Business Consulting


OverviewStrategyGrowth AccelerationDigital TransformationInsight and AnalyticsFinance TransformationRisk ManagementTreasury ManagementRegulatory Compliance

Business strategies are now being shaped by the plethora of technology capabilities that are available to organisations of all sizes. Those that view technology as critical to improving business outcomes are outpacing their peers in terms of business growth.

ACS specialise in delivery expert business, technology and data solutions. Our business consulting services help you navigate the many complex headwinds that you face, creating sustainable business strategies, operational capabilities and processes that are underpinned by appropriate technology and data driven solutions.

Strategy

To grow and protect your organisation’s business, reputation and financial success by understanding where your organisation is today, deciding where you want it to be, how to get from now to the future. Fundamentally, this is what we do.

In today’s rapidly advancing world, there is a constant, critical need for organisations to change, to improve, to evolve. In a world of fierce competition, the lack of efficient and effective change and improvement for an organisation can mean risking existence.

As ACS partner with our clients, we engage, we focus, we add value and we deliver to revolutionise on what it means to have a successful, sustainable business. Through deeply understanding our clients, their values and the things that matter, we create purpose-driven direction implemented through goal-based strategic execution. Driving success through a ‘fundamentals up, inside out’ approach.

Leveraging our expertise across behavioural and organisational behaviour, coupled with our leading-edge technical capabilities, at ACS we work to create and implement a well-defined, tangible strategy that drives the organisation forward. As a guiding beacon, the strategy interacts with every aspect of why, how and what the organisation does. The right strategy is therefore imperative to the organisation’s success.

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Umar Khan

Umar-Khan
Partner
Strategy and Middle East

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Growth Acceleration

Advances in technology now make powerful solutions, marketing and productivity tools, analysis and customer centric approaches to doing business more available and affordable. Many of the options that have previously been seen as only for large corporates are now more accessible to organisations of all sizes. Making best use of technology is now less about enterprise wide systems, but adopting a number of specialist applications and ensuring integration and ease of user interface for customers and employees. Aggressive competition in all sectors means competitive advantage stems from adopting leading edge approaches to IT enablement.

Businesses typically progress from standalone information systems with little integration and the use of structured data only, to introducing further systems and gradually integrating these systems to provide cross data analysis with multiple sources of data. A technically advanced organisation may have a fully integrated enterprise that utilises unstructured data sources, 360° MI reporting, predictive analysis and the latest state of the art approaches to doing business with its customers.

Along the journey to becoming technology enabled it is vital that practical and appropriate IT change is harnessed that enables accelerated growth to be achieved. By using technology to streamline workflows, slash time spent on repetitive data entry and inefficient processes, gain better insights into opportunities and threats, and create new business models, progressive firms are well positioned to tap into new customer requirements, improve customer engagement and experience, and enter new markets.

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Simon Farrell

Simon
Partner
Strategic Solutions

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Digital Transformation

Customer and stakeholder behaviour is changing and expectations are becoming more demanding. The digital age has accelerated that change and therefore businesses need to be fast at changing themselves to meet these new expectations. Companies need to transform the way they engage their stakeholders including customers, suppliers and employees. The digital leaders are outperforming their peers in every industry.

Digital Transformation is the structured transformation of business models, processes and activities to fully leverage the opportunities of digital technologies. It requires leadership from the top of the organisation and for business and IT to work together on the transformations. However, most organisations are struggling to know where to start or take their existing digital initiatives to the next level.

We work with business leaders to help accelerate the implementation of successful digital transformations. Our approach to digital transformation is governed by three key attributes that will help you to achieve a successful and compelling Digital Transformation:

  • Build integrated ecosystems that can support and facilitate the stakeholder experience across multiple touch points.
  • Adopt and gain value from disruptive technologies (Cloud, Big Data, Social, Artificial Intelligence, etc.)
  • Integrate your brand with your customers and stakeholders.

Our Offerings:

Digital Strategy
Strategy aligned to corporate objectives, customer needs, technology solutions etc.

​Digital Technology Delivery
Solution implementation of the latest technology stacks, Big Data Analytics and Mobility solutions.

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Steve Miles

Steve-Miles
Partner Technology and Big Data

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Business Analytics

Increase your profit and meet your goals in a controlled and sustainable manner through the application of statistical and mathematical leading edge technologies. Our expert team of data scientists can be deployed to analyse your complex business issues.

