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What is Cuneiform® for Valuation Risk?

Reading time: 7 min   |  By Sonia Chopra   |  Published in Articles,

Valuation risk is a critical aspect of a financial firm’s overall risk management strategy and is currently complex and resource-intensive. 

Currently, fragmented workflows, laborious P&L reporting, manual exception management, low-quality concentration risk and trend analysis, and an overall lack of transparency in pricing approaches pose challenges and consequences in valuation.

In this article, we will dive into Cuneiform for Valuation Risk, a robust and intuitive solution that changes the way the world of valuation risk works.

PeerNova’s Cuneiform® for Valuation Risk

PeerNova’s Cuneiform for Valuation Risk is an intuitive risk solution that enables financial institutions to improve their fair-value estimation using scenario and trend analysis, continuous price backtesting, and contextual understanding of their OTC instrument prices using various datasets. 

Backed by a decision-science framework, the solution’s cutting-edge technology incorporates the latest in Automation, Zero-Code, AI, Big Data, and Cloud. Automate antiquated workflows and unify all your data to avoid the common complexities of valuation risk.

Features

Cuneiform for Valuation Risk offers the following features:

Business Workflows

Value Estimation and Comparison
Fair-value estimation, utilizing Level 1, 2, and 3 evidence, is enhanced by continuous backtesting with policy-driven configurations to ensure accuracy and compliance in valuation processes.

Scenario Analysis
Decision-science based scenario analysis improve regulatory-driven risk measurements and model alternate outcomes.

Price Backtesting
Policy-driven configurations help rigorously evaluate the performance of trading strategies over time.

Operational Workflows

Exception Notification and Alerts
Exception notifications and alerts are set to trigger based on predefined criteria, specifically variances from expected valuation estimations and comparisons, ensuring timely identification and resolution of discrepancies.

Contextual Views
Unified, contextualized views of instrument prices and third-party pricing datasets, overlaid with client-specific trade, liquidity, and market data, provide a comprehensive and nuanced understanding of market dynamics.

Audit Documentation
Thorough documentation supports P&L generation, trader commissions, internal audit, and regulatory reporting by collaboratively sharing lineage, ensuring comprehensive and transparent record-keeping.

Data-science Based Scores
The solution offers a variety of scores and metrics, such as Consensus Density Score and Expertise Rank. The scores and metrics are consistently calculated across all asset classes. Your firm is able to tailor its policies and procedures to guide your valuation analysts in the process across asset classes. You are able to utilize this information to guide your analysis and the resulting valuation. 

It provides a transparent and unified overview of diverse data sources (your pricing, trade and broker data, Consensus and statistical calculations), eliminating the arduous task of hunting through multiple platforms for the insights you need.

Benefits

PeerNova’s Cuneiform for Valuation Risk offers the following benefits:

Strategically align with current and future needs
Address immediate requirements and challenges while also being adaptable and flexible enough to accommodate future developments.

Realize faster time-to-value by removing network dependencies in the market
Achieve faster time-to-value, streamlining operations and quickly adapting to market changes.

Define customization policies for needed outcomes
Tailor the approach to precisely fit particular goals and requirements.

Mutualize common workflows, technology, and reduce costs
Reduce costs through shared resources and efficiencies.

Maximize privacy and market advantage by owning all data and calculated results
Maximize ownership of all data and calculated results for complete control over data and confidentiality.

Meet emerging regulatory requirements now and in the future (e.g., FRTB)
Adapt to meet emerging regulatory requirements, such as the Fundamental Review of the Trading Book (FRTB) to safeguard against potential financial and reputational risks.

How Cuneiform for Valuation Risk Will Help You Save Time and Money

Cuneiform for Valuation Risk will help your organization reduce its current cost base, avoid future cost increases, and mitigate operational and reputational risk.

Reduce Current Cost Base
By optimizing current operational expenditures (OpEx) through reduced full-time employees (FTE) and IT spending, you will streamline your valuation, risk management, P&L, and audit/regulatory reporting processes for faster time-to-conclusion. The solution’s advanced technology lowers data integration, normalization, and reporting costs for more efficient and cost-effective operations.

By prioritizing exceptions in price discrepancy and calibration, your valuation team is assured that resources are focused on the most critical areas of interest. Automatically generating audit and compliance documentation not only accelerates necessary (but time-consuming) tasks, but also reduces the potential for errors to meet regulatory requirements with greater ease and precision.

Avoid Future Cost Increases
To mitigate future increases in both Full-Time Equivalent (FTE) and IT costs, the solution mutualizes common industry needs through its best-in-class software. Your firm will avoid the costly expenses and complexities associated with developing custom software. The zero-code technology helps swiftly meet stakeholder and regulatory demands without extensive programming efforts and costs.

Mitigate Operational and Reputational Risk
Avoid control errors, regulatory fines, and operational risk charges through the solution’s multifaceted approach. You will enhance the reliability of your books and records through the use of market liquidity overlays on OTC pricing. The corroboration of prices with carefully selected market and trade data ensures your organization will make better informed and robust P&L decisions. Improving policy adherence and ensuring compliance with both regulatory and internal requirements acts as a critical safeguard.

Data and Licensing Terms

Data is 100% Client Owned
You own all of your input data, analytics, intermediate calculations, results, derived datasets, and reports, ensuring full data sovereignty and control.

Bring Your Own Data
In a secure, private environment, you are able to use your own datasets for price testing and backtesting.

No Selling or Licensing
Data from various market sources, essential for guiding pricing decisions, are automatically incorporated into the solution, with additional licensing requirements. Its licensing and access control mechanisms are designed with the flexibility and user-friendliness of leading analytics tools like Alteryx, Tableau, and Snowflake in mind, making it a versatile and essential tool for navigating the complexities of valuation risk.

Implementing an innovative solution like PeerNova’s Cuneiform for Valuation Risk will offer your firm a new level of efficiency, accuracy, and security. By leveraging its cutting-edge technology, you will be able to better navigate the complexities of valuation control and independent price verification (IPV) with a robust approach to risk management, operational efficiency, and decision-making.

Contact Us

Please reach out today for more information or to schedule a demo. Take the next step towards redefining your valuation risk management strategy.


By Sonia Chopra

Sonia Chopra is PeerNova's Product Marketing Manager for the Valuation Risk product line. She has nearly a decade of marketing experience and has been with PeerNova for eight years. She specializes in crafting content and campaigns that address the complexities of product and valuation control, such as market volatility, asset pricing discrepancies, and regulatory compliance issues. Her ability to articulate the intricacies of these challenges, enables her to develop highly effective product marketing strategies that meet the evolving needs of the industry.

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