In today's environment of intense competitive pressures, volatile economic conditions, rising bankruptcies, and increasing levels of consumer and commercial debt, an organization's ability to effectively monitor and manage its financial and credit risk can mean the difference between success and survival. Protiviti's KnowledgeLeader has tools, publications and resources to help you manage your financial and credit risk.
Below you will find just a few examples of the KnowledgeLeader materials that address financial risk and credit risk:
Audit Committee Reports: Sample Presentations
Each of these four samples contains an audit committee report that has been presented by internal auditors at a target company. The report content primarily focuses on presenting the audit risk assessment process and results, the internal audit planning process and timing, and the business self-assessment processes and results.
Corporate Treasury Review – Audit Report
This sample internal audit report, presented in PowerPoint format, illustrates treasury review objectives, scope and procedures performed. It includes a sample of treasury review observations and management implementation plans that address that the issues. The appendix has an internal control assessment for various cash flow and financial risks.
Credit Risk Policy
This sample outlines a set of policies and procedures formalizing the credit risk management process, the goal of which is to: protect against any unwarranted customer or counterparty credit exposures; maintain credit risk at a manageable level; and identify and avoid a material credit failure (of a significant value, which would impact earnings).
Customer Credit Policy
The purpose of this policy is to establish guidelines for establishing customer credit limits, the credit hold and release process, and the ongoing credit review of customer accounts, in order to maximize profitability by minimizing credit risk and potential collections issues.
Investments in Securities, Derivative Instruments, and Hedging Activities - Audit Work Program
The objective of this audit work program is to review the controls related to a company’s investment procedures. The work program reviews whether investment transactions were initiated in accordance with management’s established policies, the accuracy of investment information, and the results reported in the financial statements.
Process Level Documentation Requirements Memo – Sample
This is an example of a memo used by a public company to describe the documentation they prepared for each process determined applicable to their Section 404 compliance efforts. The three levels of documentation described correlate to the priority rating of the financial statement elements and associated processes. Also included are descriptions of standard documentation types (process narrative, process flow, and risk control matrix).
Protiviti Risk ModelSM
The Protiviti Risk Model is a comprehensive organizing framework for defining and understanding potential business risks. The model categorizes business risk into three main areas: Environment Risk, Process Risk, and Information for Decision-Making Risk.
Another Response to the Financial Crisis: Regulatory Reform
Most people would agree that one of the factors that contributed to the current economic crisis was an inadequate regulatory regime for financial services activities. Many reports and sets of recommendations have already been issued about the root causes of the problem and how regulatory regimes should be revamped to better protect the stability of the financial system. In addition to root causes, this article also provides detail on guiding principles for reform and recommendations for effecting reform.
Balancing of Risks in a Game of Snap: The Coming Re-regulation of Financial Services
The common thread permeating every aspect of the financial crisis is the breakdown of the management of risk. The systemic failure that caused this financial crisis has been an object lesson on a macro level of the impact of silos on the effectiveness of risk management. The dysfunctional activity that contributed to the crisis likely will lead to more regulatory oversight.
Creating Transparency into Your Largest Risk Exposures
In January 2008, a global financial institution reported a $7 billion loss that occurred when unauthorized trading positions were closed. This substantial loss, among others, is yet another reminder that there are severe penalties if the largest risk exposures are not identified in a timely manner, properly monitored and managed effectively. This issue of The Bulletin suggests approaches for improving transparency into an entity’s most significant risk exposures, with the objective of minimizing the risk of unwanted surprises.
The Current Financial Crisis: Frequently Asked Questions
As the current financial crisis continues to evolve globally, there are a seemingly infinite number of questions emerging about how the crisis developed and spread, how it is impacting financial institutions as well as other companies, what governments are doing to address the crisis, and what companies must do to secure their own futures. This document provides answers to some of what Protiviti believes are among the most commonly asked questions about the financial crisis.
