Challenges

CRISIL has been a trusted partner to firms covered by UMR Phases 1-4 and is now working to support Phase 5 and Phase 6 clients in achieving UMR compliance.

Our work with clients in prior phases has given us unique insights into the implementation of a UMR-compliant IM program. To ensure timely compliance, Phase 5 and 6 entities will need to start early to establish the IM program governance structure, including a steering committee involving senior management sponsorship, and a cross-functional team.

Through these structures, the newly covered entities must work to address issues across the in-scope assessment process, Risk Based IM calculations and collateral optimization. As they do so, they will face specific challenges such as:

• Coordinating compliance-related tasks and responsibilities across legal, front office, operations, counterparty credit risk, model risk, data, technology, internal audit, and senior management;
  
• Creating  & validating UMR compliant risk sensitivities and designing & building a robust control framework for data.
  
• Collateral management, including initial margin and collateral forecasting, etc.;
  
• Establishing a UMR-compliant SIMM governance structure, including testing and ongoing monitoring of SIMM outputs, and dispute resolution mechanisms.

As the industry's leading provider of risk analytics and traded risk related services, CRISIL is helping clients around the world overcome these challenges and achieve seamless and on-time UMR compliance.