Enterprise pricing policies are crucial for risk mitigation. Inconsistent valuation models and data inputs across business units can impact risk exposure and capital requirements. Experts recommend firms establish codified pricing methodologies and committees with risk managers to ensure one view of instruments firmwide and enable backtesting of new products. While progress has been made, some firms still lack fully integrated enterprise pricing policies.
The document presents a framework for implementing social CRM in the Swiss banking sector to address challenges around losing customer loyalty and trust. It discusses relevant theories around social media, CRM, and social CRM to formulate a research question. The research design section outlines the scope, variables, sample, data collection and analysis methods used to generate a social CRM framework for the banking industry.
This document discusses the evolving landscape of enterprise compliance solutions. It notes that compliance has become a top priority for companies due to the large number of regulations they must address. While many vendors offer point solutions that focus on specific compliance areas, the document argues that companies need integrated platforms that can manage compliance across the entire enterprise in a consistent manner. It outlines key components that should be included in comprehensive compliance solutions and governance, risk, and compliance programs. Finally, it presents models for how compliance solutions can take a holistic "top-down/bottom-up" approach to better meet enterprises' evolving needs.
Independent analysis by The Optera Group found that banks using Microsoft Dynamics CRM saw tangible benefits including improved marketing, operations, and risk management. Six banks profiled showed how Dynamics CRM helped optimize existing customer relationships, drive efficiency, and cut costs through real-time data visibility, automated processes, and enhanced customer experience. The flexible software integrated with legacy systems and supported growth through mergers.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies previously focused on bottom-line profitability, most now aim for sustained profitable growth. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to get better, such as consolidating spending and adapting employee spending behaviors.
This document is a report that summarizes the results of a survey of 325 senior finance executives at small and midsize companies regarding cost management in the economic recovery. It finds that companies are taking a cautious, low-risk approach to growth focused on continuous cost improvement. Finance functions have become more influential in cost savings efforts. Executives plan to achieve more expansive cost savings through continuous monitoring of expenses. The sponsor's perspective is also discussed.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies previously focused on bottom-line profitability, most now aim for sustained profitable growth balancing top and bottom lines. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to further consolidate spending and help employees adapt spending behaviors.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies relaxed their focus on profitability, most aim for sustained profitable growth going forward. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to get better, especially in vendor consolidation and adapting employee spending behaviors.
The document presents a framework for implementing social CRM in the Swiss banking sector to address challenges around losing customer loyalty and trust. It discusses relevant theories around social media, CRM, and social CRM to formulate a research question. The research design section outlines the scope, variables, sample, data collection and analysis methods used to generate a social CRM framework for the banking industry.
This document discusses the evolving landscape of enterprise compliance solutions. It notes that compliance has become a top priority for companies due to the large number of regulations they must address. While many vendors offer point solutions that focus on specific compliance areas, the document argues that companies need integrated platforms that can manage compliance across the entire enterprise in a consistent manner. It outlines key components that should be included in comprehensive compliance solutions and governance, risk, and compliance programs. Finally, it presents models for how compliance solutions can take a holistic "top-down/bottom-up" approach to better meet enterprises' evolving needs.
Independent analysis by The Optera Group found that banks using Microsoft Dynamics CRM saw tangible benefits including improved marketing, operations, and risk management. Six banks profiled showed how Dynamics CRM helped optimize existing customer relationships, drive efficiency, and cut costs through real-time data visibility, automated processes, and enhanced customer experience. The flexible software integrated with legacy systems and supported growth through mergers.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies previously focused on bottom-line profitability, most now aim for sustained profitable growth. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to get better, such as consolidating spending and adapting employee spending behaviors.
This document is a report that summarizes the results of a survey of 325 senior finance executives at small and midsize companies regarding cost management in the economic recovery. It finds that companies are taking a cautious, low-risk approach to growth focused on continuous cost improvement. Finance functions have become more influential in cost savings efforts. Executives plan to achieve more expansive cost savings through continuous monitoring of expenses. The sponsor's perspective is also discussed.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies previously focused on bottom-line profitability, most now aim for sustained profitable growth balancing top and bottom lines. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to further consolidate spending and help employees adapt spending behaviors.
