Advanced Risk Management
11 - 12 February 2019 | Panama, Panama
Learning objectives
By the end of the course, participants will be able to:
- Improve efficiency and effectiveness of risk management activities through a better understanding of their strategic context, adding value to business streams and benefiting the bottom line
- Develop objective risk management policies consistent with an enterprise-wide risk management framework
- Evaluate emerging opportunities, particularly Blockchain and FinTechs effectively
- Recommend the most appropriate investment decisions for your organisation
- Effectively communicate key treasury considerations with stakeholders
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
Programme
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Treasury’s strategic role in Enterprise Risk Management and deploying a risk management framework
Start time: 9:00 am End time: 5:00 pmIntroduction
- 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
Risk Management Framework 1 to 3 (ISO 31000) -Identification, Assessment, Evaluation
Case study exercise
- Analysing a business and its objectives eg commercial, returns to stakeholders, credit strength
- Sources of risk and identifying key risks to objectives
- Initial risk assessment and risk maps
- Further assessment – risk evaluation and common methodologies
Risk Management Framework 4 –Developing & Implementing Effective Responses
Exercise – application to own business, & comparative, critical appraisal:
- The critical importance of contracts
- The life of risk in a contract
- Perceptions of hedging and speculation
- Treasury’s role in developing responses
- Implementing responses using policies
Risk Management Framework 5 – Developing Effective Treasury Risk Management reporting
- Reporting purpose & relevance to the business
- Effective reporting – criteria and systems implications
- Report examples for Treasury; dashboards
- Measures and benchmarking – KPIs / KRIs etc
- Consequences of risk management; modification, evolution of risks
Exercise & discussion – reporting in your business
Review key treasury Risk Management tools for ‘classic’ Risk management
- Holding cash and the resulting real option
- Financial derivatives
- Documentary support eg security, guarantees
- Commercial terms eg guarantees, take-off & price agreements
Risk and return – corporate finance and credit interactions
Case study / exercises:
- The interplay between key credit ratios and the cost of finance
- Managing risks and return criteria in business investments
- Funding subsidiaries / projects abroad – FX translation risk and credit implications
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Developing concepts in financial risk management
Start time: 9:00 am End time: 5:30 pmManaging FX Risk – advanced deployment of outrights and options
Brief recap Day 1
Case study: Advanced methodologies in using outrights and options: is your Board aware of what can (and can’t) be achieved?
Managing Liquidity risk
How to manage liquidity risk within a Risk Management framework, considering factors such as:
- Target gearing levels / credit rating
- Spreading the risk through eg diversification, layering, pooling, maturities
- The impact of fashion – sectors, covenants, funding sources
- Estimating appropriate headroom
- The cost / benefit playoff
Case studies from different sectors
Managing new risks 1 – macro threats
Behavioural aspects:
- Effect of wealth on investment decisions
- Over-optimism and overconfidence
- Misselling or mispurchasing
Political and social risks and Compliance – regulatory eg EMIR, KYC, extraterritorial legislation eg FATCA, FTT, GDPR
- Governance – Modern Slavery, Anti-Bribery
- Sanctions, Financial Crime, AML and export controls
- BEPS
- Accounting changes and impact on credit (eg IAS 39 -> IFRS 9), IFRS 16
Managing new risks 2 – provider capabilities
- Effect of Basel III / IV on banking economics and services and
- Evaluating required bank returns and interaction with corporate credit strength
- Bank credit strength
- Bank splits – Vickers, Liikanen, Dodd Frank, Brexit
- End of notional pooling and end of global banking
- FinTechs, PSD2 (EU), APIs and new banks
- AI, distributed ledger
- Treasury systems development
New challenges – Cyber Security
- What is cybersecurity, and cyber risk in managing the risk
New challenges – FinTech
- RAROC and bank business models
- The importance of credit
- Regulation, tax, and sanctions
- Rise of the machines and IT
- Opportunities for FinTechs, non-banks and challenger banks
- What is a FinTech (and other types of -techs
- FinTech concept example: APIs and PSD2 – Apple Pay, Alipay
- Where are FinTechs most active / successful – eg services, markets, regions
- Do FinTechs have a future?
- Implications and opportunities for treasury – now and in the future
New challenges – Digital Ledger Technology and and crypto currencies (eg Bitcoin)
- What is Blockchain?
- Digital Ledger Technology (DLT) distinguished from cryptocurrency eg Bitcoin
- Key concepts and types of DLT network
DLT aspirations and limitations
- Use cases for DLT – success criteria, deployments to date
- Smart contracts
- Case studies – Ripple, IATA
Conclusion
- Key take aways
- What to expect in the future