What's Neu - News from the The NeuGroup Network of Peer Groups

Blog entry
By thoward, September 14, 2018
In the latest issue of iTreasurer we discuss several trends that have been percolating throughout the year so far, and which also promise to continue to be top of mind heading into the end of the year.
 
On page 1 we take a look at the perennial treasury challenge of managing and, more importantly, keeping talent. A 2018 first-half NeuGroup cross-peer group poll shows the topic has moved up to No. 5 in the Treasurer Top Projects & Priorities, bumping FX management/hedging to No. 6. Indeed, talent remains more important to treasurers than a variety of important issues, including M&A and divestitures, supply chain, strategic planning and cybersecurity, among many other topics. Accordingly, managing this key resource is critical, particularly as the unemployment rate creeps lower.
 
In our “Anticipated Exposures” section on pages 4-5, we discuss companies’ concerns about being ready when new lease-accounting standards go live at the start of 2019. Also, corporate debt rose to a record 45.5% of US gross domestic product in Q1 of 2018. Finally, will US tax reform’s new corporate rate reduce the likelihood that US companies choose inversions to countries with lower rates? And should companies reconsider their cross-border configurations—especially with countries like Canada?
 
On page 6, in “Piloting Pension Moves as Tax Rates Fall, Interest Rates Rise,” we examine Raytheon’s recent announcement on tax-deductible contributions to defined benefit plans. The defense contractor said it would make a $1.25 billion pension contribution by Sept. 15. Companies like Raytheon on calendar fiscal years have until that date to make the contributions before the deduction on the contribution falls to 21%, the new corporate tax rate.
 
This month’s peer group meeting summary features NeuGroup’s Bank Treasurers’ Peer Group. At its first-half meeting, members discussed bank regulatory reform, shared their experiences with the latest rounds of stress testing and considered how regulatory reform will affect them. Members also mulled the rate outlook and how to adjust asset sensitivity and, perhaps most importantly, how to model deposits—looking beyond betas, or the sensitivity to Fed rate moves, to myriad other factors. This all relates to shifting analytical resources from focusing solely on stress testing to looking at banking business challenges like deposit acquisition and runoffs.
 
On pages 11-14, we talk to HSBC about its new global strategy, which has seen heavy investment in technology and an engagement to open architecture, or open banking, to help its clients with digital transformation. Treasurers at multinational corporations face immense pressure to make better use of emerging digital technologies—both to increase efficiency in treasury’s key areas of responsibility and to help the larger company meet its strategic objectives. And this overarching pressure to automate and embrace transformation has put additional focus on what is perhaps the single most important relationship treasury has outside the company—with its banks.
 
Finally on page 15, we discuss how prenegotiated bankruptcies make filing easier, which may explain the rise in Chapter 11 filings.
 
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Blog entry
By afriberg, September 13, 2018
 
Anne Friberg, Senior Director of Knowledge Exchange at NeuGroup, leads panels featuring several peer group members.
 
I’m delighted that I will again be chairing part of “The Treasurer: Agent of Change” stream (stream 4) at the upcoming EuroFinance in Geneva, International Treasury Management conference at the end of September.
 
On the afternoon of September 26, when conference goers have just fueled up in the refreshment break, we’ll tackle “Working capital and cash optimization across the business.” This session is designed to look at ways to unlock working capital from supply chains – to the tune of some $6 trillion in US and European companies alone, according to The Hackett Group! By leveraging data and analytics to understand how cash is deployed in an organization, treasury can work to release it to improve balance sheets, reduce cost of goods sold and enhance business agility. 
 
After that, I’ll moderate a panel that includes two fellow Swedes, including esteemed NeuGroup member, Johan Nystedt, Treasurer of Conagra Brands, and Ericsson’s Magnus Attoff, Head of Financial Risk Management & Internal Bank. Rounding out the panel is Dr. Michael Reuter, Head of Corporate Treasury, Henkel AG. The topic of this panel is “Total risk management” or enterprise risk management (ERM) and will focus on how treasurers can contribute to the management of risks that go beyond their traditional remit of financial risks. We’ll discuss the top risks facing these three companies, their nature and velocity as well as their potential impact and of course how they are mitigated. Do you know what your greatest risks are and how fast they are coming toward you?
 