Small and midsize companies are experiencing some recovery from the economic downturn but expect only modest improvement in business prospects over the next year. Most companies are pursuing relatively low-risk growth strategies like increasing market penetration of existing products rather than riskier strategies. While companies relaxed their focus on profitability, most aim for sustained profitable growth going forward. Finance executives believe maintaining a lean cost structure will provide an important competitive advantage as the recovery continues. Companies have improved at managing costs over the past two years but see opportunities to get better, especially in vendor consolidation and adapting employee spending behaviors.
The document discusses different types of instructional media products including virtual reality simulations, children's math games, tutorials, and presentations. Virtual reality simulations can include visual and auditory elements to make the experience more immersive, such as images of skydiving and parachute equipment. Children's math games can be interactive tutorials or drills where the user drags numbers or gets help via instructions. Presentations can be given via PowerPoint where the user controls moving to the next slide or returning to a previous one.
Presentation to American Marketing Association Lincoln Chapter
Cause Camp
Friday, February 24, 2012
Tips on how to create social media community of advocates, advocacy tools, etc.
This document summarizes a lung cancer advocacy organization's campaign to raise awareness about lung cancer. The organization launched a campaign with the message "No One Deserves to Die" to change perceptions and have an attention-grabbing message on a small budget. They redesigned their brand identity and launched creative ads on social media and websites. The campaign was a success, generating over 300 million impressions and significantly increasing engagement on social media and web traffic.
The document discusses network management systems and their components. It describes the Simple Network Management Protocol (SNMP) which aggregates device information and presents it graphically. It also discusses the Network Management System (NMS) hardware and software that monitors and administers networks, providing performance, inventory and traffic information. Finally, it mentions the Management Information Base (MIB) which contains information about managed network devices that is accessible to SNMP programs.
The document discusses the novel Perfume by Patrick Süskind and provides context about the author and historical era in which the novel is set. It poses questions about connections between the author and his reclusive nature. The opening of the novel and the significance of setting it in 18th century France are also examined. Students are asked to discuss what is known about this historical era in terms of events and philosophers through a jigsaw activity. Finally, comparisons are made between how authors use settings to develop their narratives.
The document summarizes a conversation between Cindy Hill, Dale Stanley and Guy St. Clair about future trends in knowledge management and knowledge services. Some of the key trends they discuss include the growth of social media and networking, increased integration of content both internally and from vendors, the rise of smartphones and mobile access to information, and more emphasis on discovery and self-service models of support. The group advocates that knowledge professionals stay abreast of emerging technologies and tools to better incorporate new trends into their workplaces and continue providing strategic value.
The document discusses asset liability management (ALM) in today's environment, outlining key ALM concepts, techniques, and processes. It explains that ALM establishes a framework for insurers to measure and manage risks from their asset and liability portfolios as well as the interaction between the two. The document also provides an overview of typical ALM techniques like duration matching, key rate duration matching, and cash flow matching along with important considerations around liquidity, capital, and regulatory risks.
Multiple Dimensions of Pricing Sophisticationguestc9708f8
The document discusses the multiple dimensions of pricing sophistication for property and casualty insurance companies. It identifies five key dimensions - data, modeling approach, rating plan design, competitive sensing, and pricing strategy. The document provides a spectrum for each dimension, ranging from low to very high sophistication. It explains where different companies may fall along each spectrum based on their capabilities and resources. The goal is to provide insurers a framework to evaluate their own sophistication and identify areas for improvement.
Multiple Dimensions of Price Sophisticationguestc9708f8
This document discusses the dimensions of pricing sophistication in property and casualty insurance. It identifies five critical dimensions along which a company's pricing sophistication can be evaluated: 1) data - the type, volume, and quality of data collected; 2) modeling approach - how data is analyzed; 3) rating plan design - how ratings and prices are determined; 4) competitive sensing - understanding competitors; and 5) pricing strategy - how sophistication aligns with business goals. More sophisticated insurers are able to leverage larger and higher quality datasets and more advanced analytical techniques to optimize their rating plans, gain competitive insights, and better align prices with business strategy.
