Microsoft Server Product Portfolio

Customer Solution Case Study

Outsourcing Firm Meets Compliance and

Significantly Lowers Operational Loss

Overview ―In the first year of our deployment of StratexPoint,

Country or Region: United Kingdom
Industry: Financial services—Banking we’ve considerably reduced the volume of frequently
occurring operational loss events. It has improved our
Customer Profile
HML is the leading provider of third- profitability.‖
party mortgage services in the United
Gillian Weatherill, Head of Operational Risk, HML
Kingdom and Ireland, and a wholly
owned subsidiary of the Skipton Building
Society.
HML—which specialises in financial outsourcing for financial
Business Situation institutions in the U.K. and Ireland—needed to improve
HML wanted to transform the role of risk
management in the business to make it
operational risk management to avoid unnecessary losses and
central to strategic and operational bolster compliance. The firm relied on spreadsheets and
decisions, thereby reducing the economic
capital held against the organisation.
disparate databases to analyse performance and risk, but
recognised the need for a more rigorous approach. This led to
Solution
Microsoft Certified Partner Stratex
Microsoft Certified Partner Stratex Systems delivering
Systems deployed its StratexPoint StratexPoint—a risk management, governance, and compliance
solution for performance and risk
management, based on Microsoft Office
solution designed to meet the demands of the executive team,
SharePoint Server and Microsoft SQL as well as the expectations of the Financial Services Authority.
Server technology.
StratexPoint is powered by Microsoft Office SharePoint Server
Benefits technology and was central to supporting a ―risk-led‖
 Direct operational losses fall
significantly
transformation at HML, with an improved risk framework and
 Need to retain capital is lowered new focus on key controls. As a result, the firm has significantly
 Compliance targets are met
 Risk-aware culture is embedded
reduced operational losses, as well as its regulatory capital.
 Situation
―We were already fully Financial outsourcing specialist HML is a
engaged with this work. wholly owned subsidiary of the Skipton
Building Society in the United Kingdom
We had 12 months to (U.K.), working for more than 30 U.K. and
Ireland-based financial institutions. On
implement a major risk- behalf of its clients, it manages more than
driven change 45,000 financial products and assets of
approximately £45 billion.
programme, much of
In January 2008, HML appointed a new
which was scoped before Chief Executive Officer who wanted to
the FSA visit.‖ transform the business—in particular, the
role of risk management in the firm. Gillian
Gillian Weatherill, Head of Operational Weatherill, Head of Operational Risk at
Risk, HML HML, says: ―Our mission is to make risk
management central to strategic and
operational decision making. In doing so,
our goal is to enhance profitability, lower
operational losses, and reduce the
economic capital held against the business.
This initiative was also about laying the
foundation for state-of-the-art, next-
generation risk management capabilities,
which support the needs of all staff and
clients.‖
Soon after Weatherill joined HML—which
employs 1,600 people—the Financial
Services Authority (FSA) carried out a
routine site visit. This corresponded with a
time of major market disruption due to the
onset of the credit crunch and subsequent
economic downturn. The site review
resulted in the FSA recommending a Risk
Mitigation Programme for HML aimed at
enhancing the operational risk capabilities
within a strict and challenging timeframe.
Weatherill says: ―We were already fully
engaged with this work. We had 12 months
to implement a major risk-driven change
programme, much of which was scoped
before the FSA visit.‖
The operational risk processes inherited by
Weatherill were disparate and silo based.
Most involved using early versions of
Microsoft Access database software and
Microsoft Office Excel spreadsheets, which
were updated periodically. A few people in
the central risk team also used an existing
operational risk solution. In a rapidly
changing market—and with the economic
downturn significantly impacting mortgage
applications and arrears management—
HML required a more agile, flexible, and
practical solution. Weatherill says: ―We
needed information to be visible
immediately, so our employees and
managers could assess risks easily without
tracking through numerous spreadsheets.‖
Solution
After considering a number of options,
HML selected Microsoft Certified Partner
Stratex Systems. Its software solution
StratexPoint brings together performance
and risk management into a single,
integrated solution.
Developed using Microsoft Office
SharePoint Server and Microsoft SQL Server
technology, StratexPoint combines the
qualitative elements of performance and
risk management with quantitative data. It
is helping HML drive strategic execution
and manage the trade-off between risk and
reward in its services.
Andrew Smart, Founder and Managing
Director at Stratex Systems, says:
―StratexPoint provides enterprise-level
capabilities for HML to monitor and analyse
all of its organisational governance,
objectives, risks, and controls using
assessments and key indicators. With
Microsoft, we want to drive a new approach
to managing strategy, risk, and
compliance.‖
StratexPoint uses a range of features in
Office SharePoint Server, including security,
workflow, document management, and
collaboration. It also offers powerful SQL

