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Archive for March, 2011

JG Wentworth is a famous and well known name among U.S citizens. It provides financial grants to meet emergency and unexpected expenses through its work plan of buying future annuities. It also provides cash funds to people in U.S in lieu of their structured assets. The most important positive aspect of this system is that clients are able to get payments for years on each portion of their surrendered annuity and structured assets.

No hidden terms or undeclared processing charge is taken from clients. After coming in contact with JG Wentworth many clients not only met their emergency cash needs, they also retired comfortably from job with its flexible payment plan that ensured payments for many forthcoming years. These payments are really precious as they help many people to meet big needs like healthcare, educational fee, clearing old debts and paying installments on home loans.

Besides helping clients with money through its smooth and trustworthy annuity and asset buying system JG Wentworth also deals in many other sectors of financial services. Most of its plans and services involve granting lump sum money in exchange of future annuities and wealth of assets. It also deals in providing funds in exchange of equity assets. It is one of the most reputed structured settlement service providers. It works well with pre settlement loans, lottery payments, mortgage notes, payouts of insurance and payments on future annuities. This company has been credited with granting funds of more then $2 billion to clients for making them get out of monetary crisis. Clients have readily accepted and appreciated its work infrastructure based on structured assets.

The active management of credit risk has been receiving increasing regulator attention and strategic focus at many financial institutions. Regulators cite poor credit risk management at the portfolio level, weak credit standards for borrowers and counterparties, and insufficient attention to changes in economic and other circumstances affecting the capacity of borrowers and counterparties as the highest contributors to inadequate credit risk management. Regulators have changed capital charges to make financial institutions more responsive to actual credit exposure and have set new rules for how much capital banks must set aside to cover potential losses.

The basic principles for an effective credit risk management process were outlined in the consultative paper Principles for the Management of Credit Risk, issued by the Basle Committee on Banking Supervision. We consider it appropriate to underscore these principles in view of the current regulatory and credit market influences.

Definition of Credit Risk

Credit risk is the risk of loss arising from a borrowers or counterpartys inability to meet its obligations. The majority of a financial institutions credit risk arises from its lending activities outstanding loans and leases, trading account assets, derivative assets, and unfunded lending commitments that include loan commitments, letters of credit, and financial guarantees. It also exists in other activities such as acceptances, interbank transactions, trade finance, and retail and investment settlements.

Managing Credit Risk

It is important to formulate and implement a structured credit policy and related processes to manage credit risk. Strategies for credit risk management, including credit policy development and risk monitoring, is the responsibility of business unit and senior management, and the board of directors.

Financial institutions should establish credit limits to control the risk in all credit-related activity. Limits by industry sector, geographical region, product, customer, and country should be specified, along with the approaches to be used for calculating exposures against those limits, and made part of credit policy. Consideration should also be given to the spread across industries or regions as the default of one firm or industry may also affect others. Larger financial institutions might also consider multiple limits for each borrower or borrower group, by product, operational unit, and borrower member so that banking and trading activities of those borrowers or borrower groups creating credit risk can be more adequately monitored. While the trend has been that many financial institutions monitor total exposures in those categories, most have not set maximum limits on those exposures.

Commercial Portfolio Credit Risk Management

Credit risk in the commercial portfolio can be managed based on the risk profile of the borrower, repayment source, and the nature of underlying collateral given current events and conditions. Commercial credit risk management should begin with an assessment of the credit risk profile of an individual borrower or counterparty based on current analysis of the borrowers financial position in conjunction with current industry, economic, and macro geopolitical trends. As part of the overall credit risk assessment of an obligor, each commercial credit exposure or transaction should be assigned a risk rating and be subject to approval based on approval standards defined in credit policy. Subsequent to loan origination, risk ratings should be adjusted on an ongoing basis as necessary to reflect changes in the obligors financial condition, cash flow, or ongoing financial viability. The regular monitoring of a borrowers or counterpartys ability to perform under its obligations allows for adjustments to be made that will affect the credit exposure measurement.

Risk rating aggregations should be considered for measurement and evaluation of concentrations within portfolios. Risk ratings are also a factor in determining the level of assigned economic capital and the allowance for credit losses.