Multiple Dimensions of Price Sophisticationcwhurst
This document discusses the dimensions of pricing sophistication in property and casualty insurance. It identifies five critical dimensions along which a company's sophistication can be evaluated: 1) data - the type, volume, and quality of data collected; 2) modeling approach - how data is analyzed; 3) rating plan design - how ratings and prices are determined; 4) competitive sensing - understanding market dynamics; and 5) pricing strategy - how sophistication aligns with business goals. More sophisticated insurers are able to leverage richer data sources and analytics to optimize pricing across these dimensions, gaining competitive advantages over less sophisticated peers.
Microsoft Dynamics CRM and ERP solutions can provide a return on investment within the first year through several key strategies:
1) Boosting sales by retaining customers, maximizing revenue opportunities, and streamlining sales processes.
2) Providing business intelligence through real-time visibility, aligning business units, and reporting/tracking capabilities.
3) Offering cloud hosting options that reduce costs while providing flexibility and choice in deployment.
4) Functioning as an all-in-one product that increases existing systems' potential through seamless integration.
5) Giving competitive advantages like improving customer service capabilities.
ISACA Puget Sound November 2002 - CRM Security & Controlsprosenzw69
This document discusses customer relationship management (CRM) security and controls. It provides an overview of CRM strategies and implementations, highlighting common failure points such as lack of data quality, key stakeholder involvement, and flawed business processes. The document outlines frameworks for securing CRM systems, including ensuring business process integrity and application integrity. It examines security and controls for key CRM processes such as sales, customer service, and marketing. The document also covers privacy standards and proliferation of privacy laws. Case studies are presented to illustrate the need for end-to-end protection of CRM solutions.
Inflection Point Media has built a platform to connect business marketers with business decision makers online. It collects data from leading B2B sites on users' search keywords, browsing behavior, and recency of activity to group them into proprietary segments of similar purchasing intent. Marketers can then target ads to these prequalified audience segments as they browse various business publisher sites. The platform allows marketers to message to business professionals throughout their purchase process, from initial awareness to final consideration and purchase.
1) The document discusses how Microsoft Dynamics CRM helps banks drive profitability, cut costs, and reduce risk by providing visibility into customer data to optimize marketing, operations, and risk management.
2) Case studies of banks like Sterling Bank and Sasfin Bank show how Microsoft Dynamics CRM improved loan pipeline accuracy, enabled more accurate risk assessments, and improved regulatory reporting.
3) Additional benefits discussed include extending efficiency across merged banks and enhancing the customer experience for banks like MidAtlantic Farm Credit and Banca Transilvania.
Turning Customer Interactions Into Money White PaperJeffrey Katz
This white paper discusses how companies can use predictive analytics to achieve stellar returns on investment by turning customer interactions into increased profits. It finds that companies successfully using predictive analytics have well-defined goals, measure both direct and indirect ROI benefits, and make analytic results easy for all employees to access and act on. The paper profiles several companies that have improved customer retention and profits through predictive analytics approaches.
Portfolio Management, Best's Review, May 2004Gates Ouimette
#Portfoliomanagement within an insurer's applications as well as #BPO relationships.
Portfolio management allows IT operations to be measured from a business process-centric perspective.
Overall IT technology costs can be specifically associated with each business process, regardless of the type of IT #infrastructure.
This document provides an overview of a consulting firm called Wilson Perumal Consulting (WPC). The summary is as follows:
1) WPC is a leading advisor to companies on managing complexity and helps clients address strategic and operational issues.
2) They have worked with leading companies across industries and have applied their methodologies to a wide range of issues.
3) Clients praise WPC's results and ability to drive tangible outcomes such as cost savings, profit increases, and risk reduction.
