Steve Bullock is senior vice president and general manager for North America for IT2 Treasury Solutions. In addition to working for 10 years with treasury software providers in Europe and the U.S., he also spent 14 years in Aon's corporate treasury in London, in front office dealing, FX exposure management and hedging, and bank relationships.
Just when treasury's focus seemed to shift slightly away from counterparty risk management, the Greek and then the Hungarian sovereign debt crises blew up, showing once again that extreme events such as the collapse of Lehman Brothers or a sovereign debt crisis ought not to be discounted. Treasury best practice seems to demand that counterparty risk management stay at the top of priority lists and that treasurers remain constantly vigilant for sudden credit deterioration. New models are emerging to help with that task, as well as better ways to use integrated technology.
T&R: What has changed?Bullock: Credit limit and counterparty exposure management in the past were seen as important, but essentially routine. Since the crisis, it's clear that all the disciplines of treasury risk management are interrelated, and the common factor is counterparty risk. This is because the current and projected valuations of financial instruments in fact depend on the creditworthiness of the counterparty. The crisis showed how important it was that these areas were connected and analyzed in one coherent risk management process. The reality that major banks could in fact fail brought credit risk into prominence.
Continue Reading for Free
Register and gain access to:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.