FXRisk Management
May 13, 2021

A Fresh Look: Refining Financial Risk Management Programs

Streamlining a hedging portfolio can seem daunting, but there are advantages for corporates that take the plunge.There’s a growing trend among corporates to take a new look at existing financial risk management programs. Some of the triggers for review are explicit events, such as financial reporting results or restatements, or changes in key personnel. But many companies are finding that longstanding hedging programs may just no longer meet the original program objectives, or may have grown in silos and created…
Risk ManagementTalking Shop
May 13, 2021

Talking Shop: Cash Exposure in Counterparty Risk Assessment

Editor’s note: NeuGroup’s online communities give members another forum to find answers to their questions. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: insights@neugroup.com. Member question: “In counterparty risk assessment models, related to cash in bank accounts, do teams typically manage cash exposure using a percentage of the total or fixed dollar limits (or both)? If dollar-based, how are limits defined (and how much flexibility is employed)?”Peer answer 1: “We set deposit limits with our…
ESGRisk Management
April 29, 2021

Shifting Winds of ESG Policies and Regs Have Risk Managers on Alert

The prospect of increased regulation and disclosure around corporate sustainability has risk managers preparing.The likelihood of increased regulation and mandatory disclosure of ESG-related activities and risks under the Biden administration and across the globe has enterprise risk managers trying to get their ESG ducks in a row. “From a risk management perspective, we audit all facts and figures in ESG reports we’re using internally,” said one member at a recent meeting of NeuGroup for Enterprise Risk Management. “The expectation is…
ComplianceFXNeugroupRisk Management
April 15, 2021

Adding Complexity to Hedging: An Adventure in Entity Restructuring

An FX risk manager faces hedging and forecasting challenges amid changes made in response to BEPS regulations. It’s no surprise that the 15-point action plan announced by the OECD in 2015 to address base erosion and profit shifting (BEPS) would create various headaches for finance teams at multinational corporations. But a member presentation at a recent meeting of NeuGroup FX risk managers provided a fuller picture of some specific challenges facing companies as they comply with the new regulations.At issue for…
NeugroupRisk ManagementTechnology
April 15, 2021

‘Heat Maps Must Die’: Out With the Old ERM Tools, in With the New

Critics say traditional tools are inadequate for illustrating risk; one ERM member has found success modernizing them.Pity the poor risk heat map. This well-worn tool, traditionally used by ERM teams to provide a visual representation of the range of risks a corporate faces, is now an object of scorn for some risk managers, including NeuGroup members. “Heat maps must die,” one member said at a recent NeuGroup meeting for ERM heads, a sentiment echoed by a number of his peers.Also…
NeugroupRisk ManagementTreasury Management
April 13, 2021

Flying Higher: Moving ERM Beyond Safety Net to Strategic Partner

ERM is reaching new heights as risk exposures multiply and rising insurance premiums drive a search for options. Enterprise risk management is having a moment amid a seeming explosion of risk exposures facing corporates since the pandemic began. And as the function grows in importance, at least a few ERM teams are heading toward inclusion in corporate strategy groups—a trend definitely worth watching. One member at a late March meeting of NeuGroup’s Corporate ERM group said his goal since recently…
FunctionalNeugroupRisk ManagementTreasury Management
April 8, 2021

Making the Devil’s Advocate an Angel on Your Shoulder

NeuGroup risk managers make space for contrarians to question decisions and combat overconfidence.Rather than shunning contrarians for challenging conventional thinking, corporates need to make sure their decision-making processes always include a constructive devil’s advocate—someone who forces teams to consider all the ramifications of whatever action—or inaction—a company is contemplating. This was among the key pieces of advice given by Michael Zuraw, head of enterprise risk management at ON Semiconductor, during a presentation on decision-making at a recent ERM-focused NeuGroup meeting.…
FXRisk Management
April 1, 2021

Cut the Static: An FX Risk Manager Transitions to Dynamic Hedging

Standard Chartered guides a client to hedging that requires more analytics but aligns more with risk management goals.The increased frequency of so-called black swan (or gray rhino) events roiling currency markets recently has more corporates establishing or revamping FX hedging programs designed to minimize earnings volatility. They face a host of decisions involving which exposures to hedge, timing, instruments and overall approach—static, dynamic or somewhere in the middle. At a recent meeting of FX risk managers, sponsor Standard Chartered, along…
BankingRisk ManagementTechnology
March 25, 2021

A Goldman Risk Management Tool Flying Under the Radar

FX risk managers talk up a Goldman Sachs solution called Capital Markets Atlas to measure value at risk.To no one’s surprise, a recent meeting of NeuGroup FX risk managers included plenty of talk about well-known vendors of exposure identification solutions like FireApps and AtlasFX, FX trading platforms including FxAll and 360T, and a variety of ERPs and TMSs. But not everyone in the large virtual room had heard of a self-service tool from Goldman Sachs that some members are using…
Pension and BenefitsRisk Management
March 25, 2021

Spring and Derisking in the Air for Defined Benefit Pension Plans

A strong stock market and higher interest rates plus regulatory relief bring smiles to some DB plan managers.An upbeat mood befitting the beginning of spring prevailed at this week’s meeting of NeuGroup for Pensions and Benefits. With the yield on the 10-year US Treasury note rebounding to pre-Covid levels and equities trading in the vicinity of all-time highs, a summer of full funding is within sight for many plans. Below are takeaways distilled by NeuGroup executive advisor Roger Heine, who helped…