The document provides an overview of business valuation, including defining the valuation process, standards of value, approaches to valuation, and discounts and premiums. It discusses key aspects of valuation like determining fair market value, the income approach using discounted cash flows, and applying discounts for lack of control or marketability. The goal is to combine business wisdom, industry analysis, and technical financial expertise to determine a company's value. Valuations must meet professional standards from organizations like the IRS.
This document summarizes a white paper from Microsoft about how Customer Relationship Management (CRM) software can help companies succeed in challenging economic times. It discusses how CRM allows companies to focus on existing customers, maximize revenue opportunities, do more with less, reduce operational costs, and optimize existing IT assets. Specifically, the document outlines how Microsoft Dynamics CRM provides tools to streamline processes, improve productivity, analyze customer data, optimize marketing, and automate sales.
The notion of managing software as a precision engineering operation remains an elusive target in the software industry, and that may remain the idealised view of the industry for a long while, partly because of the nature of software and partly because the current mainstream methodologies do not reinforce value-maximisation in the process.
The document discusses different types of instructional media products including virtual reality simulations, children's math games, tutorials, and presentations. Virtual reality simulations can include visual and auditory elements to make the experience more immersive, such as images of skydiving and parachute equipment. Children's math games can be interactive tutorials or drills where the user drags numbers or gets help via instructions. Presentations can be given via PowerPoint where the user controls moving to the next slide or returning to a previous one.
Presentation to American Marketing Association Lincoln Chapter
Cause Camp
Friday, February 24, 2012
Tips on how to create social media community of advocates, advocacy tools, etc.
This document summarizes a lung cancer advocacy organization's campaign to raise awareness about lung cancer. The organization launched a campaign with the message "No One Deserves to Die" to change perceptions and have an attention-grabbing message on a small budget. They redesigned their brand identity and launched creative ads on social media and websites. The campaign was a success, generating over 300 million impressions and significantly increasing engagement on social media and web traffic.
The document discusses network management systems and their components. It describes the Simple Network Management Protocol (SNMP) which aggregates device information and presents it graphically. It also discusses the Network Management System (NMS) hardware and software that monitors and administers networks, providing performance, inventory and traffic information. Finally, it mentions the Management Information Base (MIB) which contains information about managed network devices that is accessible to SNMP programs.
The document discusses the novel Perfume by Patrick Süskind and provides context about the author and historical era in which the novel is set. It poses questions about connections between the author and his reclusive nature. The opening of the novel and the significance of setting it in 18th century France are also examined. Students are asked to discuss what is known about this historical era in terms of events and philosophers through a jigsaw activity. Finally, comparisons are made between how authors use settings to develop their narratives.
The document summarizes a conversation between Cindy Hill, Dale Stanley and Guy St. Clair about future trends in knowledge management and knowledge services. Some of the key trends they discuss include the growth of social media and networking, increased integration of content both internally and from vendors, the rise of smartphones and mobile access to information, and more emphasis on discovery and self-service models of support. The group advocates that knowledge professionals stay abreast of emerging technologies and tools to better incorporate new trends into their workplaces and continue providing strategic value.
The document discusses asset liability management (ALM) in today's environment, outlining key ALM concepts, techniques, and processes. It explains that ALM establishes a framework for insurers to measure and manage risks from their asset and liability portfolios as well as the interaction between the two. The document also provides an overview of typical ALM techniques like duration matching, key rate duration matching, and cash flow matching along with important considerations around liquidity, capital, and regulatory risks.
Multiple Dimensions of Pricing Sophisticationguestc9708f8
The document discusses the multiple dimensions of pricing sophistication for property and casualty insurance companies. It identifies five key dimensions - data, modeling approach, rating plan design, competitive sensing, and pricing strategy. The document provides a spectrum for each dimension, ranging from low to very high sophistication. It explains where different companies may fall along each spectrum based on their capabilities and resources. The goal is to provide insurers a framework to evaluate their own sophistication and identify areas for improvement.
