How to create Allocation Schemes in SAS Asset and Liability Management on Viya

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You are planning a dinner party and you have decided to order pizza for everyone. You know you need 5 pizzas total, but how do you decide what types to get? Maybe 2 pepperoni, 2 veggie, and 1 Hawaiian?

That decision-making process is exactly what allocation schemes do in banking, they help you decide how to split up your planned growth across different products.

The purpose of this post is to walk you through the step-by-step process of creating allocation schemes in SAS Asset and Liability Management on Viya, using simple non-jargon language and practical examples that make this complex banking concept easy to understand and implement.

What is an Allocation Scheme anyway?

Consider your bank's future growth plan like that pizza order. Your business evolution plan tells you "we need 5 more pizzas for our party" (or in banking terms, "we need $100 million more in loans"). But the allocation scheme is what decides "2 should be pepperoni, 2 veggie, and 1 Hawaiian" (or "50% should be mortgages, 30% auto loans, and 20% personal loans").

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In SAS Asset and Liability Management on Viya, allocation schemes work hand-in-hand with business evolution plans. The business plan says how much you want to grow, and the allocation scheme says exactly where that growth should go.

The setup

Before you can create an allocation scheme, you need a business evolution plan already set up. Just like needing to plan a party before you can decide what pizza to order.

More information on how to setup a Business Evolution Plan can be found in an earlier post here.

Anyway, back to our allocation scheme. Here's how to create one:

Step 1: Navigate to Allocation Schemes screen

• Open SAS ALM on Viya
• Select "Allocation Schemes" object on the left panel
• Click the "+" button to create a new one

Step 2: Basic information Just like naming your dinner party, you need to give your allocation scheme a name and description. Keeping it simple by using something like "Q1_2025_Growth_Plan" works great.

You also need to pick whether this is for testing (Developing), or ready to use (Production). If you're just learning, stick with Developing for now.

Step 3: Link to your business evolution plan This is where you connect your allocation scheme to your business plan. It's like saying "this pizza order is for Saturday's party, not Sunday's game night."

The fun part: setting up your allocation

Now comes the interesting bit which is deciding how to split things up. In the Weights tab of the allocation scheme screen, you can see all the different segments from your business evolution plan that need growth. Think of these as different groups of friends at your party, some want meat lovers, others want veggie.

Understanding segments Your business evolution plan might have created segments like:

• Fixed rate mortgages
• Variable rate mortgages
• Auto loans
• Personal loans

For each segment that's set to grow, you need to decide how that growth gets spread across specific products.  You can do this in the Allocation Type column.

Making your choices You will see two main ways to allocate:

1. Equal distribution - Split everything evenly, like cutting a pizza into equal slices
2. Custom weights - You decide the exact percentages, like giving your vegetarian friends more veggie pizza

Most banks start with equal distribution and then adjust based on what makes sense for their strategy.

The Segments Overview

This table view style shows you which parts of your business evolution plan need allocation decisions. You'll see columns like:

• Segment Name: Shows combinations like "USD/Fixed Rate Mortgages" or "EUR/Auto Loans"
• Target Type: Displays "Growth/Liquidation" for segments that need allocation
• Planning Currency: Shows the currency for that segment
• Target Variable: Indicates what's growing (like "Ending Book Balance")
• Allocation Type: Select the allocation type

Some tips from the field

Start simple: Don't try to get fancy on your first allocation scheme. Pick a few main products and split growth between them evenly. You can always create more detailed versions later.

Think seasonal: Just like you might order more hearty pizzas in winter, banks often adjust their allocation schemes based on market conditions. Create different schemes for different scenarios.

Test first: Always create your allocation scheme in "Developing" mode first. Run some test scenarios to make sure the results make sense before moving to production.

Document everything: Future you (and your colleagues) will thank you for clear names and descriptions. "Mortgage_Growth_Q1" is much better than "Test_123".

Common pitfalls to avoid

The 100% Trap: Your percentages don't have to add up to exactly 100%. SAS ALM will normalize them for you. So if you put 30%, 30%, and 20% for three products, it'll automatically adjust to make the math work.

The zero weight problem: Make sure at least one product in each segment has a weight greater than zero. Otherwise, you're basically saying "grow this segment but don't actually add any products" - which doesn't make much sense!

The forgotten connection: Always double check that your allocation scheme is connected to the right business evolution plan. It's like making sure you are ordering pizza for the right party.

Conclusion

Creating allocation schemes in SAS ALM on Viya is about being smart about how to grow your bank's business. Start with the basics, test run your plan, and don't be afraid to adjust as you learn more about what will work best for your organization.

The greatest thing about SAS ALM is that you can create a number of different allocation strategies and compare. Try different approaches, see what the figures tell you, and pick the technique that suits your bank's needs best.

Imagine it this way: there is no perfect allocation plan, no more than there is a perfect pizza order for any party. The idea is to understand your audience (your market), your goals (profitable growth), and your constraints (risk), and based on that, make the best of what you got.

Ready to start the party? Then start SAS ALM on Viya and start testing. The pizza isn't going to order itself!

For more information and documentation of SAS Asset and Liability Management on Viya please access the following link

Find more articles from SAS Global Enablement and Learning here.