SRA Company Profile. Company Background Products and Services Our Perspective Thought Leadership and Research Contact Information

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1 SRA Company Profile Company Background Products and Services Our Perspective Thought Leadership and Research Contact Information August, 0 0 Stamford Risk Analytics. All Rights Reserved. Reinventing Risk Management SRA s Products and Services Offering Research Projects Educational Seminars Advisory and Consulting Services Software Products 0 Stamford Risk Analytics. All Rights Reserved. 0 Stamford Risk Analytics. All Rights Reserved.

2 SRA Company Background Stamford Risk Analytics (SRA), formerly OpRisk Advisory, was founded in 00. SRA was founded by Ali Samad-Khan, who also founded OpRisk Analytics (00) a leading provider of operational risk software. SAS acquired the principal assets of OpRisk Analytics in 00. SRA has advised more than 00 of the world's leading banks, investment banks, energy, technology, transportation and insurance companies, multi-lateral organizations and national and international regulators in over thirty countries in North America, Europe, Asia, Africa and Australia. We returned to the software space in 009 after discovering the ALEC Method a new method of modeling risk. ALEC transforms risk management from a compliance exercise to a process that genuinely supports risk-based decision making and adds tangible value. ALEC is applicable to market, credit and operational risk. 0 Stamford Risk Analytics. All Rights Reserved. SRA Founder Ali Samad-Khan Ali Samad-Khan is Founder and President of Stamford Risk Analytics. He has over years of experience in risk management and more than 5 years of experience in financial services and consulting. Ali has advised more than 00 of the world s leading banks; insurance, energy and transportation companies; and national and international regulators on a full range of risk management issues. Key elements of his Modern ERM/ORM framework and methodology have been adopted by leading institutions around the world. Recognized globally as a thought leader in the risk management space, Ali s provocative articles and white papers have served as a catalyst for change in the way organizations manage risk. For his pioneering work in this field, Ali was named one of the 00 most influential people in finance by Treasury & Risk Management magazine. Ali is also a charter member of Who s Who in Risk Management. Prior to founding Stamford Risk Analytics, Ali served as a Principal in the ERM Practice at Towers Perrin (now Towers Watson), where he was also Global Head of Operational Risk Management Consulting. Previously, Ali was Founder and President of OpRisk Analytics LLC, a software and data provider, which was acquired by SAS in 00. Before that Ali worked at PricewaterhouseCoopers in New York, where he headed the Operational Risk Group within the Financial Risk Management Practice. Prior to that, he led the Strategic Risk Initiatives Group in the Operational Risk Management Department at Bankers Trust. He has also worked as a policy analyst at the Federal Reserve Bank of New York and at the World Bank. Ali holds a B.A. in Quantitative Economics from Stanford University and an M.B.A. in Finance from Yale University. 0 Stamford Risk Analytics. All Rights Reserved. 0 Stamford Risk Analytics. All Rights Reserved.

3 Number of Events Probability Missing data Size of Loss High () Med () Low () Probability of Exceeding 5% % % % % 0% Inadequate segregation of duties Insufficient training Lack of management supervision Inadequate auditing procedures Inadequate security measures Poor systems design Poor HR policies EMPLOYMEN T CLIENTS, EXEC UTION, BUSIN ESS PR ACTIC ES & PR OD UC TS & DAMAGE TO DELIVERY & DISRUPTION AND INTERNAL EXTERN AL WORKP LACE BUSINESS PH YSIC AL P ROCESS SYSTEM FRAUD FRAUD SAFE TY P RACTIC ES ASSE TS MANAGEMENT FAILUR ES TOTAL Corporate Finance Number Mean 5,59 5,05,5 5,890 5,7, 89,78,5 Standard Deviation 5,9 8,975,85 7,890,5 5,5,97 Trading & Sales Nu mb e r Me a n 5, 89 78,08 5,8 85, 5 85,0,89, 5 7, Standard Deviation 8, 5, 5,78,8 5 5,8 8 5,5 0, Retail Banking Number Mean 7,870 70,7, 7,80 7,59,8,05 59,90 Standard Deviation 7,87, 5,9 0,5,,78 9,7 C o m mer c ial Bankin g Nu mb e r Me a n,0 8,8,99 9, 8,9,5 08, ,7 Standard Deviation, 9 8 0,905,7 9, 58, ,05 8,7 Payment & Settlements Number Mean 8,77 5,9,779,09,09, 98,0 8,9 Standard Deviation, 9,8,05 8,8, ,7 7,8 Agency Services Nu mb e r Me a n,5 9 8,08,55 7, 5 7,,5 7, ,0 8 Standard Deviation 7, 7,777 5,05 0, 5,55 0,89 9,5 Asset Managem ent Number Mean,87,77,08 7,8 7,00,7 05,908 5,7 Standard Deviation,75 0,599,5 9,8, ,80 8,8 Retail Brokerage Nu mb e r Me a n 50, 5 7,77,898 80, 80,0,7 7, 09 0, 0 Standard Deviation Insurance Number Mean 5,,95,08 7,5 7,,589,8 5,9 Standard Deviation 7,,7,90 0,0,08 0,08 8,897 Total Nu mb e r ,8,80 Me a n 5, 5 7,0,50 7, 5 7,0,0 5, 5 9 5,9 Standard Deviation 7,,555,950 0, 58,50 5 0, 8,98 -in-0 year loss Internal Fraud High () Med () Low () External Fraud Employment Practices & Workplace Safety Clients, Products & Business Practices Damage to Physical Assets Business Disruption & System Failures Execution, Delivery & Process Management -in-5 years ,000,00,00,00,00,500 Ground-up Full Loss Amount ($ millions) in-0 years Low () Med () High () Legal Liability Regulatory, Compliance & Taxation Penalties Loss or Damage to Assets Restitution Loss of Recourse Write-down Reputation Business Interruption EFFECTS Monetary Losses OTHER IMPACTS Forgone Income Mean 99th Percentile Some of our contributions to the field of risk management Invented ALEC Method for Measuring Market, Credit and Operational Risk Invented Payoff Matrix Method for Classifying Loss Data Best fit curve using MLE Developed MLE Routines for Fitting Truncated Loss Data to Parametric Distributions n R ext Scaled Loss L DB 000 R int Published Scaling Paper L Actual Loss experienced by bank DB R Revenue of external firm ext R Revenue of firm int n Scaling co-efficient determined by regression analysis 997 First to Define Reputation Risk as an Impact/Effect 009 Published A New Approach for Managing Operational Risk Addressing the Issues Underlying the 008 Global Financial Crisis Defined the Two Business Problems: Traditional and Modern ERM/ORM Invented -Dimensional Risk Architecture/Taxonomy Developed Matrix Based Framework for Modeling Operational Risk: Blueprint for Basel II AMA Likelihood INDIVIDUAL LOSS EVENTS 7,7,5 7,0,709 7,57,75 7,5,957 7,,57 7,5,5,5, 9,58 Traditional Loss Prevention COSO CAUSES EVENTS CONSEQUENCES 9 Low () Med () High () Impact RISK MATRIX FOR LOSS DATA LOSS DISTRIBUTIONS P Frequency of events P Frequency Severity of loss Modern Risk Optimization n/a COSO Severity VAR CALCULATION VaR Calculator e.g., Monte Carlo Simulation Engine n/a n/a What is the impact of the tail on the mean? TOTAL LOSS DISTRIBUTION Annual Aggregate Loss ($) 0 Stamford Risk Analytics. All Rights Reserved. Our thought leadership pieces have been published in English, French, German, Russian and Chinese. These papers are available at no charge at 0 Stamford Risk Analytics. All Rights Reserved. 5 0 Stamford Risk Analytics. All Rights Reserved.

