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The World Bank The World Bank Risk Architecture in a Basel- II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented by David M. Rowe, Ph.D. Executive Vice President for Risk Management SunGard Trading and Risk Systems

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Page 1: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

TheWorld Bank

The World Bank

Risk Architecture in a Basel-II World

Presented to theWorld Bank Risk Management Seminar

Washington, D.C.May 18, 2004

Presented byDavid M. Rowe, Ph.D.

Executive Vice President for Risk ManagementSunGard Trading and Risk Systems

Page 2: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 3: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1935 1945 1955 1965 1975 1985 1995

Tota

l E

qu

ity

Cap

ital

to

To

tal A

sset

sU.S. Bank Capital Ratios – 1935 - 1988

Depression thru WWII

Post-War Recovery thru early 1960s

Mid-60s thru Mid-70’s

Mid-70s thru Late-80’s

Page 4: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

Basel 1

Proposed: 1986Effective: 1988

CreditRisk

Page 5: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

Basel I

1986 – Proposed minimum regulatory capital requirements for banks.

1988 – Capital requirements came into effect with minimum capital rising to 8% of risk adjusted assets by the end of 1992.

The capital calculation was intended to distinguish among assets by risk class, but did so in only the crudest fashion.

Page 6: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Overview of risk weights

The Basel I Approach

Claim

Sovereigns

Assessment

Corporates

Comm. Banks

OECD Non-OECD

0% 100%

20%

20%

100%

100%

OECD Non-OECD All

50%

Multi-National Development Banks

All

Secured ResidentialMortgages

Required data could largely be derived from financial reporting systems.

Page 7: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1935 1945 1955 1965 1975 1985 1995

Tota

l E

qu

ity

Cap

ital

to

To

tal A

sset

sBank Capital Ratios – 1935 - 1988

Depression thru WWII

Post-War Recovery thru early 1960s

Mid-60s thru Mid-70’s

Mid-70s thru Late-80’s

Page 8: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1935 1945 1955 1965 1975 1985 1995

Tota

l E

qu

ity

Cap

ital

to

To

tal A

sset

sBank Capital Ratios – 1935 - 1998

Depression thru WWII

Post-War Recovery thru early 1960s

Mid-60s thru Mid-70’s

Mid-70s thru Late-80’s

Late-80s forward

Page 9: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

Basel 1.5

Proposed: 1993Effective: 1998

CreditRisk

+

MarketRisk

Basel 1

Proposed: 1986Effective: 1988

CreditRisk

Page 10: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

April, 1993 – Initial “prescriptive” proposal.

April, 1995 – Proposed allowing use of internal market risk models for calculation of regulatory capital (subject to supervisory review and approval.)

Jan 1, 1998 - Market risk amendment took effect with internal VaR models as a major source of risk estimates.

Basel I

Market Risk Amendment

Page 11: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel Capital Accord – Brief History

Basel 1.5

Proposed: 1993Effective: 1998

CreditRisk

+

MarketRisk

Basel 1

Proposed: 1986Effective: 1988

CreditRisk

Basel 2

Proposed: 1999Effective: 2007

CreditRisk

(Enhanced)

+

MarketRisk

(No change)

+

Op Risk(New)

Key sources of required work for affected banks.

Page 12: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 13: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

By Country US JP AU JPBy Industry Finan Steel Chem

By Corporate Family Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Internal Region ProductLoans

EMEA Trade CreditDerivative TradingLoans

Asia Trade CreditDerivative TradingLoans

Americas Trade CreditDerivative Trading

Data Fragmentation

System Integration tends to be along internal regions and products.

Page 14: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

By Country US JP AU JPBy Industry Finan Steel Chem

By Corporate Family Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Internal Region ProductLoans

EMEA Trade CreditDerivative TradingLoans

Asia Trade CreditDerivative TradingLoans

Americas Trade CreditDerivative Trading

Data Fragmentation Credit Risk data requirements cut directly across

existing system fragmentation.

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Page 15: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

By Country US JP AU JPBy Industry Finan Steel Chem

By Corporate Family Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Internal Region ProductLoans

EMEA Trade CreditDerivative TradingLoans

Asia Trade CreditDerivative TradingLoans

Americas Trade CreditDerivative Trading

Data Fragmentation Credit Risk data requirements cut directly across

existing system fragmentation.

Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Page 16: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

By Country US JP AU JPBy Industry Finan Steel Chem

By Corporate Family Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Internal Region ProductLoans

EMEA Trade CreditDerivative TradingLoans

Asia Trade CreditDerivative TradingLoans

Americas Trade CreditDerivative Trading

Data Fragmentation Credit Risk data requirements cut directly across

existing system fragmentation.

