Although Financial institutions nowadays achieve fairly high levels of STP, the remaining part of their transaction flow usually still represent the biggest part of their processing costs. As a matter of fact, the processing of exceptions and their related level of risk remains one of the most complicated areas of automation. Consequences of this can be easily measured in terms of risk and operational efficiency, which in turns can be converted to costs.

It is usually granted that even if transaction exceptions are as low as 20% of the total volume, their processing cost can represent as much as 80% of the overall processing cost. Therefore, any enhancement in the automation of exceptions processing leads to substantial savings in the processing costs, a 5% decrease of exception volume corresponds to a 20% reduction of the global processing costs.

Even if the cost of these transactions can be easily measured, two additional side effects are much more difficult to estimate while being of utmost importance. Firstly, the exceptions are a cause of customer dissatisfaction which often leads to more revenue loss than the processing cost of the exceptions. Secondly, the related risk exposure of these transactions is far beyond their actual processing cost and the return they generate.


This forces to say that a “Risk” oriented exception management system is one of the key elements of any efficient financial organisation.



Exceptions Dash-Board

XMS eXception Management System offers a multi-dimensional dynamic dashboard. The dashboard sums up all exceptions per their type of control/matching : Cash, Securities, Forex, fiducial … Exceptions are either listed as number of entries or as the total value of risk exposure they represent.

Multi dimensional

Exceptions are categorized according to several axes :

  • Risk type
  • Number of days outstanding
  • Quantity of money involved in the risk evaluation
  • Groups of accounts
  • Accounts
  • Quality (value date discrepancy, amount difference, …)
  • Department/User in charge of the case


Each user (manager or query-only user) can easily fine tune the dashboard to focus on his main duties :

  • choice of information axis used
  • way of nesting information
  • any data field can be used as an axis (real-time recalculation)

The information presented in the dashboard can be analyzed using any axis.


The dashboard can be saved under various formats HTML, Excel … either as dynamic or static objects. Dynamic objects retain their dynamic characteristics even when transmitted by e-mail, thanks to OLAP technology. Exported dashboard can also be published on the intranet, thanks again to the underlying OLAP technology.


Creation (and attachment to an e-mail) of the dashboard can be scheduled at predefined intervals. Even when sent by e-mail, dashboard reports retain their dynamic functionalities!

Practical Use

The same dashboard is used for every one, but differently tailored according to the various security profiles : Control, Operations,Risk Management, Audit, General Management, etc. Statistics and pie-charts are also available (linked to the dashboard), as well as details of exception transactions which can be drilled-down from the dashboard.

All actions can be initiated from the Exception dashboard (forwarding, follow-up, adding a note, …) with a direct view on the associated priorities instead of processing tedious unsorted lists.

In the twinkling of an eye :

  • Employees involved in the solving of exception can focus on the most important points
  • Managers have a complete crystal-clear view of every unsettled/unmatched item along with their respective associated risk level

From early identification of Exception transactions up to automation of their processing

In order to process the exceptions with a rational structured methodology it is necessary to consider :

  • Priorities linked to risk exposure and operational efficiency
  • Proprietary organisational procedures
  • Commitment to internal regulations

eXception Management System, as a generic platform :

  • Proactively fulfils all these requirements
  • Delivers tailor-made flexible solutions which easily adapt to either internal (organisation, management,…) or external (legislation) changes

As for all other XMS solutions, eXception Management System relies on the same two core principles to deliver STP solutions :

  • Ability to process any data format
  • Platform independency

The exception and risk management focuses on three main axes :

  • Evaluation of risk exposure
  • Attribution of a risk level
  • Creation of a specific exception file

At any time, users and managers have access to the latest transactional information with a full visibility, taking into account their relevant priorities : Exceptions Dashboard. Based on a natively designed open architecture and making use of strong technology standards, XMS eXception Management System fully structures and automates :

  • Detection of any exception as soon as it enters the system (continuous monitoring or transactions)
  • Evaluation of individual risk value and automatic definition of a risk type based on user defined priorities
  • Workflow of exceptions to be processed (assignment to departments, users, etc…)
  • Exception Case creation for each outstanding with rationalised follow-up guideline procedure

‘RAR’ Table : Risk Attribution Rules

Generic :

This table defines a risk level for each exception. This is done automatically as an STP process. Rules can be amended and new rules can be added without limitation. As for any other business rule, all message fields are available and can be used as criteria to create a new rule (and/or any fields’ combination : risk exposure value, items ageing, etc.). The various types of risk are then organized into a hierarchy based on their importance

Dynamic :
  • The risk level assigned to an exception can be amended at any time :
  • in STP mode according to ageing level, change in calculated risk value, etc.
  • manually, user can reassign the type of any exception.

Centralized follow-up of exception entries throughout their lifecycle

As soon as it enters the systems any exception is automatically assigned to a department and/or an operator, and an Investigation Case is created. This file combines various functionalities (a notepad, follow-up messages, etc.) in order to offer a rational structured functionality.

XMS eXception Management System allows to group into a single file, all outstanding items related to the same transaction (for instance, cash movements linked to a Security transaction).


Exception Case : Enquiry STP procedure

The work to solve an exception is greatly simplified by the fact that all involved internal documents are linked together into a single file which may include copy of all sent/received information :

  • Fax and/or E-mail : can be generated out of predefined templates (either full STP or semi-automated to allow additional comments to be added)
  • Incoming faxes can be included and are digitally archived
  • Follow-up messages : sent internally (to the person in charge) and externally (correspondent/counterparty)
  • Generation and validation of SWIFT messages
  • Automated query messages based on time elapsed since last action
  • Automated resolution of specific exceptions: matching of maximum accepted fees, general ledger host update, etc.
  • Warnings: reception of an answer, ageing of the item, etc.

The structure of any query procedure being defined by parameters, it is possible to setup as many procedures as there are types of exceptions to be handled.


Real-time automatic valuation of exception transactions risk exposure

Finding out the most accurate risk exposure value is one of the key elements in the evaluation and management of risk associated to transactions. XMS uses Bank’s internal reference data and/or those provided by the third-party (depository, correspondent, counterparty, etc.) whenever available to establish the most accurate value possible. Additional controls are possible, such as ensuring that any change of risk value remains within a given range, etc.