM rosenoer@us.ibm.com • Gunther Rotherwiel, SAP gunther.rotherwiel@sap.com