Finan Steel ChemAlpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Page 17: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

By Country US JP AU JPBy Industry Finan Steel Chem

By Corporate Family Alpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Internal Region ProductLoans

EMEA Trade CreditDerivative TradingLoans

Asia Trade CreditDerivative TradingLoans

Americas Trade CreditDerivative Trading

Data Fragmentation Credit Risk data requirements cut directly across

existing system fragmentation.

US JP AU JPFinan Steel ChemAlpha Beta Gamma

Alp

ha

Ba

nk (U

S)

Alp

ha

Se

curitie

s Inc. (Ja

pa

n)

Be

ta S

tee

l Co

rp. (Ja

pa

n)

Be

ta C

he

mica

l Ltd

. (Au

stralia

)

Ga

mm

a C

he

mica

ls (Jap

an

)

Page 18: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Overview of risk weights

Credit Risk - Standardised Approach

Claim

Sovereigns

Assessment

Option 1

Option 2

Corporates

Banks

AAA to AA-

A+ to A-BBB+

to BBB-BB+ to B- Below B- Unrated

0% 20% 50% 100% 150% 100%

20%

20%

20%

50%50%

50% 100%

100%50%

100%

100%

150%

150%

150%

100%

100%

50%

AAA to AA-

A+ to A-BBB+to BB-

Below BB- Unrated

Required data must come from risk systems.

Page 19: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Credit Risk - IRB Approach

Regulatory capital = EAD x risk weight (f [PD, LGD, M]) x 8%

This implies an even greater need for data from risk systems rather than just financial systems.

Regulatory capital = EAD x risk weight (f [PD, LGD, M]) x 8%

Estimation of Probability of Default (PD) FoundatioFoundation n IRBIRB

Estimation of Exposure at Default (EAD)

Estimation of Loss given Default (LGD)Advanced Advanced IRBIRB

Regulatory capital = EAD x risk weight (f [PD, LGD, M]) x 8%

Page 20: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

The First Challenge: Data Integration

Consolidating exposure across products, regions and systems (by obligor or by risk characteristics.)

Maintaining clean and consistent legal entity and facilities definition data.

Integrating collateral, guarantees and other credit enhancement data with items 1 and 2.

Collection and maintenance of external historic data (market data, industry defaults, etc.)

Providing audit trails and reconciliation to source systems.

Archive facilities to refine analysis and validate results. Proper data security to limit unauthorized access.

Page 21: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

The Second Challenge: Analytics

Implementation of multiple sophisticated credit ratings models.– Scoring or Merton-style models for PD.– Behavioral models for EAD.– Structural and external conditions models for LGD.

Advanced economic capital allocation framework (Pillar II.)

Page 22: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Credit Exposure Map

Trading Exposure

Loans

Investments (HTM)

Traded Securities (MTM)

Residential Mortgages

Leases

Project Finance

Retail

Co

mm

erci

al

Pre-Settlement

Settl.

Ter

m

Term

Revol.

Rev

ol.

UnsecuredIlliquid Coll.Liquid Coll.

Page 23: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Additional Information and Analytics

Mkt Data

Vols &Correl

DefaultAnalytics

ExposureAnalytics

LGDAnalytics

Static Data

Legal &Netting

Guarantees

And

Collateral

Terms

Credit Ratings

Page 24: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Credit Exposure and Supporting Data

Trading Exposure

Loans

Investments (HTM)

Traded Securities (MTM)

Residential Mortgages

Leases

Project Finance

Retail

Co

mm

erci

al

Pre-Settlement

Settl.

Ter

m

Term

Revol.

Rev

ol.

Mkt Data

Vols &Correl.

Static Data

DefaultAnalytics

ExposureAnalytics

LGDAnalytics

Legal &Netting

GuaranteesCredit Ratings

Page 25: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Typical Existing Data Links

LineUnit 1

LineUnit 5

LineUnit 6

LineUnit 7

LineUnit 8

LineUnit 2

LineUnit 3

LineUnit 4

ControlUnit 4

ControlUnit 3

ControlUnit 2

ControlUnit 1

ControlUnit 5

Page 26: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Ideal Data Linkage Configuration

LineUnit 1

LineUnit 5

LineUnit 6

LineUnit 7

LineUnit 8

LineUnit 2

LineUnit 3

LineUnit 4

ControlUnit 4

ControlUnit 3

ControlUnit 2

ControlUnit 1

ControlUnit 5

• Content translation

XML Protocols FpML, NTM...

MiddlewareMQSeries, MINT...

