Policy development
Policies are an important element in enshrining the strategy of a business and in ensuring it is properly controlled. Nowhere is this more important than in risk management.
We can draft or review policies in any risk management area as well as for many business areas. The types of policy we most frequently encounter are:
- High level risk and governance policy
- Credit and collateral policy
- Market risk policy
- Operational risk policy
- Risk measurement policy
- Commercial policies for specific business units
- Country risk policy
Client
Wholesale bank
Region
UK and Benelux
Client need
The client was embarking on improvements to its credit risk measurement and country risk policies. For credit risk measurement, the policy needed to be updated to take account of the move to more advanced methodologies for the measurement of potential future exposure such as Monte Carlo simulation. For country risk, the policy needed to better measure the likely effect on the bank’s trading exposures of a country event.
Our deliverables
We drafted the policies, working in close collaboration with client staff.
Client
Pension fund manager
Region
Benelux
Client need
The client had decided to upgrade its risk management capabilities and was in the process of building a risk management department. The client had produced a draft risk management policy but wished to have this reviewed to ensure compliance with best market practice.
Our deliverables
Having held a series of meetings with senior client employees to ensure we fully understood the business, we reviewed the policy to identify areas of policy and procedures which could be improved and where the client fell short of best market practice. The scope included all areas of the fund manager’s risk practices including market risk, liquidity risk, tracking error and compliance with investment mandates.
Our findings were detailed in a report which was presented to management.
Client
Treasury operation of retail and commercial bank
Region
Middle East
Client need
The client entered into margined FX and derivatives with its corporate client base. The client wanted to ensure that its credit policies, processes and systems for this business were in line with market practice.
Our role
We reviewed the client’s business processes, margining methodologies, policies and systems. We identified areas where the client fell short of best practice and reported these to the client’s management. We were subsequently engaged to draft a new collateral policy for this business.
Client
Hedge fund manager
Location
UK
Client need
The client had recently expanded its trading volumes and had started to enter into more complex products. The client wanted to upgrade its risk management practices to take account of the additional risks being undertaken and to ensure compliance with best practice.
Our deliverables
We reviewed the fund manager’s risk practices and identified areas of weakness. We advised the fund manager on the appropriate risk governance and policies that should be put in place. We then worked with the fund manager to develop a suite of reports and stress tests to be delivered from its recently implemented portfolio and risk management system.