―Stratex Systems helped
HML improve regulatory
compliance at every step
during the 12-month
window to meet the
targets set by the FSA
…Our systems are more
robust than ever before.‖
Gillian Weatherill, Head of Operational
Risk, HML
Server reporting—along with its inherent
application logic and visualisation
techniques—to help HML align risk
appetite, risks, and controls with its
strategic objectives.
While the solution may ultimately be
extended to as many as 2,000 users,
Weatherill says she aimed to implement it
to approximately 500 users initially, with
different levels of permission for employees
depending on their roles.
Benefits
HML is now aligning its risk exposure with
its risk appetite. It has both reduced
operational losses and improved handling
of risk-related losses. FSA expectations
have been met and the amount of
economic capital held against the business
has been cut.
Operational Losses from Frequently
Occurring Events Fall Significantly
Using a combination of qualitative and
quantitative dimensions, the risk
management software is helping HML to
define its risk appetite threshold. This
measure is the amount of exposure or
potential adverse impact from an event
that the organisation is willing to accept or
retain.
The company’s governance processes must
focus on value, not just controls—especially
given the lingering effects of the economic
downturn. Weatherill says: ―In the first year
of our deployment of StratexPoint, we’ve
considerably reduced the volume of
frequently occurring operational loss
events. It has improved our profitability.‖
Economic Capital Held Against the
Business Reduced
It is often difficult for managers to
understand how capital is invested in
financial institutions to support operational
risk, which, in turn, needs definition.
StratexPoint is helping HML drive a return-
on-equity discipline into individual
transaction decisions through greater use
of objective risk-based pricing.
Weatherill says: ―As a result of
implementing StratexPoint, HML has
managed to significantly reduce its
economic capital—the amount held against
risk necessary to survive in a worst-case
scenario.‖
Software Helps HML Meet Compliance
Targets Agreed with Regulator
StratexPoint is unique in supporting
leading best practice approaches to
performance and risk management within
an integrated, collaborative solution.
Weatherill says: ―Stratex Systems helped
HML improve regulatory compliance at
every step during the 12-month window to
meet the targets set by the FSA Risk
Mitigation Programme. Currently, we’re
using many new document management
and risk events processes with increased
security requirements. Our systems are
more robust than ever before.‖
Sai Sireesh, Director for Risk and
Compliance Solutions at Microsoft, adds:
―The HML vision of integrating business
strategy, capital allocation, and risk
management is truly innovative.
StratexPoint is uniquely positioned to
implement this vision.‖
Risk-Aware Culture Embedded Within
the Business
The new performance and risk
management software has enhanced
strategy execution at HML. The
improvement is not only in the quality and
organisation of governance, performance,
and risk-related procedures and policies,
but also in the time saved.
For More Information
For further information about Microsoft
products and services, please visit
www.microsoft.com/uk or call 0870 60 10
100*
For hearing impaired customers with a
Minicom, contact: 0870 50 30 400*
A risk-aware culture is now fully embedded Microsoft Server Product Portfolio
in the business. More importantly, it does For more information about the Microsoft
not hamper new initiatives. Weatherill says: server product portfolio, go to:
―None of our requirements have been www.microsoft.com/servers/default.mspx
compromised and now everything related
to strategy execution is easily accessed in
one place, which is significantly improving
efficiency and performance.‖

*Lines are open 8am–6pm, Monday to

Friday. Please note, numbers prefixed
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rates. For details of national call rate
charges, please contact your
telecommunications provider.

For more information about Stratex

Systems products and services, call or
visit the website at:
www.stratexsystems.com

For more information about HML

products and services, call or visit the
website at:
www.hml.co.uk

Software and Services  Microsoft Server Product Portfolio

 Microsoft Office − Microsoft SQL Server
− Microsoft Office SharePoint Server
2007

This case study is for informational purposes only.

MICROSOFT MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, IN THIS SUMMARY.

Document published May 2011