ACS deliver robust solutions comprised of cutting-edge data exploration, visualisation, and analytics capabilities that deliver the following business outcomes:

  • Sales optimization
  • Customer experience and insight
  • Market intelligence and tracking
  • Descriptive, Predictive and Prescriptive Analytics
  • Surveillance, oversight and risk control

Our Big Data and Analytics arm is focussed on looking at all your assets and helping you to realise their potential. We can work collaboratively with your staff, however technically detailed, detail lacking or unsophisticated the requirements are. In many cases our customers simply have an idea and want to see the art of the possible.

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Steve Miles

Steve-Miles
Partner Technology and Big Data

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Finance Transformation

CFO’s today are under pressure to radically improve the efficiency and effectiveness of their finance function as they are very often comprised of inefficient, duplicated, manually intensive processes, performed on disparate systems and using data that is not fit for purpose and not integrated. In addition, globally emerging regulations such as IFRS, Basel III / IV and Dodd-Frank are forcing the financial services industry to rethink. In essence, enterprise risk management, liquidity risk management, performance management and regulatory compliance are becoming interrelated obligations.

However, most transformations are failing because they lack the strategy for transformation. Typically, such transformations have struggled to answer the following questions:

  • What does a world class finance or treasury function actually look like?
  • What capabilities and processes do I need to support my long term vision and where are they best located?
  • How should we manage software vendors when the technology may not be up to scratch?
  • If I embark on an expensive transformation then how will I measure the programme success?

All of these questions are answered through our unique ACS Transformation Design Methodology which as an integral part of the transformation approach, can help to ensure that your finance vision is comprehensively delivered.

We partner the major technology providers in the market. By leveraging our experience, thought leadership and industry network our clients gain a new perspective in order to resolve their most daunting transformation challenges.

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Ian Monahgan

Ian-Monaghan
Partner Finance and Treasury Solutions

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  • Accounting Systems
  • ERP
  • Performance Measurement
  • Process Optimisation
  • Solution Design
Enterprise Resource Planning (ERP) systems offer a full business change solution across an enterprise. In many cases your HR, procurement and sales systems & processes meet your requirements but the business has altered through organisational change, takeover or consolidation. Furthermore regulatory changes can force new requirements into your accounting system that it may not be structured to cope with. In these cases, major changes may be required for your accounting system to deliver the information you require.

We offer two solutions to these problems. Firstly, keep the accounting solution you are happy with and deliver a new chart of accounts, conversion strategy and improved ETL process to support the new accounting structure. Secondly, we can help you to deliver a new accounting system, utilising the same approach as a system conversion and retaining history in the new system, but utilising our knowledge of the product market and skills in delivering from within that market to provide you with a new solution with the inbuilt flexibility required to support your business for the foreseeable future.

Our development and implementation team provides excellent product awareness across the major ERP systems, including Oracle / PeopleSoft, SAP, Microsoft Dynamics and JD Edwards. We take the view that the vendor team understands the system completely, and the business team understands its business. The more the implementation team can bridge to understanding the business, the better value we will deliver with the final solution. This is a great start, but we must also integrate industry best practices in quickly delivering a workable solution. This requires subject matter experts who not only understand all aspects of the software design, implementation approach and the system but also have vertical market experience in the client’s line of business.

When choosing us as your implementation partner you’ll receive an excellent mix of skills and experience to match the level and complexity associated with each element of the solution we are delivering. We also offer excellent levels of support to our business partners across the technical, application, business and process facets of your project. Most implementations use different partners in more than one area – we offer all of these from within our own design, development and support services team.

Oracle Financial Services Analytical Application (OFSAA)

We are in partnership with Oracle. We have an OFSAA Centre of Excellence. We therefore have strong expertise in implementing the Oracle Financial Services Analytical Application (OFSAA) – the Oracle business intelligence application that enables financial institutes to measure and meet risk-adjusted performance objectives. Our expertise covers Enterprise Performance Management, Enterprise Risk Management and Finance Services Data Warehouse modules. Covering the full SDLC, we are able to gather your requirements, perform gap analyses against the modules, configure/build, test and deploy. We are often asked to perform proof of concept and can do this on your own or our infrastructure as required.

Over the last 15 years, there has been a trend toward management approaches based on outcomes and results. Pressures such as increasing global trade, the credit crisis, demands on governments for public accountability, demands on businesses from shareholders and stakeholders and improvements in measurement solutions have contributed to many businesses adopting a results-oriented management framework.

