Target Operating Model Definition for Counterparty Risk

The counterparty risk management industry is one which is rapidly developing due to changes in both industry best practice and the regulatory environment. In response to this, the ways in which financial institutions organise their counterparty risk functions and define their counterparty risk processes are also undergoing significant change. Alongside these industry developments, counterparty risk technology capabilities also continue to evolve year on year. Such technology change typically also facilitates or requires changes to business processes and/or organisational structures.

Initial design of both business processes and related organisational structures is undertaken through our Counterparty Risk Target Operating Model (TOM) definition. This addresses areas such as:

  • Overall organisation of the counterparty risk function
  • Role relative to other risk functions (e.g. corporate lending risk, market risk, compliance, collateral management etc)
  • Roles and responsibilities between sub-functions within counterparty risk
  • Risk management responsibilities delegated to non-risk functions (e.g. Front Office, Finance)
  • Risk measurement processes
  • Customer, limit and other operational data management processes
  • Limit and excess approval authorities and processes
  • Transaction approval processes
  • New product approval processes
  • Capital management processes
  • Reporting processes

To support the Target Operating Model process, we utilise the Risk Map tool.

For more details on our wider approach to managing business change, see our overall organisational change and business re-engineering page.

The Counterparty Risk Target Operating Model definition can either be taken as a discrete piece of work or as the first step in a wider programme of change (see the full InteDelta Delivery Lifecycle for Counterparty Risk for an overview of how such a programme might be structured). 

Even where a client is not yet in a position to engage the wider programme of change, many organisations find it complementary to incorporate an InteDelta Market Intelligence benchmarking exercise alongside the Counterparty Risk TOM definition in order to ensure alignment of the defined business process and organisational model with its target peer group (see Market Intelligence benchmarking services for further details).

Where counterparty risk training is required in order to effect the targeted organisational change, we are able to facilitate this (see Training services for further details).

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