For several years different methodologies have been applied to these estimations, the most widely used of which is the Var (Value at Risk) because of its positive results for the different markets in which it is implemented.

Using the specific tools for the implementation of the VaR methodology, a Financial Institution will be able to estimate, with a given confidence interval, the amount of losses it could suffer by maintaining a given position during a particular time horizon. This same concept is applied with fine results to determine the liquid asset level that may be required by a Financial Institution to cover any decreased funding sources due to market-specific volatilities.

The practical value of the VaR methodology has been discussed at international forums addressing comprehensive risk management for the technical estimation of losses which arise due to events associated with Operating Risks.

FINANWARE™ VaR provides a systematized structure and a set of tools permitting the practical and simple implementation of the VaR methodology by Financial Institutions for the range of uses of their Comprehensive Risk Management strategy.

FINANWARE™ VaR makes available a flexible structure enabling the analysis of any type of data series, such as the daily balance, price, nominal value, interest rate, yield, value of any loss event, etc. FINANWARE™ VaR also provides parametrization facilities so that the analyst can cluster positions, form portfolios and/or cluster series to be analyzed as a whole, in order to determine correlations and assess diversification benefits.

Inputting of the FINANWARE™ VaR data may be accomplished through different methods, ranging from the automated data capture of information from the different internal sources of a Financial Institution to the data capture from external market sources.

To complete the set of tools an analyst may rely on the back-testing of results in an environment that allows the simulation of results in order to find the instrument combination best suited to a need or the performance of stress tests in order to asses what could occur under certain market conditions.