E-Business risks: Collateral
Collateral risk is defined as the loss of value or inability to secure control of an asset provided to an organization as security. The use of collateral does not completely eliminate risks associated with performing financial transactions, but rather shifts the concern to the asset used as collateral. This article discusses collateral in e-business and suggests risk management best practices.
E-Business risks: Currency
Currency risk is the risk that business operations or the value of an investment will be affected by changes in exchange rates. Currency is defined as any form of money issued by a government or a central bank and used as legal tender and as a basis for trade. This white paper addresses currency strategies, risks, and best practices.
E-business risks: Financial Instrument
Financial Instrument risk is the risk of not attaining successful trades due to the properties of the financial instruments used. This paper focuses on the risks inherent in the electronic trading of financial instruments. It addresses financial instrument strategies, risks, and best practices.
E-Business risks: Settlement
Settlement risk is the risk that either the buyer or seller, or both, cannot fulfill their obligations in a transaction. This can either be a failure to pay or to deliver an obligation. This white paper describes settlement risk in e-business, including best practices and performance measures.
Guide to Enterprise Risk Management: Frequently Asked Questions
In today’s challenging global economy, there is a need for identifying, assessing, managing and monitoring an organization’s business opportunities and risks. The concept of enterprise risk management (ERM) helps elevate the focus of risk management from the tactical to strategic level. The purpose of this publication is to address some of the most commonly asked questions with respect to ERM. It offers ideas, suggestions and insights to executives responsible for ERM implementation.
Guide to Optimal Operational Risk and Basel II
The Guide to Optimal Operational Risk and Basel II presents the key aspects of operational risk management that are also aligned with the Basel II requirements. Chapter 2 provides detailed guidance for the design and implementation of an efficient operational risk management system. It contains all elements of assessment, including operational risk identification, measurement, modeling, and monitoring analysis, along with evaluation analysis and the estimation of capital requirements.
Impact of the Current Financial Crisis on the Energy and Utilities Industry
This period of unprecedented turmoil in the financial markets is affecting nearly every sector of our economy. Even the energy and utilities industry faces potential challenges in accessing capital and funding, including their business partners such as financial institutions and construction contractors. This issue of the Global Financial Crisis Bulletin summarizes the key potential impacts of the financial crisis across various sectors within this energy and utilities industry.
Integrated Compliance Efforts: Business Benefits Beyond Regulatory Mandates
Protiviti and Operational Risk magazine developed this survey to assess the current state of business compliance programs and initiatives commenced or planned to meet new compliance requirements. The survey focused on financial services institutions and included questions on compliance requirements for corporate governance, Basel II, business continuity and financial crime (including anti-money laundering). Respondents from financial services organizations representing regions across the globe participated in this study.
Is Enterprise Risk Management an Imperative for the Financial Services Industry?
Enterprise Risk Management (ERM) is not a new concept. In fact, financial services companies were among the leaders in implementing ERM frameworks. However, most were unable to convince themselves of the value of ERM. But, the buzz is back, and this time the outcome may be different.
Navigating the Financial Crisis – What Lies Ahead?
During this time of great uncertainty for companies in the United States and worldwide, management teams will be faced with difficult decisions that require them to carefully balance the risk/reward equation. Of particular note, the financial crisis is causing executives and boards to assess their companies’ assets to determine how to properly protect and exploit them in the current economic environment. This publication summarizes questions to consider when making this assessment.
New Rules of the Game: The Obama Administration’s Plan for Regulatory Reform
In the lead-up to the G-20 meeting in London on April 2, 2009, U.S. Treasury Secretary Geithner disclosed the broad principles that are expected to underpin the Obama Administration’s plans for regulatory reform in the financial services industry. This publication provides additional detail on the administration’s plan and identifies some of the challenges that must be faced in the effort to effect meaningful reform.
PCAOB Update on Proposed New Auditing Standards and Audit Considerations in the Current Economic Environment
On October 22, the PCAOB held a meeting with its Standing Advisory Group to discuss how the current economic environment affects the risk of material financial misstatements and the resulting impacts on financial statement audits, and whether the PCAOB should issue guidance to assist auditors in the audit process. In a separate meeting, on October 21, the PCAOB proposed seven new auditing standards that support a more effective and risk-based audit approach. These two developments are detailed in this Flash Report.
