Managing the uncertain consequences of changes in interest rates, foreign currency rates of exchange, and commodity pricing can be a challenge to businesses of all sizes. Market volatility, complex accounting rules and tax strategies, regulatory requirements like Dodd-Frank and Basel III in the U.S., and the European Market Infrastructure Regulation (EMIR) make the task even more daunting.
That’s why Grayline supports corporations in three different areas:
A highly customized exercise, risk management is unique to each company’s mix of industries, products and services, clients, and geographies. To manage risk, organizations should look for flexibility in adjusting business strategies and process, and implement risk management programs as new regulatory requirements emerge.
With decades of experience in all aspects of risk management in the corporate sector, Grayline’s expertise includes:
- Interest Rate Risk: Also referred to as market risk, interest rate risk is the risk that a company’s performance will change due to changes in the level of interest rates, the shape of the yield curve, the spread between two rates, or changes in any other interest rate relationship. Grayline designs and implements interest rate hedging strategies to best manage a company’s financial and risk management needs.
- Currency or Foreign Currency Risk: Also known as FX risk or exchange rate risk, it exists when an investment’s value changes due to the changes in currency exchange rates. Many organizations negotiate their financial contracts in a currency other than the base currency of their company. Since exchange rates fluctuate daily, there is inherent risk in the contract which directly impacts the bottom line. Grayline reviews all existing and future contracts, and provides advice on how to best manage that risk.
- Liquidity Risk: This occurs when a company is unable to meet short-term demand for cash. Grayline helps businesses articulate and measure their liquidity needs, and integrates a custom solution into existing workflows.
- Credit Risk: The risk of a transaction counterparty failing to make required payments can leave a business with a loss of principal and interest, disrupt their cash flow and increase their collection costs. Grayline helps companies assess current credit risk practices in light of regulatory developments.
Plus Grayline can help with strategic risk, reputation risk, price (or market) risk, transaction risk, legal and regulatory compliance risk, and capital risk.
Complying with the new regulations imposed by Dodd-Frank and Basel III can be overwhelming. That’s why Grayline created a five-step process which combines leading best practices with regulatory guidance:
- Identify applicable regulations.
- Institute a regulatory and risk MAPP (Management Approach to Policies and Procedures) to help navigate the institution’s exposure. Create (or revise) policy statements.
- Implement a framework to measure and monitor exposure to regulatory changes, and incorporate these into MAPP.
- Provide ongoing communication with stakeholders, including senior management, regulators and auditors, as policies and procedures are developed, revised and/or implemented. Provide reports to relevant governing bodies.
- Address non-compliance gaps, and evaluate alternative hedge structures on the organization’s balance sheet.
Businesses must continually analyze past performance to gain insight as they plan for the future. Traditionally, business intelligence, based on data and statistical methods, has focused on using a consistent set of metrics to measure past performance and guide business planning.
By making extensive use of statistical analysis including explanatory and predictive modeling, Grayline leverages these fact-based management tools to help drive decision making. Grayline queries and reports on business outcomes using online analytical processing (OLAP) and “alerts,” which help answer questions such as what happened, how often it happened, where the problem lies, what might happen should the trend continue, and what, if any, actions are needed.
To learn more about how Grayline can help your organization manage risk, maintain regulatory compliance or use business analytics to help accelerate business performance, contact us.