Imagine the Possibilities: An All-in-One Treasury and Risk Management Solution

Dennis Carey

Solutions Consultant, Reval

Nick Castellina

Research Director, Aberdeen Group

August 12, 2014

Imagine the Possibilities: An All-in-One

Treasury and Risk Management Solution

About the Speakers

2

Dennis Carey

Solutions Consultant

Reval

Nick Castellina

Research Director, Business

Planning and Execution

Aberdeen Group

The Integrated Approach to Treasury

and Risk

Achieving Greater Returns through Automation and

Visibility

3

Key Findings

o Finance departments must become more collaborative

o Volatile markets and increased regulation impact treasury and

risk management

o Top performers integrate treasury and risk management to

improve reporting, automate processes, forecast more

effectively, and minimize risk

o By integrating treasury and risk solutions, organizations can

realize significant increases in performance

o Cloud solutions provide benefits

4

Aberdeen’s Research Methodology

Pace: End-User Investigation

!

PRESSURES ACTIONS CAPABILITIES ENABLERS

External and internal

forces that impact an

organization’s market

position,

competitiveness, or

business operations.

The strategic

approaches that an

organization takes in

response to industry

pressures.

The business

capabilities

(organizational,

process, knowledge

management etc.)

required to execute

corporate strategy.

The key technology

solutions required to

support the

organization’s

business practices.

What is causing

organizations to

think differently?

What strategies

are they using to

respond to

pressures?

Why are they

achieving greater

success?

What technologies

and services are

enabling them to

succeed?

5

Aberdeen Maturity Class Framework

Defining the Best-in-Class

Selected Performance

Criteria (KPI)

Organizational Goals

Employee Performance

Bench Strength

Total Respondents

- Top 20%

- Middle 50%

- Bottom 30%Respondents are scored

individually across KPI

Best-in-Class

Industry Average

Laggard

6

Creating a Cohesive Finance Department

Among Top Finance Initiatives

36%

41%

43%

48%

0% 20% 40% 60%

Integrate and align data useful for multiple finance

functions

Promote collaboration with finance as well as with

the rest of the organization

Automation of core business operations and

functions

Conduct internal assessment of financial processes

and technological capabilities

Percentage of Respondents, n = 100

Source: Aberdeen Group, June 2014

7

Polling Question #1

o What is the top pressure driving your company to initiate or explore improvements in Treasury and Risk Management?

a) Greater regulatory and compliance oversight

b) Increased financial risk (foreign exchange, interest rate, sovereign risk, commodity risk, etc.)

c) Low interest rate making it difficult to find areas to invest in

d) Too many technologies or financial products making it difficult to identify a specific solution

e) Insufficient information to effectively hedge / insure against financial risks

f) Inability to keep up with market volatility

g) Inability to accurately forecast cash flows

h) Lack of visibility into and understanding of outstanding accounts receivables

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Pressures Impacting Treasury and Risk

Management

16%

21%

32%

36%

41%

0% 20% 40% 60%

Lack of visibility into and understanding of

outstanding accounts receivables

Insufficient information to effectively hedge /

insure against financial risks

Greater regulatory and compliance oversight

Inability to accurately forecast cash flows

Increased financial risk (foreign exchange, interest

rate, sovereign risk, commodity risk, etc.)



9

Defining the Best-in-Class

Definition of

Maturity ClassMean Class Performance

Best-in-Class:

Top 20%

of aggregate

performance

scorers

1.9 days to report a global cash position

3% variance in global cash forecasting

20% decrease in risk exposure over the

past year

Industry

Average:

Middle 50%

of aggregate

performance

scorers

7.4 days to report a global cash position


1% increase in risk exposure over the past

year

Laggard:

Bottom 30%

of aggregate

performance

scorers

8 days to report a global cash position


2% increase in risk exposure over the past

year

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Best-in-Class Strategies to Align Treasury

and Risk

21%

10%

27%

53%

38%

16%

21%

21%

47%

68%

0% 20% 40% 60% 80%

Formalize risk management and cash

flow forecasting processes

Implement new treasury and risk

management technology

Centralize treasury and payments

processes

Improve cash flow forecasting

Automate financial transactions


Best-in-Class

All Others


11

Taking an Integrated Approach

72%

61%56%

61%68%

49%

28%

44%39%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Integrated business

systems serve as a

complete and

auditable system of

record

Real-time updates

to financial metrics

Ability to manage

cash and risk

together

Ability to identify

and quantify risk

exposure

Real-time visibility

and control into all

cash account

balances

Perc

enta

ge o

f R

esp

ondents

, n =

100 Best-in-Class All Others


12

Enhanced Cash Management

61%67%

58% 56%

72%

60% 59%

33%30%

51%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ability to forecast

cash positions for

defined time

periods

Streamlined and

centralized

payment

processing

Ability to invest

end-of-day surplus

cash

Ability to support

multiple pooling

structures and bank

relationships

globally

Support for

integration of new

banks / accounts

Perc

enta

ge o

f R

esp

ond

ents

, n =



13

The Importance of Reporting and Control

71%

50%

74%

41%

25%

51%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Continuous process compliance

