The Challenge

A tier I investment bank had identified issues with its operating model around the internal transfer of income and expenses in its global asset management business. The issues had also been identified by the local regulator, who raised a high profile review point. Given the materiality of the issues, a high-level operational risk item was raised at Board level to highlight the known problems.

How Calibrate Helped

Calibrate firstly took over the project management of the existing remediation work, and instigated a new governance structure, setting up a steering committee and two separate working groups – one for the roll-out of control framework and the other for the design of the future landscape. During the project, Calibrate resources ran both working groups and ensured risks, issues and dependencies were discussed and any action points identified were completed and closed.

Calibrate then:

  • reviewed the existing internal service level agreements governing the transfer pricing arrangements, assessed their materiality and created a prioritisation plan
  • documented the details of each transfer agreement, reviewing business, functional and economic elements
  • oversaw the calculations of any revenue and cost allocations
  • created a cross functional review body (including the business, finance and tax), instigated and ran its monthly meetings, and documented the approach and meeting output

Throughout Calibrate managed key stakeholders, ran the budgeting process and led the regular steering committee updates.

Results

As a result of a solid Governance model over the project being established, and the identified deficiencies in the existing process being addressed, the operational risk rating was reduced to the point that it was no longer seen as an item for board level attention. Controls were implemented throughout the front to back process, in order to ensure the correct identification, calculation, payment and booking of transfers of revenues and expenses. An additional post month end review process was created in order to ensure that a cross functional team met and approved the approach and ongoing transfers.