Performance measurement is the process whereby an organisation establishes the parameters within which it will achieve its desired business outcomes whereas performance management is the process of continuously assessing progress and taking actions toward achieving business goals that align with its objectives. Effectively, performance measurement and management solutions focus on achieving continuous improvement of software delivery by measuring things such as cost against business outcomes.

Our approach to solving the performance management problem is based on two facts. First, many businesses face similar performance management challenges due to the complexity and proliferation of systems used to manage their business processes. Business Intelligence systems are used to support effective performance management. Second, the Web is an example of a highly successful architecture that combines technologically diverse, geographically distributed applications. We believe that this architecture and business intelligence systems can be married to produce a powerful performance management solution for any business.

ACS have deep experience in complete front-to-back process re-engineering. We know that process execution is the key to enhancing any businesses financial results. When results are not matching targets focused analysis on business processes can help resolve the situation and steady the ship. Clear decisions and strong implementation of well-defined processes is required to improve things. Unlike other management consultants we don’t address this by writing reports and spending hours cogitating on the issues, we identify the pressure points and attack them.

For us process optimisation is about delivering a solution that improves, turns around or repairs a given business process. This can be the continuous processes underlying an operational transaction but also the processes around managing projects or even the mechanics of a management team. We always look for optimisation that will show an excellent price/performance ratio in the shortest time span possible.

An integral part of the ACS Design Methodology, the role of global process owners is pivotal to achieving group-wide process standardisation. The role needs to define, own and champion global processes, the process framework and process solution.

Our solution designs are built around a design strategy that supports the end-to-end solution delivery:

Firstly, define the solution architecture – What are the high-level components? How will they interface with each other? What are the expectations from each component?

Secondly, understand the data, both that which can be sourced and that which currently can’t – Is the new data available within the enterprise? where is it? Can it be sourced and modelled into your data architecture in a manner that will meet your requirements?

Thirdly, utilise the knowledge and skills of subject matter experts from the business and ourselves (as your implementation partner) in the solution design and configuration phases. Many technologists have excellent delivery skills but are bound by the technology. Defining a solution design that is both business and technically focused ensures that the solution fulfills the business need and is supported, rather than constrained, by the technology.

Fourthly, use conceptualisation to identify gaps in the solution design and architecture. Many implementations fail because they are too slow to deliver anything to the business. Utilising a formal proof of concept strategy not only focuses the businesses mind on what is to be delivered but also shows what the solution may be capable of with the right level of support from the subject matter experts.

Finally, use an agile approach to build out the final solution design utilising the knowledge and feedback gained from delivery of the conceptual components.

Risk Management

We focus on the CRO agenda to create value by identifying solutions and placing the best specialists to achieve desired outcomes. We cultivate and maintain high standards by working with a select network of partners in the financial and corporate sectors. Globally emerging regulations such as Basel III and Dodd-Frank are forcing the financial services industry to think differently about governance, risk & compliance (GRC), and integrating silos to a common platform. Many enterprises are now shifting focus and are taking GRC management into their strategic plan, not merely achieving compliance. Enterprise wide risk management, liquidity, conduct and performance management are interrelated and best integrated with common data architecture.

Our risk management practice will help you define the vision for your GRC function and provide the expertise to enable the comprehensive delivery of this vision. Our focus is creating a GRC management platform that helps enable leadership and the risk business to make real-time risk-based decisions on timely, accurate and complete exposure-based information.

The ACS Transformation Design Methodology will help formulate the target capabilities that underpin your vision. Our expertise in risk functions and processing will help define and deliver the underlying processes and technology that are required to support those capabilities.

Our risk practice experts work in partnership with our clients to define and deliver their strategic and operational initiatives to implement the ever evolving prudential requirements that the European banking and insurance sectors now face. Our profound understanding of the intricacies of the Basel III and Solvency II legislation is proven to provide our clients with real value add in this increasingly complex arena.

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Malcolm Staite

Malcolm Farrell Straite 150x150
Partner
Risk Management Solutions

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  • Governance, Risk and Compliance
  • Conduct Risk
  • Counterparty Credit
  • Operational Risk
  • Regulatory Risk
  • Market Risk
  • Capital Requirements
In an environment where market participants are looking to understand complex new regulations, ACS is helping C-Suite members rise to the highest value-creating challenges whilst delivering sustainable platforms to embed enterprise-wide initiatives in governance, risk and compliance.

