Integrating Funds Transfer Pricing and ALM

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Integrating Funds Transfer Pricing and ALM

To ensure we meet your expectations and maximise your return on training investment, we favour a classroom/workshop style set up for the delivery of our courses. Please note we have therefore limited number of spaces available and these will be assigned on a first come, first accepted basis. We recommend early booking to avoid disappointment.
“Discover a valuable perspective on risk management that can impact the design and governance of your Funds Transfer Pricing process”
How will you benefit?
Effective Interest Rate Risk (“IRR”) management at depository institutions becomes increasingly difficult as the size and complexity of the organization grows. This difficultly arises not because of limitations in modeling capabilities or the inability of risk modelers to grasp complex financial instruments. Rather, as those who make decisions about balance sheet composition and product design are more widely dispersed across the organization, the limitations and weaknesses of FTP functions become more critical to the process of measuring and managing interest rate and liquidity risk.
In small depositories, funds transfer pricing (“FTP”) processes are often perfunctory as ALCO members are the same ones who make key decisions about balance sheet composition and product structure (maturity terms, embedded options, break funding). In larger institutions, these various functions are generally not embodied in the same personnel. FTP serves as the linkage between risk creation (product design and pricing) and risk management (ALM). Any shortcomings in the FTP processes will result in incomplete or ineffective risk transfer from the product managers to corporate treasury. As a result, product managers are (unintentionally) incented to structure and price products inefficiently. Further, treasury’s perception of balance sheet risk is inconsistent with actual risk exposures.
Organizations which are truly successful at IRR management demonstrate a cultural awareness of risk, have risk transfer processes which are rigorously developed and strictly enforced. Such organizations are best prepared to deal with rapid and significant changes in the economic environment because the product managers and lines of business are forced to consider a priori changes in behaviors across a broad range of interest rate and economic scenarios. This requisite pro forma analysis results in optimal product design and proactive strategies to deal with changing customer behaviors and economic environments.
This course will describe the alignments which are necessary for effective risk management to occur and lessons learned in trying to create and enforce those alignments.

Location:

Miami, FL, United States of America

Country:

United States

Start Date:

Jan 22, 2015

End Date:

Jan 23, 2015

Organizer:

N/A

Sectors:

Business & Finance