Perspectives from Financial Institutions in Europe and the United States
To gain further insight into the current impact and likely short- and long-term consequences of the crisis in the financial markets, Protiviti recently conducted a qualitative research project to obtain the viewpoints and perspectives of executives and senior management from more than 40 financial institutions in Europe and the United States, as well as from the financial services industry experts throughout our firm. This issue of the Global Financial Crisis Bulletin shares insights from these members of management on the crisis, explores varying perspectives on its expected impact on the financial services industry, and reviews the most pressing issues of debate among different countries and regions.
The Public-Private Investment Program: Private Party – Public Money
On March 23, 2009 the US Treasury announced the framework for the Public-Private Investment Program (PPIP). This capped off $13.5 trillion in various U.S. Treasury, Federal Deposit Insurance Corporation (FDIC) and Federal Reserve Initiatives to stabilize the financial system and jump-start lending and the broader economy. Read this newsletter to learn about the PPIP, and also the Legacy Loans program, the Legacy Securities program, asset manager requirements, and reasons to think the PPIP may or may not be successful.
A Question of Balance: Quantitative and Qualitative Risk Analysis
This issue of The Credit memo looks at the benefits as well as the limitations of quantitative and qualitative approaches to credit risk analysis.
Regulatory Reform: We Need Music, Not Noise
Over the years, United States presidential commissions and trade associations have made countless appeals for meaningful regulatory reform, but such reform has remained elusive. This article suggests that the best way to design a meaningful plan for regulatory reform in the United States is to start with a clean sheet of paper. These simple steps offer the advice a consultant would provide to a company looking to implement effective risk management: Define your desired future state and align your strategies, people, processes and tools to achieve that state.
Recent Commentary by SEC Chairman on the Deterioration of Credit and Liquidity Conditions in the Subprime Lending Market
Earlier this month, the SEC published testimony by Chairman Christopher Cox to the Senate Committee on Banking, Housing and Urban Affairs regarding a number of topics relating to the deterioration of credit and liquidity conditions in the U.S. residential mortgage market. In his remarks, Chairman Cox discussed a number of topics relating to the subprime mortgage crisis, including some related accounting and risk management issues, the role of credit rating agencies, the mutual fund industry and steps the SEC is taking to improve transparency and oversight. This Flash Report provides commentary on recent developments.
The Regulators’ Primer on Surviving a Liquidity Crisis
A recent publication from the Basel Committee noted that many banks failed to take into account basic principles of liquidity risk management before the current market turmoil began, leaving them unprepared and exposed to market uncertainties. The Basel Committee provides 17 principles for managing and supervising liquidity risks that it broadly groups into five categories: fundamental principle, governance, measurement and management, public disclosure and role of the supervisors.
Risk and assurance at Salmat, Australia’s leading communications company
Salmat is organised under four main divisions: Salmat MediaForce; Salmat MediaForce; Salmat BusinessForce; and Salmat DigitalForce. In this profile, David Gunn, group manager of risk and assurance at Salmat, discusses how his team facilitates the organisation’s risk management and risk assessment framework. Gunn’s view is that "…we should make sure the risk framework is simple and that the principles and the basics are right." Read this profile to learn why Salmat is Australia’s leading communications company.
Risks and Challenges Facing the Financial Services Industry in 2009 - And Beyond
FS Insights, a quarterly publication from Protiviti’s Financial Services Practice, provides timely coverage of issues facing the financial services industry and insights to help you identify and manage risks and adapt to the changes affecting financial services companies. This issue features the articles: Risks and Challenges Facing the Financial Services Industry in 2009; and, the Role of the Audit Committee in Weathering the Financial Crisis.
Risk Management in a Turbulent Market
FS Insights, a quarterly publication from Protiviti’s Financial Services Practice, provides timely coverage of issues facing the financial services industry and insights to help you identify and manage risks and adapt to the changes affecting financial services companies. This issue features the articles: Risk Management in a Turbulent Market; Data Security in the Financial Services Industry: Still Room for Improvement.