monitoring

Automated financial reporting Automated transaction posting

to general ledger / financial

systems

Perc

enta

ge o

f R

esp

ondents

, n =



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Effective Risk Management

72%67% 67%

33%41%

46%51% 52%

21%

39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

A risk- and

compliance-aware

culture is established

to ensure

accountability and

alignment to

organizational

objectives

Ability to evaluate

credit

Ability to monitor and

detect fraud

Ability to optimize

and automate

hedging strategies

Ability to optimize

cash and support

intercompany

funding and lending

Perc

enta

ge o

f R

esp

ondents

, n =



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Polling Question #2

o Does your organization track and benchmark any of the

following risks on a regular basis? Please select all that apply.

a) Credit risk

b) Counterparty risk

c) Foreign exchange risk

d) Sovereign risk

e) Commodity risk

f) Interest rate risk

g) Liquidity risk

h) Reputational risk

i) Do not regularly track

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Best-in-Class Monitor More Risk Factors

44%

27%

21%

16%

32%

25%

36%

21%

26%

26%

32%

32%

37%

47%

0% 10% 20% 30% 40% 50%

Don't track

Liquidity risk

Reputational risk

Counterparty risk

Foreign-exchange risk

Interest rate risk

Credit risk


Best-in-Class

All Others


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Key Tech Enablers of the Best-in-Class

50%

44%39%

33%30%

26%

0%

10%

20%

30%

40%

50%

60%

Treasury

Management

System

Governance, risk,

and compliance

(GRC) solutions

Integrated

Treasury and Risk

Management

platform

Perc

enta

ge o

f R

esp

ondents

, n =



Benefits of Integrated Treasury and Risk

Integrated

Treasury

and Risk

Not

Integrated

Percentage of reports delivered in time needed by

managers for decision-making 84% 73%

Accurate financial reports in the last 12 months 90% 80%

Variance in revenue forecast between forecast and

actuals 9% 17%

Average return on short term capital investments 2.6% 2.4%

Average cost of short-term borrowed capital 2% 2.8%

Variance in global cash forecasting 4% 8%

Loss due to unmitigated risk over past two years 2% 4%

Decrease in risk exposure over the past year 5% 0%

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Cloud Adoption for Financial Management

Trends

38%

31%

24%

32%

21% 20%

0%

20%

40%

Off-Premise - software is installed

off-site or at a rented data center,

and is deployed to users through

your internal network

infrastructure

Software-as-a-Service (SaaS) /

Cloud / On-Demand - software is

hosted and accessed via a third-

party web-based service

Perc

enta

ge o

f R

esp

ondents

, n =

100

Best-in-Class Industry Average Laggard


20

SaaS Brings Enhanced Capabilities

58%67% 67%

58%

92%83%

41% 43%51%

39%

59% 61%

0%

20%

40%

60%

80%

100%

Audit risk

exposure is

assessed and

tracked

Ability to identify

and quantify risk

exposure

Establishment of

benchmarks to

track

performance on

an on-going

basis

Ability to

optimize cash

and support

intercompany

funding and

lending

Real-time

visibility and

control into all

cash account

balances

Ability to

forecast cash

positions for

defined time

periods

Perc

enta

ge o

f R

esp

ondents

, n =

100 SaaS TR No SaaS TR


21

Cloud Adoption for Financial Management

Trends

SaaS

Treasury

and Risk

Not SaaS

Percentage of reports delivered in time needed by

managers for decision-making 80% 75%

Accurate financial reports in the last 12 months 87% 83%

Percentage of stakeholders with access to financial

data 85% 72%

Decrease in time to decision over the past year 18% 8%

Average cost of short-term borrowed capital 1.1% 2.5%

Variance in global cash forecasting 3% 7%

Loss due to unmitigated risk over past two years 1% 4%

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Key Findings

o Finance departments must become more collaborative

o Volatile markets and increased regulation impact treasury and

risk management

o Top performers integrate treasury and risk management to

improve reporting, automate processes, forecast more

effectively, and minimize risk

o By integrating treasury and risk solutions, organizations can

realize significant increases in performance

o Cloud solutions provide benefits

23

Recommendations

o Take an integrated approach to finance and GRC

o Provide visibility into cash management and forecast

effectively with predictive data

o Identify risk factors and monitor them on an ongoing basis

o Automate transactions and reporting

o Utilize key technology

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All-in-one SaaS Treasury and Risk

