Finance & Risk Related Experience
Diversified European institution: Developing an economic capital and risk adjusted performance framework
A major, northern European institution recently entrusted us with a multi-year program to develop a group-wide economic capital and risk-adjusted performance framework. The engagement covers all areas of the client's diverse business, including insurance and private banking. Currently, we are embedding new risk-adjusted measures into all levels of our client's management processes, and into all areas of its business. Our focus includes: overseeing implementation of the organizational changes needed to drive the risk management aspects of the bank's chosen strategy, the integration of insurance and banking risks, and facilitating the bank's dialogue with regulators.
German universal bank: Assisted our client in preparing for Basel II and managing the growing pressure for disclosure from regulators, rating agencies and analysts
To manage the growing pressure for disclosure from regulators, rating agencies and analysts, a German universal bank engaged our firm as they began making their preparations for Basel II. The Finance & Risk practice conducted a survey of the client's approaches to economic capital and analyzed the results across multiple lines of business. Then, our team delivered a plan for enhancement of the organization's risk measurement and organizational efficiency within risk management, while also identifying the bank's most significant risk concentrations.
European bancassurer: Created a market-leading group risk function
Amid a myriad of technical and organizational challenges, our mission was to create a market-leading group risk function for a European bancassurer. We developed and integrated asset and liability management, as well as measurement and management capabilities, into both the insurance and banking sides of the business. The Finance & Risk Practice also designed the revamped organizational structure, developed recruitment specifications and partially staffed the new risk management function. Currently, we serve in a senior counseling role on risk management within the maturing organization.
North American regional bank: Revamping risk assessment processes and technologies across all business lines and risk types
A large North American regional bank chose our firm to conduct a thorough overhaul of risk assessment processes and technologies across all business lines and risk types. The ongoing effort includes the development of new credit and operational risk assessment techniques. The bank is developing a new credit risk rating system that will leverage the best aspects of its existing ratings process, as well as new quantitative techniques to predict potential losses throughout the enterprise. The project also entails developing enhanced applications for ratings that will allow the institution to better control, price and report credit risk exposures.
Asian statutory board: Developing a holistic framework for measuring, monitoring and managing the investment risk of this board's portfolio
For an Asian statutory board, we are developing a holistic framework for measuring, monitoring and managing the investment risk of the board's portfolio. The Finance & Risk Practice began with a gap analysis of the board's current practices before designing a new risk management framework that addressed governance, organization, processes, metrics and reporting. The intention was to build a structure that will improve the board's ability to optimize risk-adjusted investment returns. Our team also designed a set of risk policies and procedures that facilitate a proper risk governance system with established reporting lines and links to decision-making.
Major Asia-Pacific bank: Enhancing credit risk-rating models to achieve compliance with Basel II’s criteria for internal rating models
Our first step was to segment the bank's portfolio and review the existing rating models applicable to each segment. Then, we presented a set of development options, along with an estimate of the likelihood that each option would achieve Basel compliance. Now, the team is redesigning a range of obligor rating models, which will be finalized into PC-based model prototypes and fully documented in line with the relevant Basel requirements for model estimation, validation and the assurance framework.
Work in the operational risk area includes: expanding the capture and analysis of loss data; developing a process for the annual review of operational risks and risk control policies within business lines and support units; and establishing a central operational risk team to coordinate risk measuring, monitoring and reporting. With the completed framework, managers will be able to control operational risk within the limits of the bank's overall risk tolerance.
Balance sheet and Treasury strategy
At a large North American bank, MOW recently coordinated a transformational program to improve the bank’s Treasury strategy, including optimization of the bank’s balance sheet and significant enhancement to the Treasury infrastructure. The primary objective of the project was to help the bank improve low earnings via re-allocation of the balance sheet to more efficient products. In order to identify the ‘efficient frontier’ of investment alternatives, we began with a detailed review of the bank’s existing balance sheet, return objectives, and risk appetite to establish targets and boundaries for the prospective strategy. Using deep market research, risk-return analytics, and extensive analytical modelling, we identified potential asset classes for balance sheet repositioning and also developed recommendations for unlocking additional value in the existing deposit products. In parallel to these efforts, we supported the revitalization of the bank's Asset and Liability Committee through design of improved risk reporting and organizational processes. As a direct result of the project effort, our client was able to increase net interest income by more than 5% in the first year of balance sheet repositioning.
A large global insurance company: Developed new market strategy, a blueprint for organizational design, training for the sales force and a framework for risk governance
A large, global insurance company identified an opportunity to enter a new market, and set an ambitious new business target and go-live date. However, they realized that there were several roadblocks in the way. Knowledge of the market and product was scarce, the entry proposition lacked definition, and the competition for resources with other high-profile internal projects was delaying progress.
The first step was to help the client up the learning curve, increasing their understanding of this new market and the key drivers of successful entry. Armed with information and insight, it was then possible to help the client shape the product to match customer demand. Our client entered this new market one month ahead of schedule, and in addition, we helped lay the foundation for continuing success, by providing a blue-print for the organizational design, training for the sales force and a framework for risk governance.
A global life insurer: Created risk exposure boundaries across the business for robust strategic planning
We developed and implemented a risk appetite framework across the business lines for a global life insurer. Our challenge was to develop the overall risk appetite statement (including definition and quantification), to create a process for allocating risk exposure boundaries and to calculate actual risk exposure ‘triggers’ by risk and business unit.
Using a combination of mathematical analysis and management judgment, we set risk exposure boundaries. Following the specification of the risk framework, we created a reporting process which ensured that relevant risk exposure information was available for the Group’s strategic planning dialogues. This client has since gone through two rounds of reporting risk exposure information at both the Group and sub-Group level and examined the risk implications of various strategic alternatives relative to the Group’s risk appetite.
An insurance company: Developed and launched international strategy
This international insurance company had a strong domestic presence with a scattered international portfolio focused primarily on Europe. They engaged us to develop their international strategy and map out implementation possibilities and the implications for the organization.
First, their core competences and points of competitive advantage were identified. In parallel, we analyzed and reviewed the client’s existing portfolio, and then based on our findings, developed strategic options of business models and markets. A quantitative business case was created for each option, including the risk diversification impact on the Group.
The Board approved our strategic recommendations which set into motion an overall implementation roadmap with deliverables for the next couple of years. In the immediate term, implementation actions have been launched along all suggested strategic directions, and recent acquisitions have been made in line with our analysis and recommendations.