We define risk governance as the ways in which directors authorise, optimise, and monitor risk taking in an enterprise. It includes the skills, infrastructure (i.e. enterprise structure, controls and information systems), and culture deployed as directors exercise their oversight. Good risk governance provides clearly defined accountability, authority, and communication/reporting mechanisms.

Enterprise must develop a value maximising risk management strategy. Enterprise Wide Risk Management (EWRM) emphasizes a comprehensive, holistic approach to managing risk, shifting away from a silo approach of separately handling each enterprise risk. EWRM also views risk management as a value-creating activity, and not just a mitigation activity. EWRM is still an evolving concept.

Compliance facilitates the process which ensures that a set of people are following a given set of rules, which may be referred to as the compliance standard or compliance benchmark while the process is what manages their compliance. Compliance management can take many forms – a mix of policies, procedures, documentation, internal auditing, third party audits, security controls, and technological enforcement.

Arriving at the desired end state also requires paying close attention to the regulatory, political, emotional, as well as rational dynamics that accompany any changes to enterprise structure and governance. We work alongside the leadership team to incorporate these elements and drive out the end state design for an effective and efficient risk strategy.

Financial Institutions are struggling to operationalise their conduct risk strategies and take practical steps forward in developing the MI and Analytics insight needed to support their conduct risk agenda. In addition, the current focus in the marketplace is on solving the conduct risk issue from a regulatory perspective and misses the opportunity to drive the conduct agenda through the eye of the customer to ensure that business performance benefits are also realised, as well as satisfying the regulatory agenda.

The ACS offering provides a structured, practical approach to unravel the complexity of operationalising conduct risk strategy, supported by the diverse set of skills required to deliver integrated thinking across customer, culture, people, process and technology.

Our approach enables you to:

  • Quickly benchmark your conduct risk progress against industry peers and the FCA’s conduct supervision principles
  • Accelerate understanding of your existing data and delivering Advanced MI / Predictive Analytics quick wins
  • Identify your organisation’s conduct risk touchpoint and the MI metrics to evidence and predict conduct outcomes
  • Deliver insight that protects reputation, enhances customer outcomes and also drives business performance
  • Align all MI to the purpose, values and target conduct risk outcomes of an organisation
  • Improve regulatory confidence by demonstrating pre-emptive evidence of a positive organisation culture
Counterparty credit risk exposure on derivative transactions is more complex than that for loan exposures and involves credit and market risk components. Whilst credit risk covers the risk that the counterparty defaults, market risk determines the loss position in case of default. Legal frameworks and agreements help in mitigating counterparty credit risk but other mitigation techniques include netting, collateralisation and downgrade triggers.

Collateral is typically required to wholly or partially secure derivative transactions between institutional counterparties such as banks, broker-dealers, hedge funds and lenders and is used most prevalently as bilateral insurance in OTC financial transactions. However, collateral management has evolved rapidly in the last 15-20 years with increasing use of new technologies, competitive pressures in the finance industry, heightened counterparty risk from the increasing use of derivatives, securitisation of asset pools and leverage. As a result, collateral management now encompasses various complex and interrelated functions, including repos, tri-party / multilateral collateral, collateral outsourcing, collateral arbitrage, collateral tax treatment, cross-border collateralisation, credit risk and enhanced legal and operational protections using ISDA collateral agreements.

Other more complex mechanisms for mitigating counterparty credit risk include Credit Value Adjustments (CVA) of the trade position and the use of central clearing counterparties for derivative transactions.

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Krishan Gopal

Krishan-Gopal
Principal Consultant Credit and Market Risk

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Operational risk is the risk arising from human and technical errors or accidents which includes fraud, management failures, inadequate procedures and controls. Aside from the regulatory requirement to account for operational risk, the fierce competition in the financial services industry is now commanding firms to identify, measure, control and mitigate operational risk accordingly. Aside from the obvious operational losses, operational risk can also propagate other risks such as credit risk and market risk and can have a significant impact on reputational risk and business risk. .

Loss data distribution is a key element underpinning operational risk modelling and estimation. The concept covers both internal and external loss data which is validated and approved prior to usage. Another key aspect relevant to loss data is the weighting of the data points – a huge loss in the past may not be relevant for future estimations due to the low probability of the underlying event reoccurring in the future. The severity and frequency of losses should be considered in actual loss estimation which in turn impacts corresponding risk levels.