Join me in Geneva on September 26 at 4pm! I hope to see you there.
For more information on the conference, including a discount code, click here
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Blog entry
By mkmoore, September 11, 2018
HSBC has a new global strategy, is investing heavily in technology and is embracing open architecture to help its clients with digital transformation.
 
It is hard out there in treasury land. Treasurers are facing loads of pressure to jump into new digital technologies. There is no denying the mandate to increase efficiency in treasury’s key areas of responsibility and to help the company as a whole meet its strategic objectives. This overarching pressure to automate and embrace transformation has put a spotlight on what is arguably the single most important relationship treasury has outside the company—with its banks.
 
HSBC is stepping up to be the bank of the future by investing heavily in technology and partnering with fintechs that can aid its effort to make banking faster and easier. To put weight behind that claim, HSBC CEO John Flint announced the bank plans to invest $15 billion–$17 billion in technology as part of its growth.
 
What to know how they are doing it? iTreasurer sat down with key players at HSBC to outline how the bank is creating efficiencies with its open-architecture banking system, including a client-centric approach that promises frictionless banking in a digital world.
 
 
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Blog entry
By amichels, September 10, 2018

NOTE: James Walters, Managing Director, Life Sciences & Chemical Group, Aon Risk Solutions will lead a session called “Thinking Strategically About Insurance, Risk Retention and Alternative Risk Finance with Universal and Sector-Specific Risk Types,” at the Life Sciences Treasurers’ Peer Group meeting hosted by Gilead Sciences and sponsored by Wells Fargo on September 25th in Foster City, Calif.

A growing number of US-based multinational corporations are trying to restructure their insurance coverage so that it better reflects the risks they face—and to lower costs. One part of this push for more strategic insurance has corporates and their insurance brokers pushing insurers to offer multiyear coverage for multiple risks under one very large policy, with one deductible.

Here’s how the treasurer of a mega-cap consumer goods company that has a captive insurer explained what he’s looking for: “Rather than buy individual lines of coverage, I’m just saying give me a portfolio of coverage. Rather than feel like I need to have $500 million of excess coverage in property, give me $500 million of excess coverage, but it covers all my risks. It’s just a more efficient structure.”

It’s more efficient than paying premiums on, say, four $100 million policies for property, cyber risk, D&O and ERISA every year—when there’s very low probability a company will need to make claims on all of them in one year. What’s more, if the business has a loss of $300 million on just one of those risks, it’s on the hook for $200 million under a traditional insurance program buying structure. By contrast, if the company purchases a $400 million blended program, a loss of $300 million on any of the four insured risks is covered because the company has $400 million of blended total coverage for any of the individual risks.

Also, with a blended, integrated or multiline insurance policy, corporates would normally assume a higher deductible and therefore pay significantly lower premiums---a key driver of this concept. The treasurer of the consumer goods company said he would obviously prefer his captive insurance company keep any returns on its investments (when losses are less than expected) and dividend them to the parent company rather than using them to pay premiums to a third-party insurance company on policies where claims are rare.

Large, blended programs are of particular interest to companies that are unable to adequately insure specific exposures because of the size of the risks involved. For example, some big pharma companies hope a blended program that covers losses in excess of a large amount the company would cover itself might offer insurers a way to accept the risks of providing product coverage. And size matters. Because while blended programs do exist, insurers so far are unwilling to structure them at the size, scale and capacity mega-cap companies are clamoring for today.   

 “It sounds really easy to do,” said Eric Andersen, co-president of Aon, an insurance broker that is trying to help companies, including pharmaceutical manufacturers, to structure and buy blended policies from insurers. “It is not really easy to execute.”