Risk Quantification
Management of business risks has become an increasingly important issue. In this article, Protiviti’s Dr. Gabriel Kuhn presents background information on risk measurement and estimation and shows several quantification methods for the four main risk types: credit, market, liquidity and operational risk.
Société Générale Aftermath - A Call to Action
On January 24, 2008, the world learned of the largest bank trading loss of all time - Société Générale. This Flash Report discusses some of the implications of the Société Générale incident, as well as highlights lessons learned given the event’s place in history among similar trading loss events. It also suggests areas of focus for financial institution executives in its aftermath. No control system is perfect, as there are cost-benefit trade-offs, but a holistic review should serve to patch any obvious cracks and make it more difficult for the rouge trader to execute unabated in the future.
Strength in Numbers: How Creditors’ Committees Maximize Results in Chapter 11 Cases
While the financial meltdown of mortgage lenders and investment banks has riveted the attention of citizens and governments worldwide, many mainstream businesses are finding that "business as usual" is more difficult than ever. This article is the second in a series that addresses some of the difficulties that arise when businesses become insolvent. It focuses on how companies can use official creditors’ committees to protect their interests when important clients reorganize under Chapter 11 of the Bankruptcy Code.
Technology Investment: Achieving Balance Between Business Requirements and Regulatory Compliance
Today, with most enterprises having achieved initial compliance, the effort is shifting toward a critical phase: Companies now strive to maintain ongoing compliance while working to drive down cost and improve overall business performance. The effective CIO must now strive to balance aspects of IT growth, business alignment, risk mitigation, operational efficiency and compliance.
U.S. Risk Barometer
In September 2005, Protiviti commissioned a study to better understand the risk profiles of senior executives with the 1,000 largest companies in the United States. The study was conducted by an independent research firm through a survey of 76 senior executives at Fortune 1000 companies who both report to the board and have a strategic role with respect to identifying and managing risk. The results are summarized in three categories - changes in risk profile, risk management capabilities and current state of risk.
U.S. Subprime Crisis: Risk Management’s Next Steps
The financial industry is hard at work trying to move beyond the U.S. subprime problems that surfaced in 2007. As part of the recovery effort, financial institutions are reconsidering their credit practices, quantitative models, governance structures and risk management activities. Each of these areas will experience change as banks and their boards and executives adapt to the current economic and credit environment.
What Should Be the Focus in 2009? Considerations for High-Tech Companies
As a result of current economic conditions, many high-tech companies are beginning to implement cost-cutting measures to prepare for a tough 2009. How are high-tech organizations weathering the challenges of the current economic environment? Smart companies are looking at ways to freeze or cut costs while reducing or mitigating corporate risk. More details are provided in this bulletin.
Association of Corporate Treasurers
The Association of Corporate Treasurers was created to encourage and promote the study and practice of finance and treasury management and to educate and train those involved in this field. This site offers articles from The Treasurer, conference information, and the latest technical bulletins and educational information.
Bank for International Settlements (BIS)
The Bank for International Settlements (BIS) is an international organization that fosters international monetary and financial cooperation and serves as a bank for central banks.
The Bank of England
The Bank of England is the central bank of the United Kingdom. This site offers monetary and banking statistics in addition to handbooks for Central Banking Studies.
Business Finance
Business Finance Magazine covers news and developments relevant to financial executives involving general accounting, cash management, benchmarking, credit and collections, and other finance issues.
Dun & Bradstreet
Dun & Bradstreet is a publisher of business information reports and guides covering topics such as credit, collections, marketing, purchasing, and small business services. This site features selected full text guides, newsletters, industry trends, and more. Access to reports and databases is limited to D&B subscribers or credit card purchasers.
>> Sign up now for a
30-day free trial or an
annual subscription.
Find out more about our
subscription prices and group discounts.
If you have any questions please
contact us.