Insights NewsletterUncategorized
November 14, 2019

Pushing Responsibility for Risk Gets Results

Sometimes you have to assign risk to reluctant BU leaders to get their attention. Complying with internal audit’s requests isn’t always front and center in terms of business leader priorities. But prompting them to accept responsibility for identified risks can change that.   In a lengthy discussion at a recent meeting of NeuGroup’s Internal Auditors’ Peer Group, members discussed the inadequate funding internal audit (IA) often receives to perform its function as well as the sometimes-low priority business leaders can…
Insights NewsletterUncategorized
November 14, 2019

Companies’ Buyback Addiction and Other Capital Allocation Insights

Why share repurchases become a drug for companies. Responding to questions about their capital allocation priorities, assistant treasurers at a recent NeuGroup meeting acknowledged “regurgitating the standard deployment line,” as one participant put it, after organic growth captured nearly half the votes and M&A ranked second. Stock buybacks ranked last, even though much of the discussion ended up focusing on that use of capital, which may be a clearer indication of capital priorities. Key insights included: Like a drug. Returning capital to…
Insights NewsletterUncategorized
November 12, 2019

Shining a Light on Proxy Advisors as Activist Allies

Founder’s Edition, by Joseph Neu Investors and corporates need to know about conflicts of interest when proxy advisory firms team up with activist investors against management.  The former CFO of a company that successfully defended against an attack by an activist investor shared some key lessons learned from the experience at a NeuGroup meeting last week. Here’s a big one: Management at even the most shareholder-friendly corporations must court passive investors to counter the inherent power of proxy advisors that…
Insights NewsletterUncategorized
November 7, 2019

Bank Account Rationalization: Taking a Page from Marie Kondo

One member’s approach to reviewing accounts, purging the inessential and optimizing. A photo of a smiling Marie Kondo, author of The Life-Changing Magic of Tidying Up, helped set a positive tone for one member’s presentation on the thorny task of bank account rationalization.  The treasury operations team’s embrace of purging clutter and keeping only what’s essential was fueled less by the desire to spark joy than the imminent, mundane chore of moving offices. That meant buckling down and weeding through each and every…
Insights NewsletterUncategorized
November 7, 2019

Flying High with a Rare Bird: A Decentralized Treasury

The treasurer of a decentralized team says he’s more influencer than boss. And it works—for him.  The corporate treasurer of a fast-growing, global holding company that owns multiple brands explained at a recent NeuGroup meeting that each brand has its own treasury team but that treasurers at the brands report to local CFOs—none of them have a formal, direct reporting line to him. Why. The member inherited this decentralized structure, which corresponds to a business model where each brand manages itself and the…
Capital MarketsInsights NewsletterUncategorized
November 6, 2019

We’ll Get to Libor Later

By John Hintze Two surveys say nonfinancial firms are falling behind in Libor transition efforts. Nonfinancial companies are taking a passive approach to prepping for the transition away from Libor, relying heavily on their banks and other financial firms to carry most of the burden. According to recent surveys, however, the financial community is lagging. In its recently published “Liboration: A practical way to thrive in transition uncertainty,” Accenture spells out financial services firms’ lackadaisical efforts toward the transition, even…
Insights NewsletterInvestment ManagementUncategorized
November 6, 2019

Prepping Pensions for Potentially Perilous Periods

By Joseph Neu Managers of frozen or closed pension funds need to be prepared for transitional periods.  Managers of pension funds on a decumulation journey (with more cash flows going out of the plan than coming in) need to be wary of the different dynamics in this stage of the savings cycle. Investors are more vulnerable to shocks and more susceptible to forced selling, all with a greater time dependency on realizing returns. This is particularly true during periods of…
Insights NewsletterUncategorized
November 5, 2019

Cyber Risk Committees and Related Governance Tips

Founder’s Edition, by Joseph Neu Cybersecurity is now a board-level risk and that might justify a board-level cyber risk committee, NeuGroup members said during our recent Internal Auditors’ Peer Group meeting.  In a discussion about cyber risk and a tangential conversation on separate audit and risk committees, chief audit executive members from tech and other IP-intensive firms highlighted the issue of cybersecurity expertise and experience at the board level. Directors on most audit or risk committees don’t necessarily have this…
Insights NewsletterUncategorized
October 31, 2019

Containing the Cost of Hedging

Zeroing in on the cost of carry can help companies get a handle on hedge costs. Volatile markets require an effective hedge program while ensuring the cost is reasonable for the level of risk reduction. At a recent FX Managers’ Peer Group meeting, in a session co-led by a member and a sponsor’s risk advisory team, the group pondered ways to contain the cost of hedging and the trade-offs. A critical takeaway was that one of the first things practitioners…
Insights NewsletterUncategorized
October 29, 2019

Fishing for Clarity: Murky Bank Fees and Whether to Pay to Reduce Them

Why paying for performance when trying to cut bank fees may not hold water. The pain point of bank fees is not significant enough to justify paying vendors who promise to analyze and reduce them on a performance basis. This was the consensus of NeuGroup members discussing bank fee management—one of their top priorities—at a recent meeting.  While in theory it might make sense to pay a contingency fee based on how much a vendor saves a company, treasury operations…