VAR has traditionally been confined to measuring and assessing market risk. It is now also being used to control and actively manage both credit and operational risks. Different models can be applied to the VAR estimation of operational risk e.g. basic indicator, standardised or the advanced measurement approach. These are further used in the capital calculation of operational risk.

Our operational risk team has the deep expertise required to implement your loss data distribution and will help you leverage this to measure your operational risk.

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Krishan Gopal

Krishan-Gopal
Principal Consultant Credit and Market Risk

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Regulatory risk is the risk of financial losses due to changes in law, policies or procedures and regulations by governing bodies. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of investment and change the competitive landscape.

Today’s financial service industry is believed to be the most technologically complex industry in existence and is leading to the proliferation of new regulatory measures. Regulatory supervision is a mandate which is corroborated by meeting regulator’s reporting requirements. Financial supervisors have analysed the problems in risk management, issued guidance on many specific concerns and are redefining regulatory reporting thereon.

Many European banks are still struggling to cope with the demands of the Bank of International Settlements (BIS) for Basel II, yet Basel III is already upon us. In addition, due to the nature of the banking industry and business processes across the world, banks need to report to both local and national regulators.

ACS understands the intricacies of Basel II, III and Co-Rep. We also work with our global clients to help meet their more local needs. Critically, we understand that meeting regulatory compliance also depends on a strategic framework for ease of reporting, better data quality, consistency and completeness of data.

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Krishan Gopal

Krishan-Gopal
Principal Consultant Credit and Market Risk

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Market risk is the risk of losses on a bank’s trading book position due to changes in market risk factors i.e. interest rates, foreign-exchange rates, stock prices and commodity prices. Different measures for market risk estimation and management include Value-at-Risk (VAR) and Expected Shortfall (ES).

VAR determines the worst possible loss over a target horizon within a given confidence level. It provides an aggregated view of a portfolio’s risk and accounts for leverage, correlations and current positions and is very much a forward-looking measure. Despite the benefits, VAR calculations are limited to estimating losses up to a stated confidence level only. The Expected Shortfall (ES) is calculated to overcome this limitation. ES is a supplement to VAR and provides an estimate of the tail loss by averaging the VARs for increasing confidence levels in the tail. VAR estimation models include Historical Simulation (normal, age-weighted, volatility-weighted and correlation-weighted simulations) and Monte-Carlo simulation. These models estimate VAR based on different valuation methodologies such as Full Valuation and Delta Valuation (Greeks). Back-testing is an important aspect for validating the VAR calculation and usage. This helps in the correct estimation of risk levels using VAR.

Our experts have hands-on experience in building and implementing VAR models and methodologies for our clients.

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Krishan Gopal

Krishan-Gopal
Principal Consultant Credit and Market Risk

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The regulatory framework governing minimum bank capital and liquidity standards is being strengthened. Basel III places significant emphasis on the quality and level of capital needed.

All calculation approaches are data and process intensive. The foundation /advanced internal rating basis approaches incorporate an internal estimation of the Probability of Default (PD), Loss Given Default (LGD), Exposure At Default (EAD) and effective maturity. The capital calculation for market risk based on the Internal Models Approach (IMA) will use VAR. Regulatory capital for operational risk requires either the basic indicator, standardised or advanced measurement approach (AMA). Common to all of these approaches is the fact that regulators are increasingly imposing large capital buffers and uplifts for inadequate internal models and importantly, these costs are often huge. The benefits for getting it right first time are clear.

In contrast, economic capital is required to achieve the target solvency standard against unexpected losses, providing stakeholders with confidence that invested funds are safe. Its complex calculation uses loss distribution estimation and unexpected losses for a pre-defined confidence level. Economic capital is also required to cover credit, market and operational risk and the challenge to get it right is now stronger than ever.

Whatever your approach, our core experience and knowledge of the Basel and capital directives are helping our clients to manage regulator, stakeholders and investor expectations as well as maximising business returns.

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Krishan Gopal

Krishan-Gopal
Principal Consultant Credit and Market Risk

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Treasury Management

Corporate treasury functions now need to support sustainable business growth through efficient management of balance sheet resources (capital optimisation and funding) and effective management of balance sheet risk (liquidity, structural interest rate and FX risk).

The Basel III regulations regarding liquidity risk have played a considerable part in driving this demand – as credit and capital market seizures took hold in 2008, everything changed and liquidity risk moved to the very top of the risk agenda for every bank operating in the UK.