To manage the relative risk within the commercial portfolio, many financial institutions utilize participation or syndication of exposure to other financial institutions or entities, loan sales and securitizations, and credit derivatives to manage the size of the loan portfolio and the relative associated credit risk. These activities can play an important role in reducing credit exposures for risk mitigation purposes or where it has been determined that credit risk concentrations are undesirable.

Consumer Portfolio Credit Risk Management

Credit risk management for consumer credit should begin with initial underwriting and continue throughout a borrowers credit cycle. Consumer and other common attributes to evaluate credit risk. Statistical techniques may be used to establish product pricing, risk appetite, operating processes, and metrics to balance risks and rewards appropriately. Statistical models can be purchased or created that use detailed behavioral information from external sources such as credit bureaus, along with internal historical experience. These models should be validated periodically to assure they continue to be statistically valid and reflect performance of the institutions customer base, particularly if used for credit scoring. When used, these models will form the foundation of an effective consumer credit risk management process and may be used in determining approve/decline credit decisions, collections management procedures, portfolio management decisions, adequacy of the allowance for loan and lease losses, and economic capital allocation for credit risk.

Accurate Calculations of Exposures

Assuring accurate calculations of exposures against limits is critical to managing credit risk. Methodologies will vary according to product types. For lending products and current accounts, the book balance is considered an appropriate measure, with related accruals included as part of the exposure as default of a counterparty on the primary exposure would also likely lead to loss of interest income. The current market value should be used for issuer exposures on bonds and equities, with replacement cost of the trade used as measure for any unsettled trades. For foreign exchange and derivatives, exposure should be measured at the replacement cost of the trades plus an add-on value based on the nominal value to reflect potential future adverse movements in the replacement cost.

Concentrations of Credit Risk

Portfolio credit risk should be evaluated to assure that concentrations of credit exposure do not result in undesirable levels of risk or in violations of regulatory requirements. Regular review and measure of concentrations of credit exposure against established limits by product, industry, geography, and customer relationship should be performed. For specialized industries, additional measurement categories may be appropriate, such as geographic location and property type for commercial real estate loans. When exposures exceed established limits, an escalation process should be triggered to avoid potential conflicts and to assure senior management is aware of all excesses. Periodic revalidation of established limits would be appropriate to assure that the limits continue to match the strategic risk appetite, provide for targeted asset mix, and recognize potential exposures as anticipated.

Examination of Credit Risk Management

Regulatory examination activities use a variety of techniques to assess a financial institutions credit risk, including a sampling of loans and review of the institutions credit management processes. Consideration is given to the complexity of the financial institutions products and activities, and overall risk management practices. Designing, implementing, and adjusting processes and practices to effectively manage credit risk will limit unanticipated exposures.

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What do these companies have in common, Southwest Airlines, Neiman Marcus, Marriot, Disney, and Enterprise Car Rental? They are all customer service pioneers. Each company has forged a new path through their commitment, dedication, and innovations, to become known as leaders in delivering excellent customer service. Serving the customer is more than some fancy words on their company mission statements. Customer service truly represents the very essence of each companys existence.

These companies, along with hundreds more, have already done the hard work; they have laid the ground work, set the examples, and blazed the trails for other companies to follow. They have demonstrated how to achieve success by serving the customer.

Why then, dont all companies follow this proven path to success?
Do they not know the core principles these companies follow?

To borrow a concept from the Late Show with David Letterman, this is a top ten list of principles all companies need to implement to achieve service excellence.

Number 10: Focus The customer should always be the number one focus of any company. All decisions, services, and products should be based upon satisfying the needs and expectations of the customers.

Number 9: Take Action The best laid plans will never come to life, without action. If you are going to talk-the-talk, then you must walk-the-walk. When companies, which brag about the importance of customer service, fail to deliver outstanding service, customers and employees lose faith and trust in them.

Number 8: Create Happy Employees Your employees beliefs, attitudes and behaviors determine the quality of the customer service provided. The quality of customer service will never exceed the quality of the people who provide it. Happy employees create happy customers.

Number 7: Develop Employees The three key words in employee development are training, training, and training. Teach your employees how to serve the customer, equip them to serve, and then empower them to serve with excellence.

Number 6: Establish Relationships Customer loyalty is achieved by having a relationship with your customers. The stronger the relationship, the more loyal your customer becomes. Relationships are built upon trust, communication, and interaction. Every customer interaction is an opportunity to further enhance communication and improve trust.

