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Credit Scoring Credit Risk Application Scoring Behavioral Scoring Collection Scoring Fraud Detection Mortgage Lending Smaller Businesses Basel II Compliance		Solutions > Basel II Compliance Scorto Solution and Basel II Compliance The Basel II risk and capital management methodology is one of the most frequently used approaches to credit risk management worldwide. For any bank, the basis for the implementation of the Basel II requirements is provided by the system of the evaluation, analysis and decision-making processes’ management the key role in which is played by the rating (scoring) process. The Scorto™ credit scoring systems are a tool by using which the bank can fully implement the main of the Basel II approaches - the Internal Rated Based Approach (the IRB Approach). Building an internal rating system based on the Scorto suite of software applications is a complex task solving which will allow the bank to evaluate, analyze and manage the following factors: The likelihood of a default by the counterparty (PD); The absolute losses value under default (EAD); The share of the losses under the counterparty’s default (LGD); The expected losses (EL). Implementing the Scorto system by any bank will mean the compliance of its retail lending process with the Basel II requirements: Mechanisms of Borrower rating and Borrowers Distribution into Different Pools The Scorto system rates borrowers, assigning each of them with a rating evaluation and distributing the retail credit requests into separate pools. Monitoring and tracking of the changes in the status of specific borrowers within each pool is used to ensure the borrowers’ adequate distribution across the pools. Analysis, Evaluation and Loan Portfolio Management Based on the Pools Loan portfolio management based on the pools is the main Basel II for retail lending. It provides tools for the building of the PD, LGD and EAD evaluations for each pool. Orientation toward Borrower Risk and Operation Scorto’s rating systems are based on both borrower-related risk and operational risk characteristics, including the type of the product and/or collateral (for example, the ratio of the loan amount toward the value of the collateral, guarantee, collateral ownership claims, and so on). Monitoring of Rating System’s Adequacy One of the advantages of the Scorto system is the availability of special tools for working with reports and loan portfolio analysis. Interactive reporting allows monitoring the quality and structure of the formed loan portfolio, as well as the adequacy of the used scoring models. Tools and Methodology for Scoring (Rating) Model Development Rating and segmenting model development tools are an integral part of the Scorto Solution. These tools and the model development and evaluation methodology they are based on allow efficiently implementing the Basel II requirements in loan portfolio management.

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