Management

Strategic opportunities and benefits of an

integrated treasury and risk management

workflow

25

Integrated, Connected, Seamless

Processes and Capabilities 26Disparate, Disconnected, Siloed

Systems and Processes

Multiple Systems and Data Sources Interfaced to

Address Tactical Treasury Requirements

All-in-one Fully Integrated Solution for TRM

Built to Deliver on Strategic Treasury Requirements

GL Ledger

Market Data

Bank Accounts

Commodities

Risk

ManagementLight Web

User Interface

Custom

AppsTWS

Hedge Accounting

Integrated vs. Not Integrated

Effective Financial Risk Management

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WHO -

•Trades• Approves• Monitors• Reports• Counterparty

WHAT -

• Exposures• Objectives• Strategy• Instruments• Benchmarks• ReportsWHEN -

• Decisions• Trading• Settlements• Communication

HOW -

• Objectives • Trading• Risk Analysis• Accounting • Valuation

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Increased Financial Risk

Increased Strategic Decision Making

Financial Risks

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CashFX

Exposure

IR

ExposureCommodity

Exposure

Limits Controls

Risk Management

• Holistic view

• Timely info

• Key metrics

• Policy thresholds

Cash Policies

• Bank partners

• Pooling structures

• Payment

structures

Risk Management Policy

• Hedge strategy

• Compliance

• Performance

metrics

• Execute policies

• Compliance

• React to unexpected

• Reputational risk

Decisions

Cash & Liquidity Risk

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TODAY

FORECAST

Cash Position

o Large disbursement (Liquidity risk)

o Held in currency (Currency risk)

o Held in bank (Counterparty risk)

o Held in country (Country/Sovereign

risk)

Simulations

Cash & Liquidity Risk – Building the

Foundation

o Centralized bank account management database

o Total visibility into world-wide cash balances

o Flexible, dynamic and configurable cash position worksheets

o Global cash flow forecasting• Identify future shortfalls and surpluses

o Basic cash forecasting performance testing

o Understand debt and investment structures

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The Power of SaaS TRM

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CASH MANAGEMENT• Bank statement retrieval

• Bank account management

• Cash positioning and reconciliation

• Payments and Payment Factory

• In-house banking and Pooling

• Multi-lateral Netting

• Forecast and Liquidity Planning

• Debt & Investments Management

• Intercompany Loans

• Limit Monitoring

• Accounting

• Performance Evaluation and

Reporting

LIQUIDITY MANAGEMENT

ACCOUNTING AND COMPLIANCE

RISK MANAGEMENT• Integrated Market Data

• Exposure Quantification / Management

• Multi-Asset Class Derivative Valuation

including IR, structured rates, FX, energy,

agriculture, metal, equity, credit)

• Credit adjusted valuations

• Hedging Strategy

• Back Office and Accounting

• Strategy Evaluation and Performance

Measurement

• Compliance with ASC 815(FAS 133

and FAS 161), ASC 820(FAS 157),

IAS 39, IFRS 7, IFRS 9, and IFRS 13

• EMIR and Dodd-Frank Reporting

• Inventory & Activity Reporting

• General Ledger

• Audit Controls

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Amplified with Innovation-as-a-Service

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SOFTWARE-AS-A-SERVICE (SaaS)

• Immediate and global access to Reval’s

single and integrated platform

• Flexibility for growth and expansion

• On-going upgrades and enhancements

seamlessly deployed to entire user

community

DATA-AS-A-SERVICE

(DaaS)

• Validated data aggregated from

multiple sources and systems

• Evaluate, analyze and act on

information within Reval’s single

integrated platform

CONNECTIVITY-AS-A-SERVICE (CaaS)

• Seamless connectivity and integration

with transaction partners (MMF portals,

Trade Execution, ERP etc.)

• Streamlined and simplified treasury

activities including:

• Bank statement reporting

• Transactions and trading

• Investment (MMF portals)

• Internal connections (ERP)

Questions?

Dennis Carey

Solutions Consultant, Reval

[email protected]

Nick Castellina

Research Director, Business Planning and

Execution, Aberdeen Group

[email protected]

@nickcastellina

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mailto:[email protected]

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Imagine the Possibilities: An All-in-One Treasury and Risk Management Solution

Technology

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