One problem is convincing insurance carriers who are used to selling individual lines of coverage separately to break out of their silos. “All of a sudden if you start blending the coverages you’re manuscripting language and you don’t have as much history and insight into what the numbers should be: how you price it, how do you adjudicate the claim? It’s just easier to do it one product at a time as opposed to multiple products in one policy,” Mr. Andersen said.

Another problem, experts say, is the experience of insurers that have underwritten blended policies in the past and suffered large losses from product liability and other catastrophic events, including the financial crisis. Part of the challenge, therefore, is to convince insurers—using better data analysis to predict losses—that they will ultimately benefit by including in one policy bigger risks, like product liability for pharmaceuticals, along with lesser risks like property.

Despite the impediments, NeuGroup members are not giving up on what is proving to be a bigger challenge than some might have imagined. The hope is that the insurers will see the benefit for themselves in offering products the market clearly wants.

“There’s a lot of work that’s going [on] right now to get them to come around and try it again,” Mr. Andersen says. “Right now, they’re not that interested.”

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Blog entry
By mkmoore, September 10, 2018

NeuGroup and Bank of the West collaborate on inaugural meeting of the Tech20 Treasurers’ Peer Group High-Growth Edition. 

Attendees at the first meeting of the Tech20 HG—a new peer group for treasurers at fast-growing tech companies meeting at ServiceNow in Silicon Valley on October 11—will discuss the unique financial challenges and opportunities facing the tech sector. To open the meeting, sponsor Bank of the West will look at what’s driving the bank’s interaction with treasurers in high-growth tech as well as key trends among its clients. 

 
While on the topic of banking, the group will get a lesson in relationship management. The banking relationships that sustain a startup may not suffice as the company expands into a large multinational. How should you manage the migration, and how do banks view the relationship as you mature and reach milestones? Learn how to set up banking infrastructure to scale and take advantage of open banking and fintech opportunities. 
 
Also on tap is a session about keeping pace with the business while solidifying treasury’s strategic say. Today’s treasurers should practice pulling out of their comfort zones in the tactical treasury domain and positioning themselves as strategic partners. Three members will consider how to set up a cash and risk culture incenting forecasting by the business and proper exposure identification, plus ways to supplement the human element with automation, smart systems, data extraction and reporting.  
 
Also on the agenda: a briefing on the FX environment and an update on US tax reform. 
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By thoward, September 06, 2018
ION, which has acquired a host of treasury solutions, will discuss its product line and how to select the best TMS for you.
 
Serial treasury management system acquirer ION Group will partner with iTreasurer and NeuGroup for a webinar to discuss selecting a TMS and ION’s plans for how the businesses it has acquired over the last several years will work together. The webinar will take place on September 20, 2018, at 10 a.m. EST.
 
ION first bought into the treasury systems market in 2011 when it acquired Wallstreet Systems, now Wallstreet Suite (WSS). Along with WSS, its stable of brands now includes Treasura, City Financials, IT2, ITS, Reval, and more recently, Openlink. ION has been relatively quiet about these acquisitions, leaving many treasurers wondering where these products stand in terms of support and their future. 
 
The webinar will begin with an explanation of the current state of treasury and what treasurers need to consider when selecting a TMS. Specifically, treasurers and treasuries are under more pressure than ever to automate and proactively make the right decisions. These factors introduce unnecessary complexity for the system-provider decision-making process. In this webinar, ION, as the world’s largest provider of treasury and risk management solutions, will offer details on how it can make the systems selection process much easier for customers. 
 
The webinar will feature compelling customer success stories and ION’s vision for the future of treasury, its new offerings as well as technology from the company’s portfolio of solutions. Participants will also hear how ION Treasury’s unparalleled technology roadmap supports all seven of its unique treasury products to better support customers in their digital journeys.
 
The webinar will also address the RFP process, and why it is outdated and not helping clients make the best decisions.  
 