Multiple Dimensions of Price Sophisticationguestc9708f8
This document discusses the dimensions of pricing sophistication in property and casualty insurance. It identifies five critical dimensions along which a company's pricing sophistication can be evaluated: 1) data - the type, volume, and quality of data collected; 2) modeling approach - how data is analyzed; 3) rating plan design - how ratings and prices are determined; 4) competitive sensing - understanding competitors; and 5) pricing strategy - how sophistication aligns with business goals. More sophisticated insurers are able to leverage larger and higher quality datasets and more advanced analytical techniques to optimize their rating plans, gain competitive insights, and better align prices with business strategy.
Multiple Dimensions of Price Sophisticationcwhurst
This document discusses the dimensions of pricing sophistication in property and casualty insurance. It identifies five critical dimensions along which a company's sophistication can be evaluated: 1) data - the type, volume, and quality of data collected; 2) modeling approach - how data is analyzed; 3) rating plan design - how ratings and prices are determined; 4) competitive sensing - understanding market dynamics; and 5) pricing strategy - how sophistication aligns with business goals. More sophisticated insurers are able to leverage richer data sources and analytics to optimize pricing across these dimensions, gaining competitive advantages over less sophisticated peers.
Microsoft Dynamics CRM and ERP solutions can provide a return on investment within the first year through several key strategies:
1) Boosting sales by retaining customers, maximizing revenue opportunities, and streamlining sales processes.
2) Providing business intelligence through real-time visibility, aligning business units, and reporting/tracking capabilities.
3) Offering cloud hosting options that reduce costs while providing flexibility and choice in deployment.
4) Functioning as an all-in-one product that increases existing systems' potential through seamless integration.
5) Giving competitive advantages like improving customer service capabilities.
ISACA Puget Sound November 2002 - CRM Security & Controlsprosenzw69
This document discusses customer relationship management (CRM) security and controls. It provides an overview of CRM strategies and implementations, highlighting common failure points such as lack of data quality, key stakeholder involvement, and flawed business processes. The document outlines frameworks for securing CRM systems, including ensuring business process integrity and application integrity. It examines security and controls for key CRM processes such as sales, customer service, and marketing. The document also covers privacy standards and proliferation of privacy laws. Case studies are presented to illustrate the need for end-to-end protection of CRM solutions.
Inflection Point Media has built a platform to connect business marketers with business decision makers online. It collects data from leading B2B sites on users' search keywords, browsing behavior, and recency of activity to group them into proprietary segments of similar purchasing intent. Marketers can then target ads to these prequalified audience segments as they browse various business publisher sites. The platform allows marketers to message to business professionals throughout their purchase process, from initial awareness to final consideration and purchase.
1) The document discusses how Microsoft Dynamics CRM helps banks drive profitability, cut costs, and reduce risk by providing visibility into customer data to optimize marketing, operations, and risk management.
2) Case studies of banks like Sterling Bank and Sasfin Bank show how Microsoft Dynamics CRM improved loan pipeline accuracy, enabled more accurate risk assessments, and improved regulatory reporting.
3) Additional benefits discussed include extending efficiency across merged banks and enhancing the customer experience for banks like MidAtlantic Farm Credit and Banca Transilvania.
Turning Customer Interactions Into Money White PaperJeffrey Katz
This white paper discusses how companies can use predictive analytics to achieve stellar returns on investment by turning customer interactions into increased profits. It finds that companies successfully using predictive analytics have well-defined goals, measure both direct and indirect ROI benefits, and make analytic results easy for all employees to access and act on. The paper profiles several companies that have improved customer retention and profits through predictive analytics approaches.
Portfolio Management, Best's Review, May 2004Gates Ouimette
#Portfoliomanagement within an insurer's applications as well as #BPO relationships.
Portfolio management allows IT operations to be measured from a business process-centric perspective.
Overall IT technology costs can be specifically associated with each business process, regardless of the type of IT #infrastructure.
This document provides an overview of a consulting firm called Wilson Perumal Consulting (WPC). The summary is as follows:
1) WPC is a leading advisor to companies on managing complexity and helps clients address strategic and operational issues.
