Target Operating Model Definition for CVA

One of the most challenging aspects of any large scale change initiative is the design and implementation of the required business processes and organisational structures. This challenge is particularly acute for CVA initiatives due to the fact that for many organisations the active management of counterparty risk is a relatively new concept and also that the end-to-end CVA process touches upon many different departments and functions in the bank (CVA desk, Sales, Finance, Credit Risk, Market Risk, Collateral Management etc).

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

  • Overall organisation/mandate (e.g. profit centre or service centre)
  • Pricing/measurement process (e.g. definition of expected exposure measures, consideration of proxying process for illiquid names etc)
  • P&L reporting/reserving processes
  • Risk mitigation processes (e.g. hedging, collateral, securitisation etc)
  • Risk reward analysis processes
  • Reporting processes
  • Inter-departmental process touch points

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 CVA 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 CVA 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 CVA 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 CVA 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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