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Risk Management

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…
Justin Jones
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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…
Justin Jones
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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,…
Justin Jones
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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…
Justin Jones
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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…
Justin Jones
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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…
Justin Jones
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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…
Justin Jones
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BankingRisk ManagementTalking Shop
October 5, 2023

Talking Shop: Account Verification Solutions for Payments Fraud

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: Payments fraud remains a significant threat to corporates—although some research shows it declined in 2022. The 2023 AFP Payments Fraud and Control Survey reported that 65% of organizations surveyed were victims of reported or actual payments fraud last year. That’s down from 71% in 2021 and the lowest percentage of fraud activity since 2014,…
Justin Jones
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ComplianceRisk Management
September 27, 2023

Getting Ahead of the Curve: ERM’s Reputational Risk Rethink

The case for ERM practitioners to view reputational risk less as an impact of other risks and more as a risk itself. The power of social media to damage corporate reputations in the blink of an eye is just one factor leading a growing number of enterprise risk managers to take a more proactive stance toward heading off reputational risks rather than reacting to them after the fact. This marks a shift in perspective by some ERM practitioners who have…
Justin Jones
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Capital MarketsRisk Management
September 21, 2023

Corporates May Need to Add Sugar to Recipe for Bonds Funding M&A

Investors may demand better terms in special mandatory redemption clauses amid longer deal review times and rate cut risk. Treasury teams structuring bond deals to fund M&A transactions who want to lock in rates before an acquisition closes may need to sweeten the terms of a clause in bond offerings called a special mandatory redemption. The key reason: increased risks for investors stemming from longer regulatory reviews of mergers and the possibility that deals fall apart. SMRs typically require an issuer…
Justin Jones
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