Risk - Challenge Advisory

Functional Practices - Risk

One element of industry that is impossible to avoid is risk.

For the financial and commodity markets especially, it is important that each decision made is the right one; with every small niche and danger taken into account.

Constructing an effective strategy that is well-informed in terms of risk has become increasingly important, and such strategies can often be the difference between success and failure.

Challenge Advisory provide a unique perspective on risk, taking into account different sectors, countries and our own insights to deliver high-quality risk assessment to our clients. We are one of the global leaders in risk management, specialising in six areas: credit, crisis response, regulation, trading and analytics. We also have a wide range of contacts in every industry, giving the client access to risk knowledge from leading experts around the world.

We have contacts in Asia, Africa, the Middle East, Europe and the Americas to ensure that wherever the client is based, they can be assisted with strategies tailor-made to their specific needs. If need be, we can call upon senior experts in any given field, with whom we have close and profitable working relationships. Our risk team can draw from over 50 years of experience, with a range of companies such as banks, global agencies and multinational businesses and satisfy each of these clients with high-quality risk assessments that helped them to dominate their respective markets.

Each of our clients had specific technical needs that had to be catered for, and by working with each of them our risk team had to consider fresh perspectives and new approaches, which better equip Challenge Advisory for any future tasks that our clients may require, as well as any obstacles that come with these tasks.

Credit Risk - Challenge Advisory assists clients in creating value across the entire credit-risk life cycle. We also assist the client in benchmarking their performance, mitigate loss and optimise credit processes.

Crisis Response - Challenge Advisory assist clients in stabilising crises and delivering integrated responses, limiting damage from a crisis, and introducing crisis response methods that help the client to focus on the future.

Risk Culture - Challenge Advisory helps clients to bring a risk-reward perspective to strategic decision-making and the business culture. We help clients to identify their most important risks and their related returns.

Trading/Balance Sheet Risk - Challenge Advisory helps clients to minimise risk from a marketing perspective, including asset liability management, counterparty-credit-risk management, trading operations strategies, risk mitigation, as well as market risk regulation and analytics.

Risk Advanced Analytics - We combine advanced tools and techniques with expertise in strategy formulation and organizational transformation to help clients to improve performance, increase profits, accelerate growth, and optimize their risk exposures.

Risk and Regulation - We provide our clients with insights in relation to regulatory change, and assist them with deploying comprehensive strategies in response to these changes, using information technology and impact assessment techniques.

Credit Risk

Managing credit risk is always a complex challenge—one that becomes even more complex against a backdrop of market volatility and evolving regulatory guidelines. We help clients maximize returns from their credit operations.

We help clients increase revenue and minimize costs by supporting the development of sound credit-risk strategies, organizational structures, and portfolio-management processes.

Well-designed credit processes can reduce operating expenses by 15 to 20 percent and risk costs by more than 20 percent, while improving customer experience. We have extensive expertise in optimizing credit processes (origination, underwriting, pricing, administration, monitoring, and management) across all customer segments. Our approach combines a deep understanding of business and credit-related issues with proven lean techniques.

Financial institutions must proactively manage potential credit losses to sustain value, especially during volatile economic periods. We help clients design and implement effective strategies for every stage of the collection process, from early delinquency to work-out. When necessary, we also create targeted approaches for asset disposal. Our projects typically reduce the cost of risk by 10 to 20 percent.

Banks increasingly require deep analytical insights to understand the value and risks associated with their credit portfolio, as well as to respond to market fluctuations and regulatory requests (for example, stress testing and capital management). We have more than 40 analytical experts in Europe and Asia dedicated to helping clients develop specialized models that can be applied either to individual loans, portfolios of assets, or a bank as a whole.

 

Regulation and Risk

Regulatory changes in the financial services industry have come with dizzying speed and complexity, often with massive implications for business models and competitive strategies. We work with clients to address the impact of new regulatory requirements, and we provide insights that allow clients to identify and seize market and competitive opportunities arising from regulatory change.

In light of the wave of new regulation following the financial crisis, we have built strong capabilities to help clients understand the impact of regulatory changes and design mitigating strategies.

Laws and regulations are becoming ever more detailed, extraterritorial reach is increasing, and the consequences of non-compliance are more severe than ever. As a result, many companies in various industries are reviewing their overall approach toward achieving compliance. Often, this needs to go hand in hand with an organizational transformation that changes mindsets and behaviors. We help our clients diagnosing their current state of compliance, design holistic transformation programs with them, or support them on selected high-priority interventions in this area.

We have collaborated with the Institute of International Finance and engaged with working groups of the industry to analyze current practices in risk IT and develop industry-wide best practices that address risk data, operating models, technologies, organization, and interactions with supervisory bodies.

With the introduction of the Solvency II directive, the insurance industry faces a more stringent capital regime and an entirely new set of requirements on risk governance and disclosure. This new regulation, coupled with a highly volatile and generally adverse macroeconomic environment, has profound consequences to the viability of many insurance products and to the sustainability of some business models in the industry. To support clients, we have analyzed the impact of Solvency II on four areas: capital management/optimization, investment strategy, product portfolio and in-force optimization, and overall risk governance.

 

Crisis Response

We help business and government leaders take immediate control of the crisis situation, stabilize their organizations, and accelerate and deliver on recovery. We know what the breakpoints are and act preemptively to protect them—containing problems before they blow up and proactively managing critical stakeholders. We then look to the future, helping clients find and fix the root cause of the crisis or mitigate against future events, and ensure they recover stronger than before.

We are uniquely placed to help clients foresee the impact of their crisis-response decisions, and we bring tried-and-tested skills and tools to help them quickly restore performance, return to stability, and tailor interventions for rapid and effective recovery.

We activate a specialized crisis-response team within 24 hours, integrating all the types of support needed—operational, reputational, financial, regulatory, and market. We move fast to help our clients establish a central control room to coordinate every aspect of the response and work with them to maneuver through the critical decisions that can lead them out of the crisis.

We provide the judgment, strategic tool kits, global experience, and integrated point of view required to be true counselors to business heads and government leaders. We help our clients bring together multiple internal functions and external providers around one central plan, along the entire crisis life cycle. We also help leaders shape clear crisis-response messages, prioritize resources, and deploy key talent where it is needed most.

We have developed a powerful suite of crisis-response methodologies and solutions. These help clients set up best-practice crisis-control rooms in a matter of hours or days, rapidly assess the effect of crises on their cash flow, and pinpoint the stakeholders with the greatest potential impact in resolving or deepening the crisis.

We help our clients find and address the root cause of the crisis—not just the immediate problem. We shape change programs that build resilience and aim to minimize future risks so clients recover stronger than before. Our support includes rapid design and implementation of new business capabilities and processes—ranging from claims processing to complex capital repair to climate resilience strategies—to rebuild performance and stakeholder trust.

Your Biggest Challenges

We surveyed some of our partners and most respected clients to identify the largest challenges that surround the improvement of an enterprise's risk management strategy. These were the most popular answers.

Your Biggest Challenges

47% cited reducing costs as a top priority for their organisation.

43% reported their main concern was aligning the management of risk with the overall business strategy of their organisation.

41% of surveyed organisations have a goal of improving risk management within their enterprises and modelling prospective organisational structures.

41% of enterprises associated with risk were most interested in implementing regulatory demands, and identified this as one of their main challenges.

40% of businesses pinpointed availability, consistency and organisation of data management as a key area for improvement and organisational development.

Sustainable Profitability: Maximising Profitability by Managing Risk

Challenge Advisory's client service is based on the principles of sustainable profitability. Read more about sustainable profitability here.

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