Number 5: Measure Performance If you cant measure it, you cant manage it. Measuring customer satisfaction, customer feedback, and employee adherence to customer service standards is paramount in delivering exceptional customer service with any degree of consistency. Always inspect what you expect.

Number 4: Build Team Unity To achieve optimal success everyone must be on the same page, striving for the same goal, aspiring to the same vision, and functioning as a team. Teamwork will always produce greater results, then individuals working alone.

Number 3: Formulate a Plan Is the care your customers receive by design or by default? Without a crystal clear, well defined, universal set of customer service standards you will leave customer satisfaction up to chance. If you fail to plan, you plan to fail.

Number 2: Commit to Excellence Customer service is the number one differentiator in todays competitive marketplace. Having a good product or a low price does not guarantee a competitive advantage or customer loyalty anymore. Commit to installing and fostering a customer-first culture within your company. Serving with excellence is a choice.

And the Number 1 principle all companies need to implement to achieve service excellence is:

Belief Believe in the power of customer service. Believe in necessity of customer retention. Believe in the relationship between customer loyalty and the growth of your business. Believe that becoming customer-focused not only makes good business sense but it guarantees increased revenue and profit. It has been said, A belief is not merely an idea the mind possesses, it is an idea that possesses the mind.

I challenge every company to not only implement these principles, but to have the faith, courage, and vision to move beyond providing excellent customer service to building a reputation as a customer service pioneer.

Some companies make things happen
Some companies watch what happens
Some companies wonder what happened

Hosted Call Accounting (sometimes referred to as web call accounting) is a fully managed Software as a Service (SaaS) alternative to purchasing hardware and software and expending internal resources. These services can be strictly for basic incoming and outgoing telephone call tracking from a PBX system or all encompassing of the entire communication ecosystem. Some companies offer complete outsourcing services for remote polling, authorization code billing, charge-back, network planning, traffic analysis, carrier/service comparisons, SIP / IP PBX reporting, voice mail, call center, auto attendant, mobile tracking, internet usage and more.

Many organizations have high overhead costs, staff turnovers and little time for in-house software. Hosted call accounting is managed by the provider; the end user accesses the services via a simple browser anywhere, anytime. There is generally no requirement for additional software. Hosted call accounting helps organizations manage their communication facilities. Management issues include controlling abuse, increasing staff productive and equipment provisioning. This service is a suitable solution for health care, educational institutions, government agencies and general business.

Traditionally call accounting involved the printing of hundreds or thousands of pages of activity detailing or summarizing telecom facilities by division, call center or end user. Hosted call accounting gives managers the option of reviewing the same data online in concise easy to read reports and charts. You can print only the detail you really need. No longer is there a need for one dedicated computer system to handle your call detail records.

Often when an organization changes, upgrades or replaces hardware internal call accounting software is also replaced. Hosted call accounting can make hardware changes and migration seamless. The central server of a seasoned web call accounting service can easily adapt to new data streams, protocols and technologies resulting in greater return on investment and long term assurance.

Hosted call accounting will reduce or eliminate the need for internal IT resources and training, provisioning of additional office space, computer resources and electricity cost. Experts in the field of communication management take full control of data collection, processing and real time access to reports. These specialists can generally assist you with the planning and management of the telecommunications network.

During times of uncertainty, it is imperative for organizations to streamline their organizations cut cost and increase productivity. The free flow of communication is imperative to the lifeline of every business. The invaluable metrics collected from PBXs, IP PBX/VoIP Servers, routers and gateways can assist business in configuring and fine tuning their communication facilities. Hosted call accounting offers a powerful hands free way to improve network performance, cut misuse and abuse, improve productivity and increase your bottom line.

Risk Management and Control

Key words: risk, risk management, risk assessment and risk control, risk identification, risk management planning, risk resolution, risk monitoring

Abstract

Any large scale projects involve certain risks and that is true of software projects. Risk management is an emerging area that aims to address the problem of identifying and managing the risks associated with the software projects.

The basic motivation of having risk management is to avoid disasters of heavy losses. The current interest in risk management is due to the fact that the history of software development projects is full of major and minor failures. A large percentage of projects have run considerably over budget and behind schedule, and many of them have been abandoned midway. It is now argued that many of these failures were due to the fact that the risks were not identified and managed properly.

Risk management is an important area, particularly for large projects. Like any management activity, proper planning of that activity is central to success.