• Bridging operating systems & network protocols

• Delivery and routing

Semantic Adapters

• Central repository for portfolio data and analytics

Page 27: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Practical Data Linkage Configuration

LineUnit 1

LineUnit 5

LineUnit 6

LineUnit 7

LineUnit 8

LineUnit 2

LineUnit 3

LineUnit 4

ControlUnit 4

ControlUnit 3

ControlUnit 2

ControlUnit 1

ControlUnit 5

• Content translation

• Central repository for portfolio data and analytics

• Bridging operating systems & network protocols

• Delivery and routing

Middleware

Data Mapping & Consolidation

Software

Page 28: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 29: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Evolution of Credit Risk Management

Credit Underwriting

1985 Portfolio Management

Credit Underwriting

Today

•Credit risk management was dominated by careful underwriting.

•The watchword tended to be “We only make good loans.”

•A portfolio management overlay.•Underwriting data feed portfolio management.

•Few data flow the other way.•Portfolio management is mainly strategic.

Page 30: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Evolution of Credit Risk Management

Portfolio Management

Credit Underwriting

Today

•A portfolio management overlay.•Underwriting data feed portfolio management.

•Little data flows the other way.•Portfolio management is mainly strategic.

In 5 to 15 Years

Portfolio Management

Credit Underwriting

•Data flow both ways.•The frequency and speed of data exchange accelerates dramatically.

•Portfolio analysis becomes a tactical decision support tool.

Page 31: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Data Map – Wholesale Finance

Retail

Co

mm

erci

al

Pre-Settlement

Settl.

Ter

m

Term

Revol.

Rev

ol.

Mkt Data

Vols &Correl.

Static Data

DefaultAnalytics

ExposureAnalytics

LGDAnalytics

Legal &Netting

GuaranteesCredit Ratings

Trading Exposure

Loans

Investments (HTM)

Traded Securities (MTM)

Residential Mortgages

Leases

Project Finance

Page 32: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Support for Tactical Decisions

Proposed Credit Facility

RAROC Implications(Including Portfolio Effects)

- Current RAROC

- Credit Enhancement Options

- RAROC Sensitivity

- Minimum Terms

Page 33: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Trading Exposure

Loans

Investments (HTM)

Traded Securities (MTM)

Residential Mortgages

Leases

Project Finance

Data Map - Trading Credit

Mkt Data

Vols &Correl.

Static Data

DefaultAnalytics

ExposureAnalytics

LGDAnalytics

Legal &Netting

GuaranteesCredit Ratings

Retail

Co

mm

erci

al

Pre-Settlement

Settl.

Ter

m

Term

Revol.

Rev

ol.

Page 34: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Simulation-Based Trading Credit Exp.

Limit Query

Trading Systems

Trade Entry

Portfolio Trade Data

Fast AnalyticExposure Calculator

Before & After Exposure Profiles and Limits

Marginal Credit Loss and Credit Capital Charges

Real-Time Process

Credit Risk Server

Summary Trade Data

Middleware & XML Messages

Page 35: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 36: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Needed Components for a Basel II Credit Solution

Data Consolidation

and Quality Control

Credit Rating Models

(PD, EAD, LGD)

Credit rating workflow

• static customer data

• financial statements

• credit ratings

Operational credit systems

environment

Loans, limits, exposure analytics, etc.

IRB regulatory and economic

capital calculations &

validation framework

Internal and external reporting

Page 37: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Basel II Credit Risk Architecture Overview

Exposures

Collateral

Exposures

Trading/Banking Book (Corp./Banks/Sov.)

Banking book: SME / Retail Book

Credit system

Credit system

Collateral

B2 CapitalCalculator

Internal Credit Rating

Systems

PD, EAD, LGD

Ratings and Loss Data

Regulatory Capital

CalculationsRegulatoryReporting

RegulatoryCapital

Validation Framework

RegulatoryValidationReports

Historical Data

Analysis

InternalReporting

EconomicCapital

Calculations

EconomicCapital

Allocation

Tactical Decision Support

B2

Da

ta Co

ns

olid

ator

Page 38: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 39: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Buy vs. Build & the Software Life Cycle

Software has a life cycle like all other products

CommoditizedProprietaryBreadth of

Usage

All

Few

Cost

High

Low

maturity

Dangerous Position

You Competitors

Page 40: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

Agenda

1. Introduction – A Brief History of the Basel Accord

2. Data Issues and Technology Challenges

3. Support for Broader Trends in Risk Management

4. Solution Components to Manage Credit Risk Under Basel II

5. The Buy vs. Build Decision

6. Importance of Communication

Page 41: The World Bank The World Bank Risk Architecture in a Basel-II World Presented to the World Bank Risk Management Seminar Washington, D.C. May 18, 2004 Presented

The World Bank

The Third Challenge: Communication

Keeping the credit underwriters on board.

Providing information support for informed credit judgments.

Make validation constructive not threatening.

The motto should be:

Technology in Support of Sound Judgment