2) They have worked with leading companies across industries and have applied their methodologies to a wide range of issues.
3) Clients praise WPC's results and ability to drive tangible outcomes such as cost savings, profit increases, and risk reduction.
The document provides an overview of business valuation, including defining the valuation process, standards of value, approaches to valuation, and discounts and premiums. It discusses key aspects of valuation like determining fair market value, the income approach using discounted cash flows, and applying discounts for lack of control or marketability. The goal is to combine business wisdom, industry analysis, and technical financial expertise to determine a company's value. Valuations must meet professional standards from organizations like the IRS.
This document summarizes a white paper from Microsoft about how Customer Relationship Management (CRM) software can help companies succeed in challenging economic times. It discusses how CRM allows companies to focus on existing customers, maximize revenue opportunities, do more with less, reduce operational costs, and optimize existing IT assets. Specifically, the document outlines how Microsoft Dynamics CRM provides tools to streamline processes, improve productivity, analyze customer data, optimize marketing, and automate sales.
The notion of managing software as a precision engineering operation remains an elusive target in the software industry, and that may remain the idealised view of the industry for a long while, partly because of the nature of software and partly because the current mainstream methodologies do not reinforce value-maximisation in the process.
The document discusses an article by Chase Cooper's Director of Compliance Solutions analyzing the FSA's first Retail Conduct Risk Outlook and identifying emerging risks and areas of concern, such as unsuitable advice due to a lack of clarity in customer risk profiling and potential issues arising from changes to business models in response to the Retail Distribution Review. Firms are advised to carefully review current and proposed services and activities to ensure they are operating to an adequate standard and in customers' best interests.
Several factors will affect innovation in the manufacturing industry across processes, product development, outsourcing engagements and even IT services. Among these factors are digital consumers in the automotive industry; and decision-making using Business Intelligence (BI). This list is in no way complete. But it certainly is a good starting point to explore further.
As marketing dollars continue to shift into digital channels, a new class of software applications has emerged to help automate and integrate digital marketing activities, from customer acquisition through retention and loyalty programs. The JEGI Sector Insights brief provides an overview of this EMM Stack of applications that are helping marketers address the growing complexity of digital campaign execution. Demand is strong, and budgets are sizable, for a new class of digital marketing services required to build and maintain the Stack. These services actually look more like technology consulting and IT services. The outlook for growth in this new services category is attracting new providers to the market and is driving continued growth in the Stack and a vibrant M&A market.
Crm maximizing crm effectiveness during lean timesMarcus Vannini
1) This document discusses ways that companies can maximize the effectiveness of their customer relationship management (CRM) systems during economic downturns.
2) It recommends six areas of focus: increasing sales effectiveness, improving forecasting accuracy, engendering customer loyalty, enhancing marketing results, reducing customer service costs, and leveraging CRM technologies to gain advantages when the economy rebounds.
3) Specific strategies discussed include using web tools to help salespeople prospect more efficiently, embedding best practices into sales workflows to drive consistency, integrating historical sales data into forecasting to improve accuracy, and using loyalty applications integrated with CRM to better target customers and incentives.
This document provides an introduction and overview of a management consulting firm called Wilson Perumal & Company (WP&C). Some key points:
- WP&C helps companies address complex issues that cut across strategy and operations, with a focus on complexity. They have expertise in strategy, operations, and risk management.
- They have worked with leading companies across industries on projects involving issues like product profitability, logistics strategy, and operational risk reduction.
- Their clients praise their results-driven approach and insights. WP&C combines the talent of large strategy firms with the engagement of a smaller firm.
