SAP S/4HANA -Financial Services for Intelligent Enterprise - IFRS is possibility of a wider financial transformation rather short sight regulatory project

For the Banking, financial services and insurance (BFSI)- the risk modelling potential loss / risk is a complex task, and to be close to accuracy (probability), strong need of a correct quality data in shortest time frame is inevitable. 

Either it is the IFRS accounting standards (IFRS9, IFRS17), or internal business operational model simulation or meet the Capital Adequacy Directive or the IFRS`7 requirements in the Life or property or any other insurance policies valuations with changing market volatility. Major challenges is to climb fast with definite targets/ milestone stipulated by external  standard-setting bodies. 

There are clear indication that current climate is changing, natural  disastrous situation like wildfires, hurricane, storms, Covid job losses or the health hazards issues need further a better (revised) Risk assessment including allocation of provisions and claim stress testing to meet operational capital. these Key Challenges  need IT solution to meet shortest time frame implementation requirements.

A prefect answer is ready to deploy product with minimum development/customisation need such as like S4 HANA with Add on FSPL, (SAP Bank/ Insurance analyzer with Model company-The SAP company is pre packaged, ready to use, end to end reference solution tailored to industry or line of business ), the HANA in-memory( A column-oriented relational database with improved automation, efficiency, through  he machine learning  has validated the  Answers. 

The actuarial risk analytics or the finance instrument impairment modelling such as loss potential using complex models, like coverage (PD, EAD, LGD, predicated modelling, regression, time series with loss simulation with in depth data is enabling population of business operation risk assessment. the key figures for behavioural aspects of individuals data is ready to inject in ready to use Model Company business contents importing business partner and finance transactions data. 

The S4 HANA solution for the finance and insurance with IFRS17 HAS a STRONG possibility of a FULL financial transformation with intelligent enterprises, meant capacity for a logical finance transformation with industry best practices from quick quote underwriting to full finance planning, problem-solution for the regulation harnessing data more effectively, improving the structure of finance function and to better informed decision making. 

The S4HANA with FSPL using using historical data (SAP Financial Services Data Management) will help regulatory Estimated Cash Flow Preparation (ECP) as well as business development context; 

Let’s understand how the S4 HANA solution enterprise (product) are simplifying the challenges. The Fundamental for the predicative risk analyse is the need of the multi dimensional data and flexible systems processes.  the data administration, financial presentation and actuarial calculations needs data, and in minimum time to evaluate disclose(r) information to group contracts to simulate tests. As per the IFRS17, the group is a managed (often a product) of contracts as Profitable, onerous, or may become onerous (decided at inception) with a certain inception year. in the SAP HANA ( or FSPL) can use the the Master Data, Reference Data items that are required to support the transnational Grouping of the contract data at reconsideration (recognition) phase . Insurance contract life cycle data (or finance Trading and non-trading) financial data need in SAP per master contracts post classification configuration. This is data that is set up on SAP during the build and configuration process.  This type of data is not part of the migration process, as it will be transported to the production system through the SAP transport procedure is  required for valuation/ cash flows. 

I am sure organisation which were short-sighted historically with transformation has opportunity to correct system (Data) with IFRS17 programme. 

he Fundamental S4/HANA data management across product portfolio (In recognition / classification of instrument/contract  phase) will be used post measurement/valuation for validating the quality of data from lineages, historical data storage (actuaries, risk, accounting consequences figures / characteristics and operational data from any system used in solvency II or internal actuaries systems). This data is being REUSED  so that teams can asses risk dimensions using necessary required inputs for IFRS17 modelling . Here the S4 HANA, SAP Analytics with add-on of the SAP FSPL (sub ledger) can be used to migrated/import data along with Master records so that an Integrated Finance and Risk Architecture (IFRA) could be achived. 

My working experiences in IFRA experiences and in S4 HANA implementation using SAP Bank analyzer (ver 7.0.8.0) and now the FSPL- SP3 with Model Company on S4 HANA is clearly proving me that 'SAP knows the pain point of industry' and come-up with an intelligent solutions. The SAP BA consultants/ business users can tell how slow and painful used to be running the SAP BA function in the traditional database for calculating the cash flows, (KDV), when there is changes through movement type or assess effect of new contracts (some time overnight 2-4 hrs) with new dimensions. Now with S4 HANA, it is possible in minutes.  I remember one changes in the master data records with second + primary business transactions used to take 2-5 hrs to calculable, 

with S4 HANa and FSPL updates / simulating results using changing variable such as interest rate and few other economical variable to business transaction inputs,  taking max 35 minutes (1m policy records), shorted EOD /period end not only with logic but also with performance. 

The Data ageing in the Bank Analyzer to move large volumes of data in the Results Data Layer (RDL) from the Source Data Layer (SDL) within a database changes has also been improved with more working memory in the FSPL (HANA DB). Now with HANA DB this is inbuilt for the controls,  the movement of data by specifying a data temperature scenarios. (Data that is only used rarely or that is no longer accessed can be moved from a "hot area" (partition in the working memory) to a "cold area" (partitions on storage). Data that is frequently used remains in the hot area.  The Running Business Events Analytical with adjustment (update) accruals and deferrals providing  up-to-date interest and commission on the FLY NOW or at least in shortest time (this is true intelligent and agile)....I can tell FSPL on the HANA a is the answer for the Risk and finance to meet the need of complexity...

Key process challenges are addressed with well defined business contents..: 

https://help.sap.com/viewer/6efb236dcca1451cbff97314d2334762/1809.001/en-US/2976728383bd42e6bb2cd86a83b1bc02.html

Please ping me for further documentation or  architects if there is any requirement or considerations for the IFRS9 /regulatory or  IFRS17 with Insurance Model company business contents and other Detail end to end ECL (expected cash flow approaches)  

TO be Logical ..

The Insurance industry has a big hill to climb whilst implementing the IFRS17. The IFRS is certainly a possibility (opportunity) of a wider financial transformation rather a short sight regulatory project. The SAP S4HANA solution for the Financial Services such intelligent BFSI with FSPL (sub ledger) and Finance database with analytics using SAP Profitability and Performance Management (PaPM) has the answer for a future ready FI transformation, It is not only to meet the regulation reporting but also deliver a combined financial statements in and/or carve-out cases, or the Covid 19 impacted FI statements or the drive the CFO decisions running parallel ledger.  As well said, every challenge gives opportunities, and the IFRS is opportunities to transform finance enterprises, revamping entity model or have a improved digital ready IT systems, an improved ML/AI operational data to ease future business in emerging complexities. Top 5 Cs have already rolling -up sleeves’  interpreting the IFRS, same time SAP has delivered Financial products with Sub ledger accounting ‘Old wine in new bottles’ but using more intelligence, more digitally improved crossword solution between risk/ actuaries and applying an integrating IFRA risk and finance structure......

TO  BE Landscape (used for this  study) 

https://help.sap.com/viewer/6efb236dcca1451cbff97314d2334762/1809.001/en-US/2976728383bd42e6bb2cd86a83b1bc02.html

@Rajesh Sharma