4 Our Perspective: Risk management should involve factoring risk information into decision analysis Maturity of ERM/ORM Framework Economic Value Modern ERM/ORM Risk Measurement Risk-Reward, Risk-Control Optimization Risk Based Strategic Decision Making Regulatory Compliance Risk and Control Self-Assessment* Risk Ranking Traditional ERM/ORM Risk Identification Level of Sophistication/Maturity *Traditional ERM/ORM practitioners unknowingly use the terms RISK and LOSS synonymously, but these two terms have very different meanings. Modified from Society of Actuaries and SunLife Financial 0 Stamford Risk Analytics. All Rights Reserved. For more information on Modern ORM, please refer to the following research paper, which is freely available on the SRA website OpRisk Advisory LLC has been rebranded as Stamford Risk Analytics LLC since late Stamford Risk Analytics. All Rights Reserved. 7 0 Stamford Risk Analytics. All Rights Reserved.

5 5 The value of our Modern approach to risk management has been acknowledged by leading regulators, including Roger Cole, who was Chairman of the Risk Management Group of the Basel Committee 0 Stamford Risk Analytics. All Rights Reserved. 8 Many leading institutions have adopted key elements of our Modern ERM/ORM framework; our innovative thinking has served as a catalyst for change in the world of finance 0 Stamford Risk Analytics. All Rights Reserved. 9 0 Stamford Risk Analytics. All Rights Reserved. 5

6 SRA s four software products released in 00 make implementing Modern ERM/ORM a practical reality Business Decision Analyzer Stress Economic Capital Assessor Market Risk Credit Risk Operational Risk Model Validator OpRisk Modeler Loss Distributions Approach Scenario Analysis All four products are based on the revolutionary new ALEC methodology which is causing a paradigm shift in risk management practices across all areas of risk management and all industries, globally. 0 Stamford Risk Analytics. All Rights Reserved. 0 Modern ERM/ORM must become a strategic imperative for every major corporation and its stakeholders Implementing a Modern ERM/ORM framework allows organizations to accomplish the following: Facilitate the holistic management of all risks across the enterprise, based on a consistent definition of risk and a comprehensive risk architecture/taxonomy. Embed a risk culture that reflects and harmonizes the goals of key decision makers and external stakeholders. Create a structured and transparent process for factoring risk into the business decision-making process at both a tactical and strategic level. Specifically, provide managers, senior managers and C-level executives the tools and information they need to optimize risk-reward, risk-control and risk-transfer in the context of cost-benefit analysis. Reduce information asymmetries between managers and stakeholders to help confirm that managers are pursuing strategies that conform to the risk tolerance standards of the stakeholders, i.e., mitigate principal-agent risk. Accurately incorporate the impact of rare black swan events into risk measures and risk-based profitability metrics. Incorporate soft data and expert opinion into risk models in an objective, transparent and theoretically valid manner in order to update the risk profile when historical data becomes obsolete. 0 Stamford Risk Analytics. All Rights Reserved. 0 Stamford Risk Analytics. All Rights Reserved.

7 7 SRA CEO, Ali Samad-Khan, has spoken and continues to speak about the benefits of Modern ERM/ORM at numerous risk conferences in the US and abroad 0 Stamford Risk Analytics. All Rights Reserved. Contact us USA and Canada International Karen Slawinsky VP Sales & Marketing One Stamford Plaza Tresser Boulevard, 9th Floor Stamford, CT 090, USA Direct: Fax: karen.slawinsky@stamfordrisk.com Anver Kasmani VP Business Development Maple House High Street Potters Bar EN 5BS, UK Direct: + (0) Fax: + (0) anver.kasmani@stamfordrisk.com 0 Stamford Risk Analytics. All Rights Reserved. 0 Stamford Risk Analytics. All Rights Reserved. 7