Risk Control Programme

XMI offers a unique risk-reduction and reputation assurance service focused specifically at the Treasury environment.

Against the backdrop of well-publicised failures in Treasury control and the ever-increasing regulatory environment, senior executives are faced with escalating personal accountability. The current environment requires a more proactive and practical approach to operational risk assessment complemented by solid risk-reduction policies and procedures.

XMI fills this gap by reviewing the effectiveness of controls over key risks that exist between Treasury front, middle and back offices. In particular, we focus on the interface between the people in these areas and test their understanding and effectiveness in implementing the key risk controls.
Risk Control

Existing Lines of Defence

Key weaknesses are often found in the traditional risk control mechanism within Treasury operations:

Treasurers – often have many other roles to play and may find it difficult to see key patterns developing.

Risk Management – in many organisations there is little crossover from front to middle-office resulting in a lack of front-office experience within the risk-management function.

Internal Audit - there are constraints on their effectiveness such as:

  • the timing of their investigations tends to be predictable and their review process-led;
  • in common with the risk management function they may only have limited experience of specialist front-office Treasury issues - particularly the subtle behavioural ones; and
  • they are often only called upon when problems have already occurred.

External Audit – is normally provided by one of the “big four” firms and may be perceived to carry more gravitas, but can be hampered by similar issues:

  • they can arrive long after the pattern has evolved into an entrenched problem;
  • they are process-auditors making the review prone to being reactive; and
  • there tends to be a high proportion of career consultants within their review teams.

The XMI Approach

The unique methodology for the Risk Control Programme was developed from extensive, hands-on experience and gets under the skin of the following:

Human Factor Risk - challenging and examining the behaviours and professional competencies of treasury staff;

People Management – scrutinising the people processes which create the foundations for an appropriate Treasury culture and working environment;

Treasury Strategy and Business Planning – examining linkages with corporate strategy and levels of “buy-in” from the Treasury area;

Market Risk – analysing the risk profile and its consistency with trading and sales objectives;

Control of Dealers – checking reporting lines, segregation of duties, the potential for trade manipulation, limit and mandate control;

Pricing - reviewing appropriateness of client and internal pricing policies;

Management Information – examining quality of data produced and effectiveness of how it is interpreted and disseminated.

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