5.3.3.2.2 Creating a Forecast Balance Rule

To create a new Forecast Balance rule, complete the following steps:

Figure 5-160 Create Forecast Balance Rule

1. Click the Add on the Forecast Balances summary page to add a new rule.
2. Enter the following Details.

   Table 5-43 Create Forecast Balance Rule

   Fields	Description
   Name	Enter the name of the Forecast Balance Rule.
   Description	Enter the description of the Forecast Balance Rule. This is an optional field.
   Folder	Select the Folder where the Forecast Balance Rule needs to be saved.
   Access Type	Select the Access Type as Read-Only or Read/Write.
   MDBSS Folder	Select the MDBSS folder
   MDBSS Hierarchy	Select the MDBSS hierarchy
   Time Bucket Folder	Select the Folder from which you want to apply Time Bucket Rule.
   Time Bucket Rule	Select the time horizon/aggregation for rule. Assumptions that you define when creating a forecast balance are based on a specific modeling horizon, which is defined in the Time Buckets. Example If you define a forecast balance based on a Time Bucket with a monthly modeling horizon, your results are calculated in monthly time periods. If you redefine that same forecast balance, using a different time bucket with a weekly modeling horizon, your results are calculated in weekly time periods. If assumptions in your Forecast Balance are based on a modeling horizon that is different from the horizon defined in the active time bucket, inaccurate data will result. You should verify that date-sensitive rules are consistent with the active Time Bucket.
   Currency	Select the currency for Forecast Balance

   Note:

   If any member is a currency in the MDBSS hierarchy (for example, INR) and selected currency is different (for example USD), then the member and its children nodes cannot be defined.

3. Select the MDBSS node(s) from Assumption Browser. The Assumption Browser has following two tabs: Member Tree and Search Results
   • Member Tree: Use the Member Tree tab to view the hierarchical structure and define rules by selecting the node members from the browser. Select Node and click the menu icon next to it to view the available options. Select Node and Click Menu icon next to it to view the available options.

     Figure 5-161 Member Tree

     
     

     

     
     

     Status of node is also displayed in Member Tree section, for example Selected, and so on. To select member hierarchy, following options are available:

     • Expand self, child and descendants: Allows to expand the selected node itself along with its child and descendants.
     • Expand selected member/branch: Allows to expand the selected node
     • Select UnSelect self, child: Allows to unselect the selected node itself along with its child
     • Select UnSelect self, child and descendants: Allows to unselect the selected node itself along with its child and descendants.
     • Select Defined self, child: Allows to select the selected node itself along with its child.
     • Select Defined self, child and descendants: Allows to select the selected node itself along with its child and descendants.
     • UnSelect self, child and descendants: Allows to unselect the selected node itself along with its child and descendants.

     Use Show Numeric Code Values (Left) icon to view the code value left to the Node name.

     Use Show Numeric Code Values (Right) icon to view the code value right to the Node name.

     Here, you can perform the following tasks on the selected node(s):

     • Add
     • Edit
     • View
     • Delete
     • Copy
   • Search Results: You can also search the members based on the filters. This section shows the searched node(s). To search a member, follow these steps:
     1. Navigate to Assumption Browser section of the Rule Definition page.
     2. Enter the Member ID, Name, Status, or Is Leaf in Search Criteria.

        Figure 5-162 Search Criteria

        
        

        

        
        
     3. Click Search. The searched member(s) will be displayed in Search Results section of Assumption Browser

        Figure 5-163 Searching Members

        
        

        

        
        

        Here, you can perform the following tasks on the searched node(s):

        • Add
        • Edit
        • View
        • Delete
        • Copy

     Click Show Parentage icon to view the Parent-child Node level hierarchy details of selected Node.

     Use Show Numeric Code Values (Left) icon to view the code value left to the Node name.

     Use Show Numeric Code Values (Right) icon to view the code value right to the Node name.

4. Select Forecast Balance Method from Method drop-down.
5. Select the predefined Rate Dependency Pattern from Rate Dependency Pattern drop-down. Else, click corresponding Action button to create new Rate Dependency Pattern, edit Rate Dependency Pattern, or view Rate Dependency Pattern. There are four rate-volume options to choose from:
   • No Relationship

     If you want new business amounts to stay constant regardless to the interest rate environments, select this option.

   • Rate-Level Dependent
     The Rate-Level dependent relationship allows you to change new business behavior for different values of a single indicator interest rate. The indicator interest rate, referred to as the Base Interest Rate, is defined by an Interest Rate Code, a term selection, and a rate lag.

     • Interest Rate Code: The Interest Rate Code identifies the reference yield curve or rate index whose forecasted value determines the new business amount. You can select the Interest Rate Code from all available interest rate codes for the selected currency, as defined within Rate Management. The list of Interest Rate Codes includes only codes with a reference currency equivalent to the currency selected in the Floating Tree Bar.
     • Term Selection: If the selected Interest Rate Code is a yield curve, you must also select a term. Your term choices depend on the definition of the Interest Rate Code within Rate Management. Note that the selection automatically defaults to the shortest available term.
     • Rate Lag: If you want the base interest rate calculation to perform a look back function, you can input a rate lag. The new business assumption lookup uses the forecasted interest rates as of a date within the current modeling bucket less the rate lag. If the timing of new business is End of Bucket, the lookup function uses the last day of the modeling bucket less the rate lag. For all other cases, the mid-point of the bucket less the rate lag is used.
   • Rate-Spread Dependent

     With the Rate-Spread dependent relationship, you can input new business assumptions for different spreads between two indicator interest rates, or a spread between two term points on the same yield curve. You define the first indicator interest rate, the Base Interest Rate, as described previously. The second indicator interest rate, the Alternate Interest Rate, also requires definition of an Interest Rate Code, a term selection, and a rate lag.

     The rate spread equals the Alternate Interest Rate minus the Base Interest Rate.

   • Economic Indicator Dependent
     With the Economic Indicator Dependent relationship, you can input new business assumptions related to defined economic indices (as defined in Rate Management), where the change in the index will drive a different outcome of new business. For example, you can forecast a higher GDP and tie the new business assumptions to that particular forecast.

     • Rate Tiers: The Rate Tiers tab will become available to edit when one of the following three rate volume relationships have been selected (Rate Level, Rate Spread, and Economic Indicator). Once you have selected a rate-volume relationship and defined your base and alternate interest rates, you must define rate tiers. Rate tiers provide the lookup values for which different new business assumptions can be input.
     • Lookup Method: The lookup method determines which new business assumption is selected from the input values when the forecasted interest rate falls between two rate tiers. There are two methods to choose from:

       Interpolate: Specify Interpolation as the lookup method if you want the application to interpolate add-on rate values for applicable reference terms falling between node points specified in the Adjustments rule, using straight line interpolation between the term points.

       Range: If you select Range, Oracle ALM selects the new business assumption as the closest assumption associated with the rate tier which is less than or equal to the forecasted interest rate.

6. Click Add from Assumption Browser section.
7. Click Save.