Treasury and finance teams need to adapt to the reality of different thinking about debt and deficits. By Joseph Neu“We’re not even thinking about thinking about raising rates,” Fed Chairman Jerome Powell said after the Federal Open Market Committee’s June meeting. This was good timing for me: On the same day, I suggested to clients of Chatham Financial attending a virtual summit that among the accelerating trends treasury and financial risk managers need to prepare for is the current flirtation with…
Data from Clearwater underscores the concerns of treasury investment managers reducing risk during the pandemic. If you needed any more proof that the pandemic has made treasury investment managers even more attuned to the risks in their portfolios, check out the table below from Clearwater Analytics, which sponsored a NeuGroup meeting this week on market trends and improving balance sheet management. Cash flow and credit. It may not be surprising, but relative to other searches, the sheer number of views in…
Pension managers struggle with strategy amid a pandemic pace unlike the drawn-out financial crisis. Rapidly changing conditions during the pandemic have made it extremely difficult for many NeuGroup members and other treasury practitioners to create forecasts and devise strategies. Pension fund managers are in the same pickle, finding it nearly impossible to change their overall pension strategies given how fast the landscape is shifting. This is a far different predicament than during the 2008-09 financial crisis, which was a slow-moving disaster.“The…
June 18, 2020
Pensions Look for Re-Entry, Re-Risk Opportunities
Pension managers were de-risking at the end of 2019, much to their relief months later; now it’s time to add some risk.Although pension managers have been de-risking over the course of the last several months – and continue to do so in different areas – many are now on the hunt to re-enter the market to re-risk. “Can we be nimble enough to pounce given the opportunities that are out there?” wondered one member of NeuGroup’s Pension and Benefits (NGPB)…
Treasury investment managers hear sober forecasts and calls for greater action by the IMF.Hardly any of the treasury investment managers who met in early May at a NeuGroup virtual meeting said they owned emerging market (EM) debt—not very surprising given that most companies have been parking cash in high-quality, short-duration investments since the pandemic rattled credit markets. But one manager who does invest in USD-denominated EM debt said he was “bitterly disappointed” in the International Monetary Fund and G7 nations that had…
By Joseph Neu The European Treasury Peer Group 2020 H1 meeting took place last week, sponsored by HSBC. Here are some takeaways that I wanted to share: COVID-19 validates regional treasury centers. HSBC said the case for regional treasury centers has been further validated by the pandemic. In comments on how clients have shown resilience and are preparing for markets to reopen, the bank noted the importance of real-time global exposure information, including a centralized liquidity and risk management framework; but also critical…
What small issue now can turn into a larger risk later? And how far away is later? Can a small slipup in the supply chain—such as the inability to get a small part—create a bigger risk down the line? That example of the butterfly effect in action is what one member of NeuGroup’s Corporate Enterprise Risk Management group says he and management have been thinking about lately. The issue, like many things in business these days, is that COVID-19 adds a…
More cash and falling interest rates have some corporates weighing a return to prime funds.Many treasury teams have plenty of cash to invest but not many places to park it that offer attractive yields. That has some of them debating whether, when and how to add risk to their portfolios while preserving capital and liquidity. The challenge is figuring out “how to optimize cash in a very short portfolio,” as one member put it. Here’s some of what others said this…
May 21, 2020
Aligning Risks to Inculcate Risk Awareness
How one company’s ERM team is raising risk awareness and its own profile by organizing the firm’s sprawling risks.Sometimes the best way to add importance to your function is to look to the top. To management, that is. This was what one company’s enterprise risk management team did to accomplish two things: help organize the company’s risks and add a level of seriousness to the function itself.The head of this ERM team recently described, at NeuGroup’s Corporate ERM Group’s annual meeting,…
Corporate boards are taking their oversight mandate more seriously; that’s why they need ERM. Today’s corporate boards need to fully understand the risks a company faces as well as their relevance to its strategy and risk appetite. That’s been the case since 2009 when the SEC started requiring disclosure of a board’s role in risk oversight, including the qualifications of its members and a description of how the board administers its oversight function. The risks revealed by COVID-19 make this…