Creating accurate projections for your bank's balance sheet can be challenging when different departments have varying growth expectations. Without a structured method, this process often becomes based on educated guesses rather than data.
SAS ALM on Viya offers the Business Evolution Plans (BEP) functionality as a solution to this exact problem. A BEP lets you build a framework for projecting balance sheet changes over time, adding structure and analytical precision to your planning process.
The purpose of this post is to guide you through creating a Business Evolution Plan in SAS ALM on Viya, explaining both the steps and the reasoning behind them.
What is a Business Evolution Plan?
A Business Evolution Plan specifies how target variable values (such as book value or par value) change over specific time intervals for each segment of your portfolio.
BEP’s help you:
- Project balance sheet growth or reduction over time
- Assess how changing portfolio composition affects risk metrics
- Model new business strategies and their impact on your balance sheet
- Combine business changes with risk factor changes (when used with scenarios)
The BEP is basically a structured blueprint that transforms strategic plans into concrete projections you can analyze for risk, profitability, and compliance.
What are target variables?
Target variables in a Business Evolution Plan are the specific financial metrics you want to track and project over time. They are the vital signs you monitor when planning your balance sheet's future.
Imagine you are planning a garden. You could focus on different aspects such as:
- The number of plants (similar to tracking number of accounts)
- The height of your plants (similar to tracking par balance)
- The value of produce you will harvest (similar to tracking book balance)
- The value of your entire garden (similar to tracking market value)
Each of these measurements tells you something different about your garden's growth. Similarly, in SAS ALM, you might choose:
- Book Balance - The accounting value of your instruments
- Par Balance - The face value of your instruments
- Market Value - The current worth based on market conditions
The target variable you select becomes the focus of your growth projections. For instance, if you choose Book Balance, all your growth rates will apply to this value, just as a gardener might focus specifically on increasing the total number of vegetables harvested rather than just the number of plants.
Creating a Business Evolution Plan in SAS ALM on Viya
Step 1: Access the Business Evolution Plan business object
- Log in to your session of SAS Asset and Liability Management on Viya
- Go to Business Evolution Plans in the left menu
- Click the "Create New" button
Step 2: Define the Basic Parameters
In the Details tab, provide:
- Business evolution plan ID: A unique identifier
- Name: A descriptive name (e.g., "Mortgage Growth 2025-2030")
- Description: Context about the plan purpose and assumptions
- Interval: Select the time unit (Monthly, Quarterly, Yearly, or IRRBB)
Choose an interval that fits your analysis needs:
- Monthly for detailed short-term forecasting
- Quarterly for medium-term planning (common for banking analysis)
- Yearly for long-term strategic planning
- IRRBB for regulatory reporting using standard time buckets
If you select Monthly, Quarterly, or Yearly, you will need to set an Interval count to determine the projection timeframe.
Step 3: Select Your Planning Data and Currency
- Planning currency: The currency for growth projections (typically your main operating currency)
- Planning data: The portfolio data for your starting values
- Hierarchy data: Usually synthetic instrument data defining available segments
For planning data, you can choose:
- The original or adjusted portfolio table from your data quality process
- The Portfolio Summary table from your Portfolio Preview task
Tip: If you want to use Market Value as a target variable, select the Portfolio Summary table, as it contains market values calculated at time zero.
Step 4: Define your segmentation strategy
This step determines how you will segment your portfolio:
- In Variable 1, select your primary segmentation variable (e.g., Product Type, Currency)
- Add optional secondary segmentation variables in columns 2-5 for more detail
- Select a Target Variable for each segment (e.g., Current Book Balance, Market Value)
- Choose a Target Type for each segment:
- Growth/Liquidation: For segments with new business
- Growth/Liquidation and Rollovers: For segments with both new business and maturing positions
- Runoff: For products being phased out (no new business)
- Static Balance: To maintain consistent balance
-
Select a Target Definition (Incremental Change or Annualized Percent Change)
The strength of this approach is flexibility because you can set different strategies for different portfolio segments.
For example:
- Static Balance for established products
- Growth/Liquidation for expansion areas
- Runoff for discontinued products
Note: At least one segment must use Growth/Liquidation or Growth/Liquidation and Rollovers for a valid plan.
How to make your life easier using import/export functionality
After the initial setup:
- Click export to download your BEP structure as an Excel file
- Enter growth projections for each segment across all time periods
- Save the Excel file
- Return to the BEP screen in SAS ALM and click import to bring in your completed projections
- Save and close the BEP
This Excel workflow makes it easy to gather input from various business units.
Few tips to consider while creating your Business Evolution Plans
- Align with strategic plans: Your BEP should reflect your bank official growth strategy.
- Start simple: Begin with basic segmentation (by product type and currency), then add detail as needed.
- Document assumptions: Use description fields and naming conventions to record key assumptions.
- Create multiple plans: Develop several BEPs (conservative, base case, aggressive) for stress testing.
- Pair with risk scenarios: Combine your BEP with interest rate scenarios to see how growth plans perform in different rate environments.
- Update regularly: Review and update your plans quarterly or at least annually.
Common pitfalls to avoid
- Too much segmentation: Using all five segmentation variables often creates overly detailed projections that become hard to maintain.
- Mixed target variables: Using different target variables across similar segments can produce inconsistent results.
- Missing or wrong allocation schemes: A BEP defines segment-level projections, but you still need an allocation scheme to distribute growth within segments. (we will discuss Allocation Schemes in the next post)
- Extreme growth rates: Unrealistic projections can lead to questionable risk metrics. Check your projections against historical data and market conditions.
Conclusion
Business Evolution Plans provide a structured approach to balance sheet forecasting in SAS ALM on Viya. By following these steps, you can transform growth plans into clear projections that feed directly into your risk analysis.
A good BEP combines your institution's strategic vision with solid analytical practices for proper risk management.
Have you used Business Evolution Plans in your ALM processes so far? What results have you seen?
Share your experiences below!
For more information, see the SAS ALM documentation.
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