New Risk Management

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Economic events have broadened risks to be managed. Treasury has more risk management responsibilities. There are more focus on treasury to:
Perform proactively
Collaborate internally
Scale globally

There are heightens need for technology to deliver:
Visibility
Automation
Sophistication
Integration

New technology tools and platforms make integration easier.Multiple systems can feel like one system
Single Sign On (SSO)
Web Services (or similar)

Download the PPT to learn more.

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New Risk Management

  1. 1. The New Risk Management© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL. © 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  2. 2. The New Risk Management TABLE OF CONTENTS 1) Broadened Risk Management 2) The New Risks 3) Risk Management Capabilities – Process – Technology 4) Summary & Questions© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  3. 3. Broadened Risk Management Source: Accenture 2011 Global Risk Management Study© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  4. 4. Broadened Risk Management • Risk Management used to be protecting against changes in FX, Interest Rates, Commodities Then we started paying more attention to… • 2002 – Internal controls • 2008 – Liquidity and Counterparties • 2011 – Supply Chain© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  5. 5. Broadened Risk Management 1) Foreign Exchange Risk 2) Interest Rate Sensitivity 3) Liquidity Risk 4) Counterparty Risk 5) Operational Risk 6) Supply Chain Risk© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  6. 6. The “New Risks” Foreign Exchange Risk What is new? • Globalization – More revenues/costs exposed to foreign currency • Stakeholder scrutiny – FX gains/losses no longer tolerated post FAS133 • Rate volatility – Increases justification for effective hedging© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  7. 7. The “New Risks” Interest Rate Sensitivity What is new? • Interest Rates fairly flat • Credit spreads are bigger – Due to risk management concerns of lenders© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  8. 8. The “New Risks” Liquidity Risk • “The risk of not knowing what you need to know” (a.k.a. Lack of Visibility) • Since 2009 – Effective Cash Forecasting #1 or #2 Risk Management Priority • Why?© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  9. 9. The “New Risks” Liquidity Risk • “The risk of not knowing what you need to know” (a.k.a. Lack of Visibility) • Since 2009 – Effective Cash Forecasting #1 or #2 Risk Management Priority 1) If you don’t know where cash is, don’t know what risks it is exposed to 2) If you can’t plan ahead, you are reacting© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  10. 10. The “New Risks” Counterparty Risk • If not the biggest priority, it’s #2 • 2008 surprised us with unforeseen failures and retrenchments – Tightening of liquidity → downstream and lasting effect on risk perceptions – Inclusion of CVA measure in FAS157 great example of change in actions – Demand for Total Exposure by Bank reporting© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  11. 11. The “New Risks” Operational Risk • Sarbanes-Oxley made us care about controls • Some say nothing new introduced – just a “new” reason to focus on the accountability stakeholders already expected • Many adopted (or updated) technology to satisfy SOx 302/404 – Increased concerns about spreadsheets© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  12. 12. The “New Risks” Supply Chain Risk • Risk of SC disruption more strategic concern • Treasury becoming more responsible for the Financial Supply Chain • Many supply chain risks are beyond Treasury • What can be controlled → Supply chain disruptions due to lack of liquidity – Enter: Supply Chain Finance© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  13. 13. What Do We Do? • Accenture study: 10% of organizations are “Risk Masters”  Risk Management capabilities superior to their peers  Viewed Risk Management as driver of business benefit (more so than their peers)© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  14. 14. What are Risk Management Capabilities? = Combination of Process and Technology Examples • Collaboration across teams • Increased sophistication of modeling • Going beyond compliance • Integration across business units • Visibility across the business • Invest in continuous improvement© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  15. 15. What are Risk Management Capabilities? = Combination of Process and Technology Business Benefits cited by “Risk Masters” • Collaboration across teams • Increased sophistication of modeling • Going beyond compliance • Integration across business units • Visibility across the business • Invest in continuous improvement© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  16. 16. What Do We Do? • Accenture study: 10% of organizations are “Risk Masters”  Risk Management capabilities superior to their peers  Viewed Risk Management as driver of business benefit (more so than their peers)© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  17. 