Smart risk acceptance analysis

 

The EPI-engine; a high-performance calculator capable of simulating complex financial situations such as Monte Carlo simulations.

Never again face complicated forms with vague terms

An important part of the Know Your Customer solution is the integration of an innovative scenario-analysis tool, the ‘EPI-engine’. By utilising smart algorithms the EPI-engine is capable of very fast calculations, presenting the feasibility of dozens of scenarios within a few seconds.

The EPI-engine is a powerful tool for the risk acceptance analysis of a client but does not set the investment plan, this is the job of the investment manager/adviser. Using the EPI-engine the manager/adviser has much faster access to multiple scenario predictions which he can use to advice his clients.

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Simulations in a few milliseconds

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How does it work?

The risk acceptance is determined by allowing the client to make choices based upon Monte-Carlo simulated scenarios. The scenarios calculated by the EPI engine return percentile chances of meeting the set goals for the different risk acceptance profiles available to the client. These feasibility calculations are based on the expected result and the risk profile of the clients investments.

The set properties of the goal and the horizon, supplemented with the capital to be invested and optionally the border profile are the input for a feasibility analysis. This Monte-Carlo simulation is equipped by the investment manager with variables such as expected yield per asset category, asset distribution, correlation, and more.

The result of the Monte-Carlo simulations will be presented both graphically and in a table within the SCOPE KYC Cloud solution. Setting the risk acceptance is done by pressing the “select” button, then the selected profile will be saved on account level.

EPI answers your questions

The EPI-engine can calculate what the value of a parameter should be to meet the set goals with a certain security. This allows to answer complex questions of clients such as:

1 How long should I invest, and how much, to meet my targets if I chose to invest rather than save?
2 How does the feasibility of my target change when I invest € 100 monthly rather than saving it?
3If I chose for a high risk, offensive investment strategy, what happens to my investments in the worst case? And in the best case? How does this differ from saving or investing defensively?
4 How much should I invest monthly to increase the feasibility of my target to 80%?

Time is money

The EPI-engine calculates the feasibility of financial goals set by a client. Using smart algorithms, the calculations are very fast which allows the KYC solution to present the feasibility of tens of thousands of scenarios within a short period of time. An example of this is the presentation of a matrix with different time periods and monthly deposits, which allows a client to quickly select his optimal combination for his investment plan. Using traditional methods this would required a time consuming calculation for every combination.

Integrating a 'Decision Engine'

The SCOPE KYC CLoud solution checks and determines whether a client meets the general conditions and if a maximum risk acceptance profile can be set. General KYC business rules are implemented into the Decision Engine, and gradually more rules based upon “Best Practices” will be offered. There is also the option to add your own business rules to the program.

DISCLAIMER: The SCOPE KYC Cloud solution does not guarantee compliance with the legislation, legal compliance is a combination of functionality and the user.The SCOPE KYC Cloud solution is tool which does not detriment the need for the user to be proactive about questioning the legality of situations. It is the investment manager/adviser who judges if there are any irregularities, and or reasons to further question certain situations. Such as with conflicting information or products which inherently come with risk.