Join us to learn more about a new approach to selecting a TMS with the most benefit for you.
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By aorwick, September 05, 2018
The Assistant Treasurers’ Group of Thirty gets a sneak peek at how Amazon is embracing technology. 
 
Today’s treasury professionals are being bombarded with buzzwords, acronyms and phrases such as bots, AI, blockchain and digital transformation. And few companies are as good at cutting through the confusion and using technology as Amazon, which hosts the AT30 on September 20-21 in Seattle, Wash. Members will visit a checkout-free Amazon Go store, which is sure to spark conversation about new technologies and applications for broader use. Learn how other corporates are taking advantage of web services, data visualization, automation and other tools. 
 
Day 1 also includes a session on in-house bank add-ons, retoolings and new builds. In the wake of US tax reform and Brexit, many MNCs are making changes to IHB platforms, while others are putting them in place for the first time. What’s the new state-of-the-art model for IHBs from the perspective of greenfield setups as well as for adding to or retooling existing IHBs? Meeting sponsor UniCredit will give a quick overview of the IHB evolution and touch on the advantages of IHBs over cash pools and intercompany lending programs without IHBs. 
 
Post-US tax reform, US MNCs are revisiting their capital structures and capital allocation. Are capital decisions being made methodically or evaluated on a case-by-case basis? And how are these decisions evaluated? Members will share examples of substantial changes made to their capital approaches and the processes being used to determine how much and where to invest. 
 
Also on the agenda: an update on Euro capital markets and a discussion on treasury roles and responsibilities. 
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
 
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Blog entry
By thoward, September 04, 2018
There are top risks, but attention must also be paid to risk velocity, or how fast a risk can impact a company.
 
Say you’re on the bridge of the USS Enterprise (and hopefully not wearing a red shirt). To starboard is a giant, ship-obliterating meteor closing fast, while to port, a Klingon warbird is hovering, weapons locked and powering up. A very risky situation indeed. Which risk to address first? Whatever decision you make is likely based partly on calculating the velocity of each risk and the impact it will have.  
 
That’s why it’s important to consider risk velocity, which Gartner recently pointed out in a list of the top 10 emerging risks of the second quarter of this year. The list included all the usual culprits, but two risks, numbers 3 and 10, stood out for their “risk velocity,” which was measured as the speed at which these issues could escalate and damage a firm were they to occur.
 
At number 3 was GDPR regulatory risk. As most know, the General Data Protection Regulation was introduced by the European Commission and went into effect in May of this year. GDPR is a set of rules created to give European Union citizens control over their personal data. The rule has been well received by regulators worldwide, many of whom have adopted it for their own jurisdictions. Gartner describes the risk as “a specific breach of compliance with GDPR” that leads to “a significant fine to the organization.” And it is very clear that a breach could sting. For a GDPR violation, companies can be fined over $20 million, or, more significantly, 4% of total revenue. Shoot the meteor first then read more here.
 
Also this week, making the most of a company’s channels for cross-border transactions with China. At a spring meeting of NeuGroup’s Tech20 Treasurers’ Peer Group, one China-based member updated peers on the best way to communicate with state regulators at the People’s Bank of China (PBOC) and China’s State Administration of Foreign Exchange (SAFE).
 
For one, this member said, be able to determine which regulator is which. The two major regulators are PBOC for cross-border fund flows in CNY and SAFE for USD. The ability to generate flows in both currencies will help companies work the branches and sub-branches along with the Beijing offices of these regulators. It therefore pays to understand which questions must go to Beijing and which don’t. And consider the interests of the local regulator and the impact on that city, both now and if your business needs change. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
 
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Blog entry
By aorwick, August 30, 2018
Members can expect to see familiar faces at front of 2018 H2 meetings. 
 
NeuGroup is pleased to announce that long-time employees Julie Zawacki-Lucci and Ted Howard will be serving members in a greater capacity as peer group leaders starting this fall.  
 