17. What Do We Do? • Accenture study: 10% of organizations are “Risk Masters”  Viewed Risk Management as driver of business benefit (more so than their peers)  Risk Management capabilities superior to their peers© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  18. 18. What are Risk Management Capabilities? = Combination of Process and Technology Business Benefits cited by “Risk Masters” • Collaboration across teams • Increased sophistication of modeling • Going beyond compliance • Integration across business units • Visibility across the business • Invest in continuous improvement© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  19. 19. What are Risk Management Capabilities? = Combination of Process and Technology Technology is an enabler 1) Productivity 2) Facilitate Changes in…process, workflow, policies  Visibility into exposures  Measurement tools  Reliability© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  20. 20. Broadened Risk Management 1) Foreign Exchange Risk 2) Interest Rate Sensitivity 3) Liquidity Risk 4) Counterparty Risk 5) Operational Risk 6) Supply Chain Risk© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  21. 21. Risk Management Capabilities Foreign Exchange (& Commodities) 1) Process 2) Technology • Identify Exposures • ERP • Net Exposures • Treasury Mgmt Systems • (efficiently) Hedge • Risk Mgmt Systems • Measure Effectiveness • Spreadsheets* 3) Objectives  Full visibility  Integration  Automation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  22. 22. Risk Management Capabilities Interest Rate Sensitivity 1) Process 2) Technology • Identify Exposures • Risk Mgmt Systems • Measure Sensitivities • Treasury Mgmt Systems • Hedge or not to Hedge • Market Data Source • Measure Effectiveness • Spreadsheets* 3) Objectives  Full visibility  Integration  Automation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  23. 23. Risk Management Capabilities Liquidity 1) Process 2) Technology • Actuals • ERP • Forecast • Treasury Mgmt Systems • History • Bank Portals/SWIFT • Measure Accuracy • Spreadsheets* 3) Objectives  Full visibility  Integration  Automation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  24. 24. Risk Management Capabilities Counterparty 1) Process 2) Technology • Exposures* • Banking Portals • Counterparties • Treasury Mgmt Systems • Market Data/Metrics • Trading Systems • Consolidated Reporting • Spreadsheets* 3) Objectives  Full visibility  Integration  Automation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  25. 25. Risk Management Capabilities Operational 1) Process 2) Technology • Processes • Not manual • Duties • No re-keying • Controls • Not spreadsheets* 3) Objectives  Documented  Auditable  Controlled© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  26. 26. Risk Management Capabilities Supply Chain 1) Process 2) Technology • Supply Chain Finance • Bank SCF Platform • Multi-Bank SCF Platform 3) Objectives  Full visibility  Integration  Automation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  27. 27. Risk Management Capabilities Supply Chain Finance SCF is actually three things: 1) Mechanism to improve working capital of suppliers (and reduce risk of disruption) 2) Technique to extract liquidity from the supply chain 3) Opportunity to standardize terms to suppliers© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  28. 28. Risk Management Capabilities Supply Chain Finance Reducing Risk of Disruption – SCF programs offer early payment at better rate than (smaller) supplier could get on their own – If suppliers need cash to “keep going”, SCF probably their best option – Can support growth too • For high growth suppliers, decreasing DSO means more rapid investment and scalability (e.g. Apple)© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  29. 29. Risk Management Capabilities Supply Chain Finance SCF is actually three things: 1) Mechanism to improve working capital of suppliers (and reduce risk of disruption) 2) Technique to extract liquidity from the supply chain 3) Opportunity to standardize terms to suppliers© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  30. 30. Summary • Economic events have broadened risks to be managed • Treasury has more risk management responsibilities • More focus on treasury to: – Perform proactively – Collaborate internally – Scale globally© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  31. 31. Summary • Heightens need for technology to deliver: – Visibility – Automation – Sophistication – Integration© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  32. 32. Summary • New technology tools and platforms make integration easier • Multiple systems can feel like one system – Single Sign On (SSO) – Web Services (or similar)© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL.
  33. 33. Questions? treasury@kyriba.com kyriba.com 1-855-KYRIBA-0 twitter.com/kyribacorp linkedin.com/company/kyriba-corporation© 2012 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL. 33

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