Risk ManagementTechnology
January 4, 2024

Rates, Credit Risk and AI: The Best of NeuGroup Insights 2023

Popular posts telling the story of 2023, including volatile interest rates, bank counterparty credit risk and early treasury use cases for AI. Top NeuGroup Insights of 2023. We are looking back at the 10 NeuGroup Insights posts that resonated most with members, sponsors and other readers during the past 12 months. These popular articles help tell the story of 2023 and merit reviewing or reading for the first time because they retain their relevance—for better or worse—as treasury and finance teams…
Capital MarketsRisk Management
December 20, 2023

Don’t Ignore the Halo Effect in Credit Ratings for Subsidiaries

Why ratings used to set rates for intercompany loans should factor in ‘ordinary’ support parents provide subsidiaries. The internal credit ratings of subsidiaries that a parent company may use to help determine the interest rate for an intercompany loan need to reflect a halo effect that incorporates any day-to-day, ordinary support the subsidiary receives from the parent. That is among the key takeaways from a presentation by Societe Generale at a recent meeting of NeuGroup for Mega-Cap Assistant Treasurers sponsored by the…
Risk ManagementThe NeuGroup Insights Interview
December 13, 2023

Tied to the Business When Crisis Hits: P&G Treasurer Tadd Fowler

At P&G, treasury and tax are “tied at the hip” with the business in countries where instability and volatility prevail. Many multinationals and their finance teams have extensive experience operating in countries in the throes of economic and geopolitical turmoil. Most have used what they’ve learned from managing amid hyperinflation, currency devaluation and war to prepare for future crises. Among them is NeuGroup member company Procter & Gamble. In a NeuGroup video you can watch by hitting the play button below, Tadd Fowler,…
InsurancePension and BenefitsRisk Management
December 13, 2023

Pension Risk Transfer Calculus: Costs, Benefits, Risks

Considering cost is crucial when evaluating the benefits of a pension risk transfer. The pension risk transfer (PRT) market stayed hot this year after setting a record in 2022 that included a $16 billion transfer by IBM. And there are signs—both qualitative and quantitative—that PRT volume will continue to grow as more companies with well-funded plans seek to remove pension liabilities from their balance sheets. “Anecdotally, treasurer-level members have indicated that doing a PRT transaction is likely,” said NeuGroup’s Scott Flieger, who leads NeuGroup for…
Risk ManagementTechnology
December 7, 2023

Flying Into AI Use Cases, an Internal Auditor Turns to Copilot

Microsoft’s Copilot helps pave the way for more use of AI by auditors and others at corporates embracing change. One NeuGroup member who is an early adopter of Copilot, Microsoft’s assistant for using generative AI within its Office suite of products, demonstrated the usefulness, efficiency and power of large language models (LLMs) like ChatGPT by presenting at a recent NeuGroup meeting with a slide deck generated in part by—you guessed it—AI. The presentation, delivered at the fall peer group meeting of NeuGroup for…
Risk ManagementTalking Shop
December 7, 2023

Talking Shop: Defining the Scope of Fraud Risk Assessments

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Context: Fraud risk assessments performed by internal auditors are designed to identify a company’s vulnerabilities to internal and external fraud, including embezzlement, asset misappropriation, misstatement of financial information, corruption and cybercrime. According to a position paper by The Institute of Internal Auditors, “organizations should have robust internal control procedures to limit the risk of fraud,…
Capital MarketsRegionalRisk Management
November 29, 2023

Recession and Rates Rank High on Treasurers’ 2024 Risk Lists

New NeuGroup Peer Research reveals the risk of an economic downturn and high interest expense loom large. As treasurers look ahead to 2024, the results of the NeuGroup 2024 Finance and Treasury Agenda Survey reveal two intertwined risks—headwinds which may also appear at odds with each other—looming on the horizon: the continuing threat of recession, paired with interest rates that may remain higher for longer. Normally, of course, economic weakness brings about lower rates. But the last few years have…
Capital MarketsRisk Management
November 16, 2023

Natural, Synthetic, Go Now, Not Yet: Exposure to Floating Rates

Corporates weigh when to swap fixed-rate debt to floating as inflation cools and the rate outlook shifts. Growing conviction that the Federal Reserve is at the end of its interest rate hike cycle and may cut rates next year has turned up the heat on the simmering issue of whether and when corporates with debt should swap some of their fixed-rate exposure to floating rates. Many companies in the NeuGroup Network say nearly all their debt is fixed—a byproduct of very low…
Risk ManagementTalking Shop
November 8, 2023

Talking Shop: Bloomberg Usage Fees for IBOR Fallback Rates

Editor’s note: NeuGroup’s online communities provide members a forum to pose questions and give answers. Talking Shop shares valuable insights from these exchanges, anonymously. Send us your responses: [email protected]. Context: For some corporates, the transition from the London interbank offered rate (Libor) to risk-free reference rates—such as the Secured Overnight Financing Rate (SOFR)—included the decision to adopt so-called fallback language in existing derivative contracts covered by the International Swaps and Derivatives Association (ISDA). During the yearslong process, ISDA created the IBOR Fallbacks Supplement to…
BankingRisk Management
October 5, 2023

Creating a Plan B for Bank Failure

SVB’s failure has pushed the conversation about backup cash management banks to the forefront for more companies. Shifting business to a new cash management bank is a huge ordeal for corporate treasury teams, but concern about bank creditworthiness, triggered by the collapse of Silicon Valley Bank (SVB), is leading more treasuries to explore what’s required and how to set up a backup solution. Thirty-nine percent of respondents to NeuGroup’s Best Practices in Assessing Bank Counterparty Credit Risk Survey reported they are considering…