ACS offers a global perspective to the Group Treasurer. Our treasury transformation practice has a pool of skilled consultants with a 360° view of the industry and greater collective knowledge than most. We are able to deliver value, insights and actionable answers to your unique challenges. Our expertise covers the entire breadth of treasury solutions, from dynamic capital allocation to integrated stress testing.

By leveraging our experience, thought leadership and industry network our clients gain a new perspective in order to resolve their most daunting treasury challenges.

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Ian Monahgan

Ian-Monaghan
Partner Finance and Treasury Solutions

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  • Capital Management
  • Capital Markets
  • BCBS
  • Liquidity Risk
  • Regulatory Reporting
  • Stress Testing
  • Treasury Funding
Capital management is required to manage and optimise cash flows and working capital, helping firms to concentrate on business growth. Given current industry dynamics, cash management functions are under pressure to keep pace with the latest changes and trends in financial markets. These changes have led to the development of innovative and complex cash management products across capital markets.

Capital management includes cash management, short term and long term funding, debt issuance, securities issuance, lending products, intra-group lending and money market investments.

It has now become critical for treasury functions to have the right systems and processes in place to cater for the dynamic allocation of capital across the firm. Treasury must now aim to identify business portfolios with the highest positive returns and reallocate capital across these business portfolios accordingly.

We work with our clients to address all aspects of treasury capital management, be it implementing IFRS 9, regulatory capital compliance, maintenance of core Tier 1 capital, asset pricing or the dynamic allocation of capital. Our expertise is founded on the combined knowledge and skill sets derived from unique treasury experiences gained across a wide range of industries, enabling us to deliver results of real and lasting value.

ACS has strong expertise in capital markets and treasury trading domains. We understand the buy and sell side. We have implemented and re-engineered multiple front end trading systems across the capital markets industry. This implementation portfolio includes e-trading fixed income, equity derivatives and treasury cash management platforms.

We are experienced in the full trade life cycle covering trade capture, pricing, trade execution, limit checking, position and portfolio analytics. We also have a deep understanding of product control and sub-ledger reconciliation functions.

Our product expertise naturally covers all global products:

  • Fixed income
  • Equities
  • Money market instruments
  • FX
  • Derivatives (OTC and exchange traded)
  • Structured products
  • Commercial products.

We are experts in partnering with software vendors to ensure that delivery is taken across the line where time to production is a constraint.

The key requirement is to effectively manage a bank’s intraday liquidity positions and risks to meet payment and settlement obligations on a timely basis under both normal and stressed conditions.

A number of operational elements need to be addressed within the bank’s strategy to manage intraday liquidity risk. Key to success will be its ability to:

  • Measure expected daily gross liquidity inflows and outflows;
  • Anticipate the intraday timing of these flows where possible;
  • Forecast the range of potential net funding shortfalls that might arise at different points during the day;
  • Monitor intraday liquidity positions against expected activities and available resources (balances, remaining intraday credit capacity, available collateral);
  • Arrange sufficient intraday funding to meet its intraday obligations;
  • Mobilise collateral as necessary to obtain intraday funds; Deal with unexpected disruptions to its intraday liquidity flows.

There is a need to apply quantitative tools to monitor the bank’s intraday liquidity position. There is a need to define intraday liquidity sources and usage.

Liquidity risk is the risk of difficulty of selling assets in a secondary market to meet short or long-term obligations. Virtually every financial intermediary faces liquidity risk since the liquidity of its assets and liabilities are necessarily mismatched. Liquidity risk affects all financial institutions, including banks, life insurance companies, savings institutions, pension funds and mutual funds.

The recent financial crisis was exacerbated by the global liquidity crunch. Liquidity disappeared quickly, and illiquidity stretched for an extended period during the turmoil. To mitigate liquidity risk and lower the inherent impacts BIS has introduced additional reforms, the international framework for liquidity risk measurement, as outlined in Basel III. These reforms protect banks from liquidity shocks in both the short term (Liquidity Coverage Ratio) and the long term (Net Stable Funding Ratio).

In order to gauge and manage liquidity risk, it is crucial for a firm to be able to evaluate its current position and determine its available sources and probable use of liquidity.

ACS can provide a sophisticated and robust liquidity risk solution for your business. We are able to help you develop a strategy, policy and practice to manage your liquidity risk profile using pricing models, FX and interest rate impact assessment models and asset and liability management frameworks. These will collectively help to ensure that you have sufficient liquidity to withstand a diverse range of liquidity stress scenarios.

