Strategic Corporate Risk Management

Learn to effectively manage enterprise wide risks to actively support the business and its sustainable success.

9 - 10 March 2020 | Amsterdam, Netherlands

Explore the latest financial risk management techniques to most effectively contribute to your company’s enterprise-wide risk management framework and directly benefit the bottom line.

This course is also relevant for financial service providers who want to better understand the needs of their clients in order to deliver more relevant solutions.

Learning objectives

By the end of the course, participants will be able to:

  • Develop objective risk management policies consistent with your company’s enterprise-wide risk management framework
  • Improve financial risk management to support the business strategy – both actively and cost-effectively
  • Recommend better investment decisions
  • Help the business to take advantage of new opportunities, while safeguarding against new threats
  • Have better conversations with the Board, operating units, auditors, bankers/clients and analysts
  • Improve treasury’s effectiveness in adding value to the business and benefiting the bottom line

Who Should Attend?

  • Treasury specialists seeking to improve effectiveness in managing risks
  • Corporate bankers, solutions specialists and consultants wishing to build value-adding relationships with clients through a better understanding of their needs
  • CFOs, controllers in medium sized non-financial businesses seeking to improve their financial risk management skills
  • External and internal auditors seeking a better understanding of how treasury can contribute to assurance in non-financials

Please note: Those with at least 3-5 years’ experience in risk management will gain most from the course.

Attendees need to be familiar with day to day treasury operations, policies & procedures; FX and interest rate hedging instruments; corporate finance theory; the principles of bank and bond lending & documentation; fundamental accounting and credit concepts

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Programme

  • Treasury’s role in ERM and deploying a risk management framework
    Start time: 9:00 am End time: 5:00 pm

    Introduction

    • Presentation of tutor and participants’ expectations
    • Today’s risk management landscape:
    • Definition of risk – opportunities and threats to objectives
    • RM Frameworks – ISO31000, COSO 2017
    • Social attitudes to risk especially post Global Financial Crisis (GFC) – regulation and compliance; ‘safety’ vs entrepreneurship
    • Enterprise risk management concepts
    • Integration of risk management with business decision making

    Treasury’s role in Risk Management

    • Enterprise Risk Management and a risk classification for stakeholders; governance overlay
    • Business objectives correlated to RM objectives
    • Organisational structures for decision making and RM; committees and delegation
    • Treasury’s role in decision making
    • Types of risk (systematic and diversifiable, continuous / event led, transferable / not, committed / uncommitted, time horizon)
    • Risk management responses (accept / manage / avoid)
    • Core treasury risk management tasks

    Case study : Risk Management Framework 1 – Identification and Assessment

    • Analysing a business and business objectives
    • Commercial (eg products, market share, key customers,territories
    • Financial – profitability, cashflow, EPS
    • Credit – ratings, covenants
    • Sources of risk and identifying key risks to objectives
    • Initial risk assessment and risk map

    Risk Management Framework 2 –Evaluation

    • Practical evaluation tools:
    • Sensitivity analysis
    • Scenario analysis
    • VAR and importance of correlations
    • Stress / reverse stress tests
    • Total loss overlay

    RM framework 4 – RM reporting and continuous feedback

    •  Reporting and the framework
    • Reporting aims – integration with policy and business objectives
    • Management / financial / regulatory / credit
    • Reporting criteria and systems implications
    • Report examples for treasury; dashboards
    • Measures and benchmarking – KPIs / KRIs etc

    Exercise & discussion – reporting in your business

    Reprise key treasury RM tools

    • Uses / advantages / disadvantages of:
      • Gearing (the biggest lever of all and potentially overlooked)
      • FX (and commodity): spots / forwards / short term swaps
      • Interest rate: FRAs, swaps
      • Cross currency swaps
      • FX and currency options
      • Real options eg cash, committed headroom
      • Borrowings security, guarantees, letters of comfort
      • Trading guarantees, take-off agreements, price agreements
  • Developing Concepts in Financial Risk Management
    Start time: 9:00 am End time: 5:30 pm

    Projects and contracts – opportunities to eliminate risk?

    • Eliminating or reducing FX and commodity risk from contracts
    • Life of risk in a contract and managing price lists
    • Managing multiple contracts / business / remittance streams across groups
    • Hidden FX risk in contracts

    Case study: risk and return – corporate finance and credit interactions

    • Importance of key credit ratios
    • Managing risks and return criteria in business investments
    • Funding subsidiaries / projects abroad – FX translation risk and credit implications

    Case study: Managing FX risk – Advanced deployment of outright options

    • Options
    • Hedging or speculation?
    • Cost-effective option strategies; appraising collars, AVROs, knock-in/ knock-outs
    • When you need the ability to walk away

    Outrights:

    • Synthesise an average rate
    • Use of stop loss / profit orders 

    Case study: managing interest rate (and long term currency) risk – understanding the interaction of interest rates and the business

    • Debate – whose responsibility is interest rate risk
    • Yield curve and swap prices
    • Hedging and speculation in interest rate RM
    • Appraising the value of currency swaps
    • Liquidity implications – margin calls

    Managing liquidity risk

    • Approaches to fitting to an RM framework
    • Interaction of business and gearing – selection of gearing level / credit rating
    • Mitigation techniques eg diversification, layering, pooling, maturities
    • Impact of fashion – sectors, covenants, funding sources
    • Estimating headroom
    • Evaluating the drag from cash / cost of the real option
    • Case studies from different sectors

    Managing new risks 1 – macro threats

    • Effect of wealth on investment decisions
    • Over-optimism and overconfidence
    • Mis-selling or mis-purchasing?
    • Political risk – growing equivalence of fines and taxes
    • Compliance – regulatory and extraterritorial legislation (eg  Behavioural aspects: EMIR, KYC , FTCA, FTT)
    • Sanctions and AML
    • BEPS
    • Accounting changes and impact on own credit
    • Cyber risk

    Managing new risks 2 – provider capabilities

    • Effect of Basel III on banking economics and services
    • Evaluating required bank returns and interaction with corporate credit strength
    • Bank credit strength
      • Bank splits – Vickers, Liikanen, Dodd Frank
      • End of notional pooling
      • FinTechs, PSD2, APIs and new banks
      • AI, distributed ledger
      • Treasury systems development

    Conclusion

    • Key take aways
    • What to expect in the future
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