The application of Risk Engine, Risk Framework, or both, depends highly on customer requirements and tasks that have to be covered.
Risk Engine uses a single data base per instance user (company or department). A set of company users is defined in the company’s DB (instance user) and uses data from it alone. This is the usual scenario. In the case where a different set of users within the organization needs to access another DB, a separate instance of RE has to be started or a new instance user (department) has to be configured.
The instance user DB type may be different for the different users, for ex., one uses MySql, another DB2, etc.
The usage of features and modules is enabled or restricted with separate licenses. In this way, customers pay only for modules they really need. The licenses can be configured to be either time restricted or not. It is possible to have test licenses, with free access to all interested modules, so the customer can have a closer look at the modules. The number of licenses restricts only how many users can login into the system at same time. It is possible, for example, to have 40 defined users, but only 20 of them can work at same time.
The Rule Based Instrument (RBI) is a tool that represents and calculates complex, structured, exotic and non-standard instruments that have a future path-dependent behavior. For example, in cases where future cash flows and pay offs depend on other future events. The evaluation of such instruments may require a Monte Carlo simulation of one or several factors at different future time points. The simulation structure is defined explicitly by periods and pricing formulas per factor, as well as by simulation markets.
Example: a 4-year loan can be paid back at the end of every year by max 50%. If in the first 2 years, the whole 100% are paid, then there is nothing to be paid back in year 3 and 4. If not, for example if 20% and 25% are paid, a lot of payback variations exit for year 3 and 4.