The recent financial crises, the increasing complexity of financial products and rising off balance sheet exposures have all contributed to the severe liquidity compression and funding constraints now seen across the finance industry. As a result, BIS has defined various reporting requirements designed to monitor and control liquidity risk management in severe market conditions.

A bank’s description of its liquidity risk management framework should indicate the degree to which the treasury function and liquidity risk management is centralised or decentralised. A bank should report its funding sources, against its limit setting systems and its intra-group lending strategies.

Basel III now defines requirements for robust liquidity risk management and introduces new liquidity reporting requirements in the shape of the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR). These requirements will significantly impact reporting systems and processes, data requirements and strategic funding decisions moving forward. Other reporting requirements such as CRD IV and CoREP reports also cover liquidity risk reporting.

Our team of experts have the capability to help you implement strategic and efficient reporting systems that are designed to meet your regulatory and internal reporting requirements.

The depth and duration of the financial crisis has led many banks and supervisory authorities to question whether stress testing practices were sufficient prior to the crisis and whether they were adequate to cope with rapidly changing circumstances.

Stress testing is an important tool that banks use for internal risk management and regulatory requirement purposes. Stress tests are performed for different risk types including market, credit, operational and liquidity risk. Notwithstanding the wide range of methodologies in use, the turmoil has highlighted several methodological weaknesses.

Stress testing and scenario analysis is used to evaluate the impact of sudden stress events on a firm’s liquidity position. Stress scenarios can be based on historic events such as the Black Monday of ’87, the September 2001 terrorist attacks, the sub-prime mortgage crisis of 2007 and the tsunami disaster of 2011. Stress scenarios are also based on other liquidity crisis case studies and hypothetical events which drive a prolonged term money-market freeze, unstable FX markets and stranded syndications.

ACS deliver a stress testing framework that is fully integrated with our liquidity risk management solution. This helps our clients manage their cash and generate sufficient liquidity under critical stress conditions to cover their outflows. Our stress testing solution covers various methodologies ranging from simple sensitivity tests to complex stress tests that aim to assess the impact of severe macroeconomic events on a firm’s liquidity position.

Funding matrix is a key treasury function that identifies the excess or shortfall of asset returns over a firm’s liabilities and facilitates the management of open liquidity exposures thereon. Whilst complex, it is crucial to map all funding-relevant assets and liabilities into maturity buckets to compile a firms maturity profile. Funding matrix is a key input to the capital markets business of a firm as it assists the firm in issuing targets for securities and lending products by tenor, type and volume.

Some key points about Treasury Funding and ACS:

  • ACS deliver a highly flexible and robust solution covering a wide range of products and currencies. This enables our clients to assess their asset and liability funding requirements and meet their obligations in times of stress.
  • We provide our clients with the capability to maintain efficient funding that is well diversified across various regions, markets and currencies and enables them to manage their funding matrix within the dynamic environments of today’s global banking system.
  • We have a solid track record of delivery in this space, having implemented some of the most complex funding implementations in some of the largest banks globally.

Regulatory Compliance

The events of recent financial crises has resulted in turbulent operating conditions for financial firms worsened by ever increasing regulatory demands. New widening regulations imposed by regulators are cramping the market place for investment management, retail, corporate and investment banking thereby making it harder to do business.

ACS offers a diagnostic methodology to assess the impact of regulatory change across business operations to enable efficiency, protect market share and profits, and implement new regulatory measures. ACS has experienced and highly skilled team of business and legal experts coupled with the availability of advanced technology to address this need.

In view of intensive and intrusive supervision by regulators, a portfolio approach to respond to regulatory requirements facing the industry will ensure success. ACS team of financial services regulatory experts monitor new developments and regulation closely. ACS insight and expertise can help address the impact of new regulation on business and operational model and facilitate an effective methodology for compliance. This includes helping business, operations and technology to adapt and plan for regulatory requirements on both Prudent (PRA) and Conduct (FCA) fronts.

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Malcolm Staite

Malcolm Farrell Straite 150x150
Partner
Risk Management Solutions

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Our track record for end to end delivery speaks for itself. In our short history, we have delivered some of the most complex business and IT change across some of the worlds largest organisations. Our people are happy and so are our clients. If you would like to know more about a career in ACS please click here.

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