Ms. Zawacki-Lucci, who has led NeuGroup Peer Research since joining in 2015, has been promoted to Director of Knowledge Exchange and Research. Going forward, she will serve as leader of the Global Cash and Banking Group, which meets next on September 26-27 at Bloomberg in New York City. In her new role, Ms. Zawacki-Lucci will continue to oversee survey and benchmarking processes, analyze trends and conduct research across the NeuGroup Network. 
 
“I am thrilled to be moving into this new role at NeuGroup,” said Ms. Zawacki-Lucci. “My career history in treasury, coupled with the last several years managing NeuGroup Peer Research makes this a great fit.”
 
Before joining NeuGroup, Ms. Zawacki-Lucci served as Senior Manager, Capital Markets & Foreign Treasury Operations, at CVS Health Corporation, where she was responsible for capital structure initiatives, global cash management, affiliate capitalization, international investments and bank relationship management. She also held a variety of key treasury and investor relations positions at Hasbro, Inc. During her time as Manager of Capital Markets at Hasbro, she was an active member of the Foreign Exchange Managers’ Peer Group. 
 
Mr. Howard, Managing Editor of iTreasurer, will also take on new responsibility this fall as the leader of the Corporate ERM Group. As current leader of the Internal Auditors’ Peer Group, he is uniquely qualified to facilitate conversations on risk management and strategy. 
 
“ERM has become such a critical part of managing risks in the organization,” Mr. Howard said. “I’m excited to lead NeuGroup’s Corporate ERM Group and help members learn more from each other about how best to meet the challenge of mitigating ERM’s growing universe of risk.” 
 
Mr. Howard has been with NeuGroup since 2005. Prior to joining, he was a writer and researcher at Institutional Investor. He has more than 15 years of experience as a journalist covering the financial markets and has worked in various roles in the business and financial communication industry, writing for corporate clients and financial websites.
  
Please join NeuGroup in welcoming Ms. Zawacki-Lucci and Mr. Howard in their new roles. 
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings where members connect, exchange knowledge and review distilled insights. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
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Blog entry
By thoward, August 29, 2018
Spikes in commodity prices, tariffs have companies doing a little hedge reflection.
 
Commodities have awakened in the last year. The price of Brent crude oil jumped more than 70% between June 2017 and June of this year while the price of aluminum climbed from under $1,500 a ton in early 2016 to more than $2,400 a ton in April—about a 60% jump—before falling to around $2,100 by mid-August. Then there’s the 10% tariff on aluminum imports imposed by the Trump administration. 
 
The significantly higher costs for some commodities present big challenges for many companies, especially those in competitive, thin-margin industries such beverages, and they are no doubt prompting some to reevaluate their hedging strategies. 
 
Bryant Lee, a director on Chatham Financial’s risk-management team, said his firm saw a jump in corporate clients seeking to review their hedging strategies in 2018, as prices keep creeping up and as FASB finalizes guidance for new hedge accounting rules that go into effect at the start of 2019. The Trump administration’s trade policy and overall approach to global politics have provided further prompting. Read more here.
 
Also this week, a look at what expectations are for faster payments. Innovations in making payments quicker abound today but implementing them fully will take time, in large part due to the significant changes corporates must make to their legacy technology infrastructures. But the expectation – and demand – for faster payments is strong, according to a survey from NACHA, the Electronic Payments Association.
 
TD Bank recently released the results of its annual commercial payments survey of mainly corporate executives, which it conducted at the NACHA Payments Conference earlier this year in San Diego. Integration of immediate payment capabilities captured first place, at 42%, as the technological innovation expected to positively impact the payments industry the most in the next three to five years. Artificial intelligence and machine learning took 20%, while 14% voted for mobile applications, 11% for blockchain technology, 9% for fraud and cybersecurity software, and 4% for biometics, or making payments via means including voice, face-scanning, and fingerprinting. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
 
 
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