Risk Management Overview

Risk is defined as an exposure to the chance of injury or loss. That is, risk implies that there is a possibility that something negative may happen. In the context of software projects, negative implies that there is an adverse effect on cost, quality, or schedule. Risk management is the area that tries to ensure that the impact of risks on cost, quality, and schedule is minimal.

Like configuration management which minimizes the impact of change, risk management minimizes the impact of risks.

Risk management can be considered as dealing with the possibility and actual occurrence of those events that are not regular or commonly expected. The commonly expected events, such as people going on leave, resource unavailability or some requirement changing are handled by normal project management. So, in a sense, risk management begins where normal project management ends.

Most projects have risk. The idea of risk management is to minimize the possibility of risks materializing, if possible, or to minimize the effect of risk actually materializing.

It should be clear that risk management has to deal with identifying the undesirable events that can occur, the probability of their occurring, and the loss if an undesirable event does occur. Once this is known, strategies can be formulated for either reducing the probability of risk materializing or reducing the effect of risk materializing (risk mitigation). So the risk management revolves around risk assessment and risk control.

Risk Assessment

Risk assessment is an activity that must be undertaken during project planning. This involves identifying the risks, analyzing them, and prioritizing them on the basis of the analysis. The major planning activity in risk management is assessment and consequent planning for risk control. Due to the nature of a software project, uncertainties are most near the beginning of the project. As the project nears its end, risks can be assessed more precisely. Due to this, although risk assessment should be done throughout the project, it is most needed in the starting phases of the project. In addition, early identifying risk provides the management with a lot of time to effectively handle the risks.

At a very high level, the software risks can be broadly divided into three categories:

Cost risk
Performance risk
Schedule risk

Cost risk is the degree of uncertainty associated with budgets and outlays for the project and its impact on the project. Performance risk is the possibility that the system will be unable to deliver all or some of the anticipated benefits or will not perform according to the requirements. Here performance includes quality. Schedule risk is the degree of uncertainty associated with the project schedule or the ability of the project to achieve the specified milestones.

The goal of risk assessment is to prioritize the risks so that risk management can focus attention and resources on the more risky items. Risk identification is the first step in risk assessment, which identified all the different risks for a particular project. These risks are project-dependent, and their identification is clearly necessary before any risk management can be done for the project.

Some list of risks specific to the projects and solutions:

Personnel Shortfall: Staffing with top talent, Job matching, Teambuilding, Key-Personnel agreement, Training, Rescheduling Key People.
Unrealistic Schedules and Budgets: Detailed multisource cost and schedule estimation, Design to cost, Incremental development, Software reuse, Requirements scrubbing.
Developing the wrong software functions: Organization Analysis, Mission Analysis, User Surveys, Prototyping, early user manuals.
Developing the wrong user interface: Prototyping, Scenarios, Task Analysis, and User characterization.
Gold Plating: Requirements scrubbing, Prototyping, Cost-Benefit analysis, Design to cost.
Continuing Stream of requirements changes: High change threshold, Information hiding, Incremental development
Shortfalls in externally furnished components: Benchmarking, Inspections, Reference checking, Compatibility Analysis.
Shortfalls in externally performed tasks: Reference checking, Pre-award audits, Award-fee contracts, Competitive design or Prototyping, Teambuilding.
Real-Time performance shortfalls: Simulation, Benchmarking, Modeling, Prototyping, Instrumentation, Tuning.
Straining Computer Science Capabilities: Technical Analysis, Cost-Benefit Analysis, Prototyping, Reference checking.

The top-ranked risk item is personnel shortfalls. This involves just having fewer people than necessary or not having people with specific skills that a project might require. Some of the ways to manage this risk is to get the top talent possible and to match the needs of the project with the skills of the available personnel. Adequate trainings along with having some key personnel for critical areas of the project will also reduce this risk.

The next item, unrealistic schedules and budgets, happens very frequently due to business and other reasons. It is very common that high-level management imposes a schedule for a software project that is not based on the characteristics of the project and is unrealistic. This risk applies to all projects. Project-specific risks in cost and schedule occur due to underestimating the value of some of the cost drivers. Recall the cost models like COCOMO, Function Point estimates. Even the size estimate is correct, by incorrectly estimating the value of the cost drivers; the project runs the risk of going over budget and falling behind schedule. The cost and schedule risks can be approximated by estimating the maximum value of different cost drivers along with the probability of occurrence and then estimating the possible cost and schedule overruns.

