How to Innovate Risk Management and Customer Centricity

1. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group James Taylor, CEO Decision Management Solutions Roger Burlton, Managing Partner Process Renewal Group How to Innovate Risk Management and Customer Centricity

2. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 2 Your Presenters ▶ James Taylor ▶ CEO of Decision Management Solutions ▶ Decision Management Solutions works with clients to improve their business by applying analytic technology to automate & improve decisions ▶ James has spent the last 14 years championing Decision Management and developing Decision Management Systems. ▶ Roger Burlton ▶ President of Process Renewal Group ▶ PRG provides services in BPM, business architecture and culture change to help organizations improve their business performance. ▶ Roger is a pioneer in business process transformation starting PRG over twenty years ago and helping over 100 companies and agencies to transform themselves. Business Intent & Strategy Enabling Technology Performance

3. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 3 AGENDA ▶ Maximizing Business Results ▶ Processes Are Not Decisions ▶ Risks Without Decisions ▶ Case Studies ▶ Processes and Decisions Together ▶ Questions ▶ Takeaways

5. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 5 Avoid And Mitigate Risk ▶ Regulatory and Ownership perspectives ▶ Compliance with external requirements and internal policies ▶ End to end processes integrity ▶ Operational risks typically occur at a decision point ▶ Security assurance / fraud avoidance ▶ “Knowing the client” means real-time data analysis

6. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 6 Provide The Best Customer Experience ▶ Customer perspective ▶ Fast time to market with products and services ▶ Insight, intimacy and service ▶ Simplicity, speed, and transparency ▶ End to end process integrity delivering value ▶ Digitization of end to end work

7. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 7 Improve Processes ▶ There is tremendous pressure on our Businesses: We have to act and decide faster and better / ROIValue Return Cost Time to Break Even Time in Value Sooner Better Cheaper More Flexible

8. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 8 The ROI Of Managing Decisions Accuracy Consistency AgilityLatency Cost More accurate risk management More targeted customer treatment More rapid response to business threats Fewer missed opportunities Policies applied across channels Lower fines, audit & legal costs More real-time responses Higher rates of straight through processing Lower staffing ratios Less re-work Sooner Better Cheaper More Flexible

10. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 10 Processes Are Not Decisions ▶ Processes ▶ Flow oriented across roles ▶ Often sequential ▶ Interconnected to outcomes ▶ Stable in ‘what’ ▶ Analytics about the process ▶ Decisions ▶ Declarative ▶ Hierarchical ▶ Logically “dense” ▶ Changeable ▶ Analytics change the decision ▶ Different Stakeholders ▶ Different Perspectives ▶ Different Measures

11. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 11 All Decisions Happen In A Process ▶ Decision Processes are not new but are growing in proportion and importance ▶ A PRG review of APQC frameworks shows that 20–30% of processes either make a decision or are comprised of many sub decisions. Another 30–40% are involved in providing the inputs to or knowledge for decision making.

12. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 12 Complex Process Models Hide Decisions ▶ Modeling decisions with gateways adds complexity ▶ Mixes process and decision and imposes sequence

13. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 13 Model Decisions As Well as Processes ▶ Separating Decisions simplifies and stabilizes Processes ▶ Modeling Decisions brings clarity Applicant Risk U Applicant Age Medical History Applicant Risk Rating 1 > 60 good Medium 2 bad High 3 [25..60] - Medium 4 < 25 good Low 5 bad Medium

19. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 19 Case Study 1: Customer Experience Industry comparisons • auto adjudication rates are low • confusion around what constitutes an acceptable deal Observations on risk • state regulator • Business Process Architecture for Business Unit Large areas of processes, decisions and rules unrecognized, unstructured and inconsistent  Optimize ETE processes and align to outcomes, experience  Incorporate new principles of: • integrated modular and component decision structures • progressive decisioning concepts to better support the customer journey • Focus on customer moments of truth • separation of internal duties The Opportunity The Challenge

20. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 20 Case Study 1: Customer Experience Submit application for loan Determine credit score Decide credit worthiness Approve loan SlideconceptcourtesyofBusinessRuleSolutions,LLCwww.BRSolutions.com Is the applicant eligible for the loan? Is the application complete? Is the credit score above the minimum? Are the loan risk parameters in range? • A service representative must be assigned to a received application not yet completed. • The applicant’s credit score must be higher than the minimum published in the current credit risk table. • The monthly repayment amount must be less than 25% of the applicant’s income. • A application for a loan greater than $1 million must be approved by a Vice President. Component Progressive Decisioning

21. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 21 Process Redesign Moved Decisions Some decisions move earlier Some new decisions are created and made early Some premature decisions that today result in downstream changes are avoided Some decisions can be made later therefore speeding the approval decision Case Study 1: Customer Experience

23. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 23 Case Study 2: Reducing Operational Risk From processes to risk and performance to decisions to processes again Acquire, construct and manage real-estate Design and build / acquire real- estate assets Maintain real-estate assets Obtain and install real-estate assets Dispose of real-estate assets 1. built process architecture and work flow 2. found the decision processes 3. identified the decisions structure 4. mapped the material risks 5. mapped existing controls 6. examined control gaps 7. put in place missing controls (new process steps and new decision models) Develop & Sign off Detailed Design Conduct Tender. Recommend Contractor Detailed Design Signed off Issue Construction Project Approval Form BC & FP Approved Open Project. Issue POs Construction Approval Form Issued PO for Design Obtain Construction Permit Approve Contractor Contract Contractor Construct Facility Construction Permit Approved Contractor Recommended Contractor Approved Contractor Contracted PO for Construction Obtain Occupancy Permit Relocate Staff Occupancy Permit Obtained Facility Furnished Furnish Facility Open Facility Rectify Deficiencies Closeout Financials Staff Relocated Facility Opened Deficiencies Rectified Facility Constructed Financial Closeout Completed FR-1.33 UA-2.17 C-1713 C-1212 UA-2.18 Detailed Design Developed Conduct Warranty Walk- through Warranty Walk-through Conducted UA-2.18 C-1711 GAP-1.05 N-6 N-7

25. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 25 Case Study 3: Retail Banking Customer Next Best Action ▶ Every Channel ▶ Every Time ▶ 400M interactions/month

28. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 28 Processes AND Decisions ▶ Decisions and Processes are well understood ▶ Process Models and Decision Models ▶ Decisions are linked to Processes ▶ Not buried within them ▶ New process is simplified and more robust ▶ Not fragile and yet not dumbed down ▶ Change is easier ▶ Because process & decision changes are independent ▶ Analytics drive outcomes ▶ They don’t just measure the process

30. @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group 30 Takeaways ▶ Processes and Decisions ▶ Are different ▶ Are complementary ▶ Deserve their own models ▶ Are associated ▶ A focus on Processes and Decisions ▶ Manages risk more effectively ▶ Focuses on customers more directly ▶ Enables faster operational response ▶ Adds value to the process outcomes / ROIValue Return Cost Time to Break Even Time in Value Sooner Better Cheaper More Flexible

31. Thank You For more on Decision Management, go to: decisionmanagementsolutions.com @jamet123 @RogerBurlton © 2016 Decision Management Solutions and Process Renewal Group James Taylor james@decisionmanagementsolutions.com Roger Burlton Roger.Burlton@processrenewal.com

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