- The firm's consultants have diverse real-world experience from companies like Danaher,
Similar to Enterprise Pricing Policies Crucial To Risk Mitigation (20)
Enterprise Pricing Policies Crucial To Risk Mitigation
1. Enterprise Pricing Policies Crucial to Risk Mitigation
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March 16, 2009
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By Chris Kentouris
Special Reports
With bad valuations of complex financial instruments commonly cited Email
as a key factor behind the credit crisis, valuation experts are stressing BNY Mellon: Taking the Reputational Risk Out Of
Reprints
Data Management
the importance of consistent, enterprisewide pricing policies in Reader Comments
Enterprise Pricing Policies Crucial to Risk
mitigating risk.
Mitigation
A new study, authored by analytics software provider NumeriX and Credit Market Analysis (CMA), a Business Semantics Repository Aims for Data
Precision
derivatives pricing and market data specialist, points to the need for transparency when valuing assets such
Lehman Deal Fuels Barclays' Prime Ambitions
as over-the-counter, asset-backed and mortgage-backed securities.
Financial modeling systems from vendors such as NumeriX digest data from multiple external sources and Supplements
have built-in controls and audit capabilities. CMA, acquired by CME Group last year, says its pricing data
2007 Industry Ranking
is based on a quot;buy-side consensusquot; model that seeks to eliminate dealer biases by using observed, tradable
quotes.
While organizations likely will continue to invest in proprietary or third-party pricing models--the first
step toward a valuation policy--New York-based NumeriX says they must also adopt a quot;codified and
repeatablequot; methodology so they can create a front-to-back-office audit trail. That methodology would
http://www.securitiesindustry.com/reports/19_69/23282-1.html (1 of 3) [3/16/2009 4:16:28 PM]
2. Enterprise Pricing Policies Crucial to Risk Mitigation
ideally be created by a pricing committee consisting of business unit, finance, compliance, legal and risk
management staff.
quot;A consistent pricing policy means that different departments use the same financial models and data
inputs to value the same financial contracts,quot; explains NumeriX president Steve O'Hanlon. quot;The challenge
has been that multiple financial models were used for the same instrument and even when the same model
was used it was not calibrated in the same fashion because different inputs were adopted.quot;
To ensure consistency across the firm, a model has to maintain the same view of the data within all
internal applications and business lines. That eliminates reporting discrepancies and enables the back-
testing strategies critical to bringing new financial contracts to market, says CMA chief executive Laurent
Paulhac.
The merits of an enterprise pricing policy extend beyond complying with Financial Accounting Standard
157, which established a three-tiered methodology and documentation process for valuing securities.
quot;If a front office is using a different recovery assumption for a credit derivative contract than other parts of
the organization, it will not only impact the value of the position but also the default risk,quot; says Mark
Traudt, CTO of Quantifi, a Summit, N.J.-based provider of credit derivatives pricing and risk analytics
software. quot;That could result in very different enterprisewide views of potential exposure in the event of a
default.quot;
Because margining requirements to meet capital adequacy rules are based on various stress tests, including
default scenarios, any differences in default risk will ultimately need to be reconciled, says Traudt.
Particularly on the buy side, many firms have work to do before they reach consistent pricing strategies.
quot;Hedge funds are still in the early stages of devising a pricing policy and often rely on counterparty or
broker-dealer quotes or use their third-party administrators,quot; says Ron McGann, senior consultant with
Citisoft, a buy-side consultancy in Boston. For OTC contracts, that approach can pose problems in
determining collateral requirements.
Joseph Pimbley, managing director of financial engineering at Duff & Phelps, a New York-based financial
advisory, says that even in a best-case scenario, quot;one group may have a detailed, written pricing policy
while another follows its own [unwritten] policy.quot;
Pimbley recommends that firms that have pricing committees put risk managers on equal footing with
trading desks and finance departments when choosing a model. In some cases, quot;the finance group may
want to write down the assets, while the trading desk, which has a short-term transactional viewpoint and
limited understanding of financial models, doesn't want to report any losses,quot; says Pimbley. quot;The skilled
risk manager must develop risk models embedded in-and consistent with-the company's enterprisewide
financial model and inputs.quot;
Marketplace
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http://www.securitiesindustry.com/reports/19_69/23282-1.html (2 of 3) [3/16/2009 4:16:28 PM]