The next few items are related to requirements. Projects run the risk of developing the wrong software if the requirement analysis is not done properly and if development begins too early. Similarly, often improper user interface may be developed. This requires extensive rework of the user interface later or the software benefits are not obtained because users are reluctant to use it. Gold plating refers to adding features in the software that are only marginally useful. This adds unnecessary risk to the project because gold plating consumes resources and time with little return. Some requirement changes are to be expected in any project, but some time frequent changes are requested, which is often a reflection of the fact that the client has not yet understood or settled on its own requirements. The effect of requirement changes is substantial in terms of cost, especially if the changes occur when the project has progressed to later phases. Performance shortfalls are critical in real-time systems and poor performance can mean the failure of the project.

If a project depends on externally available components either to be provided by the client or to be procured as an off-the shelf component or dependency with other services the project runs some risks. The project might be delayed if the external component is not available on time. The project would also suffer if the quality of the external component is poor or if the component turns out to be incompatible with the other project components or with the environment in which the software is developed or is to operate. If a project relies on technology that is not well developed, it may fail. This is a risk due to straining the computer science capabilities.

Using the checklist of the top-10 risk items is one way to identify risks. This approach is likely to suffice in many projects. The other methods are decision driver analysis, assumption analysis and decomposition. Decision driver analysis involves questioning and analyzing all the major decisions taken for the project. If a decision has been driven by factors other than technical and management reasons, it is likely to be a source of risk in the project. Such decisions may driven by politics, marketing, or the desire for short-term gain. Optimistic assumptions made about the project also are a source of risk. Some such optimistic assumptions are that nothing will go wrong in the project, no personnel will quit during the project, people will put in extra hours if required, and all external components (hardware and software) will be delivered on time. Identifying such assumptions will point out the source of risks. An effective method for identifying these hidden assumptions is comparing them with past experience. Decomposition implies breaking a large project into clearly defined parts and then analyzing them. Many software systems have the phenomenon that 20% of the modules cause 80% of the project problems. Decomposition will help identify these modules.

Risk Control

Whereas risk assessment is a passive activity identifying the risks and their impacts, risk control comprises active measures that are taken by project management to minimize the impact of risks. Though risk assessment is primarily done during project planning as risk assessment in early stages is most important, like cost and schedule estimation, the assessment should be evaluated and changed, if needed, throughout the project.

Like any active task (e.g., configuration management, development), risk control starts with risk management planning. Plans are developed for each identified risk that needs to be controlled. Many risks might be combined together for the purposes of planning, if they require similar treatment. This activity, like other planning activities, is done during the project initiation phase. The risk management plan has five components.

These are

i) Why the risk is important and why it should be managed

ii) What should be delivered regarding risk management and when

iii) Who is responsible for performing the different risk management activities,

iv) How will the risk be abated or the approach be taken, and

v) How many resources are needed?

The main focus of risk management planning is to enumerate the risks to be controlled (based on the risk assessment) and specify how to deal with a risk. One obvious strategy is risk avoidance, which entails taking actions that will avoid the risk altogether.

Another obvious strategy is risk reduction; if the risk cannot be avoided, perhaps the probability of the risk materializing can be reduced or the loss due to the risk materializing can be reduced.

The actual elimination or reduction is done in the risk resolution step. Risk resolution is essentially implementation of the risk management plan. For example, if the risk avoidance is to be user, the activities that will avoid the risk have to be implemented. Similarly, in the plan it might have been decided that the risk can be reduced by prototyping. Then prototyping is done in the risk resolution step and necessary information obtained to reduce the risk. Incidentally, prototyping is very important technique for reducing risks associated with requirements or reducing risks of the type perhaps this cannot be done?

Risk monitoring is the activity of monitoring the status of various risks and their control activities. Like project monitoring, it is performed through the entire duration of the project. Like many monitoring activities, a checklist is useful for monitoring. While monitoring risks, like with monitoring costs and schedules, reassessments might need to be performed, if the real situation differs substantially from the situation predicted earlier based on assessment and planning.

References

Continuous Risk Management Guidebook, Pittsburgh, PA:Software Engineering Institute

Barry W. Boehm. Tutorial: Software Risk Management, IEEE Computer Society Press