Moody’s Analytics, a subsidiary of Moody’s Corp. (MCO) recently launched an updated version of its regulatory capital management solution RiskAuthority. RiskAuthority facilitates calculation, consolidation and reporting of an organization’s regulatory credit risk, market risk, operational risk, concentration risk and liquidity risk.
The updated version of RiskAuthority is a Basel III compliant. Basel III implementation has become challenging for regulatory, capital and liquidity risk managers owing to the current stringent regulations. The new regulation raises the amount and quality of capital banks are required to hold, increases the capital charge for counterparty credit risk, introduces new liquidity and leverage ratios and focuses on greater risk integration and improved stress testing practices. Banks, credit institutions and clearing houses are expected to be Basel III complaint before 2013.
RiskAuthority consists of languages and formats used by professionals in over 50 countries. The solution offers more than 2000 pre-configured reporting templates. The updated software calculates new Basel III Capital, Liquidity and Leverage Ratios, improves the risk management process and displays the results in a flexible and intuitive manner by using Microsoft Corp.’s (MSFT) Spreadsheet software and XBRL International’s XBRL and XML format.
RiskAuthority consolidates and stores all Basel I, II and/or III required data, including assets, liabilities, off-balance sheet exposures, counterparties, ratings, risk drivers and market data, in one central platform, namely RiskFoundation. The software features built-in data quality and audit capabilities, which provide clean, consistent and transparent data within a short span of time.
We believe that RiskAuthority’s open architecture and flexible data layer allows customers to expand the number of users and the need to handle huge data volume makes it the first choice for professionals. The ease with which an existing data system is integrated with RiskAuthority is illustrated by the smoothness of data extraction and loading, saving significant costs for the banks and financial institutions. We therefore believe that the new solution will expand Moody’s customer base and also improve its competitive position going forward.
Our Take
Moody’s Analytics has emerged as a key growth driver for the company over the past few years, primarily due to the accretive acquisitions it has made that in turn have evolved into a strong product pipeline, particularly in the Research, Data & Analytics and Risk Management domains.
We believe that Moody’s will continue to acquire companies with operations complementary to its MA division, which in turn will further drive top-line growth over the long term. However, a sluggish global economy, increasing regulatory complications and increasing competition may hurt its profitability going forward.
We remain Neutral on a long-term basis (6-12 months). Currently, Moody’s has a Zacks #3 Rank, which implies a Hold rating in the short term (1-3 months).
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