Regulatory Compliance & Risk Management
We deliver comprehensive solutions in regulatory compliance and risk management, employing specialized models to calculate critical risk metrics such as Probability of Default (PD), Loss Given Default (LGD), Portfolio Risk (PR), and Value at Risk (VaR).
Our approach ensures that financial institutions not only meet regulatory requirements but also make data-driven decisions that enhance overall risk management and financial stability.
Our Machine Learning Process for Regulatory Compliance & Risk Management
Data Collection & Preperation
Train-Test Split & Cross-Validation
Model Evaluation & Validation
Feature
Engineering
Model
Development
Deployment & Monitoring
Specialized Models for Risk Metrics
1. Probability of Default (PD)
We use logistic regression and machine learning classifiers to estimate the likelihood of default, incorporating borrower characteristics, loan parameters, and macroeconomic conditions. Advanced techniques such as survival analysis allow for dynamic prediction horizons, providing insights into default probabilities over time.
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2. Loss Given Default (LGD)
Our models estimate the loss severity in case of default, accounting for factors like collateral value, loan seniority, and historical recovery rates. By using techniques such as random forests and gamma regression, we can model the complex relationships that influence recovery outcomes.
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3. Portfolio Risk (PR)
We employ Monte Carlo simulations and copula models to assess portfolio risk under various scenarios, capturing the dependencies between assets and their joint behavior under stress conditions. This helps in understanding the overall risk exposure and potential capital requirements.
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4. Value at Risk (VaR)
We calculate VaR using methods like historical simulation and GARCH models, capturing the impact of market volatility on portfolio returns. These models provide a probabilistic estimate of potential losses, helping institutions manage market risk more effectively.
Benefits of PegasusAI Regulatory Compliance & Risk Management
1. Enhanced Risk Prediction
Our specialized models provide precise estimates of key risk metrics, enabling institutions to anticipate potential defaults and losses with greater accuracy. This allows for proactive risk management and better allocation of capital reserves.
2. Regulatory Compliance
Our solutions are designed to meet the stringent requirements of regulatory frameworks such as Basel III and IFRS 9, providing transparent, auditable, and explainable risk metrics that support compliance reporting.
3. ​Informed Decision-Making
By integrating advanced risk models into decision-making processes, financial institutions can optimize lending strategies, manage capital more effectively, and reduce the impact of adverse market conditions.
4. Comprehensive Risk Management
Our models cover a broad spectrum of risk factors, from borrower-specific credit risk to market-wide systemic risks, providing a holistic view of risk that supports more robust financial planning and risk mitigation strategies.
5. Scalable & Adaptable Solutions
We offer scalable solutions that can be tailored to the unique needs of different financial institutions, whether they are managing a small loan portfolio or a large, diversified asset base. Our models are also adaptable to changing market conditions and evolving regulatory standards.
Ready to explore the potential of AI for your business?
4215 Watling Street, Burnaby, BC V5J 1V4
(647) 215-4164