Federal Reserve Board announces risk management standards for “systemically important” financial firms

On July 30, the Federal Reserve Board announced that it had established finalized standards for risk management at financial market utilities (FMUs) that are designated as “systemically important” by the Financial Stability Oversight Council.

On Monday, July 30, the Federal Reserve Board announced that it had established finalized standards for risk management at financial market utilities (FMUs) that are designated as “systemically important” by the Financial Stability Oversight Council.

FMUs are institutions that provide infrastructure to clear and settle payments and other financial transactions. Some examples include central securities depositories, payment systems and central counterparties.

The final rule – termed Regulation HH – implements two provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010. The new regulations establish standards for managing the risks involved in payment, clearing and settlement operations at critical FMUs. Institutions that are registered as clearing agencies with the Securities and Exchange Commission or Commodity Futures Trading Commission are exempt from the new rules.

Regulation HH also establishes requirements for designated FMUs to provide advance notice before implementing material changes to their rules, procedures or operations.

The standards are based on those developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions.

The Board described the new rule as “substantively similar” to the version that had been proposed previously. It includes one new provision empowering the Federal Reserve Board to waive certain elements of Regulation HH for particular FMUs where the nature of its operational risk would make adherence to specific standards inappropriate.

For any firms that may be affected by these new regulations, which will officially go into effect on September 14, 2012, working with a financial project consulting service can be extremely helpful in navigating the transitional process and ensuring that compliance does not come at the price of operational flexibility and efficiency.

Financial professionals should remember this basic rule of business

It’s important for businesses to make investments and operational decisions with a strong focus on the way things will change in the long-term.

In the past few years, we’ve watched as major U.S. financial institutions went bankrupt, a global recession set in and a string of sovereign debt crises wracked Europe. Development has even slowed in China and India. Even the U.S. Postal Service is struggling.

This turmoil should serve as a reminder to financial professionals that no investment is perfectly safe and even a highly successful business model may become outdated over time.

For example, consider the situation currently confronting Facebook. As consumers shift toward mobile devices – tablets and smartphones – the social media company’s business model is being put under a considerable amount of stress, as it generates little revenue from mobile traffic.

According to documents the business filed with U.S. Securities and Exchange Commission (SEC), 85 percent of its revenue came from advertising in 2011. However, the vast majority of this was derived from showing ads to users accessing the site through conventional computers – desktops and laptops.

With research firm Javelin Strategy predicting a 40 percent increase in consumer adoption of tablets by 2016, this is a serious challenge to Facebook’s business model. The company will need to develop new revenue streams in order to remain viable, especially now that its stock is being publicly traded, which means that disappointing projections regarding future profits could have drastic ramifications for the business’s financial health.

It’s important for businesses to make investments and operational decisions with a strong focus on the way things will change in the long-term. For any company that lacks the trained financial staff to conduct this sort of analysis, partnering with an interim investment analyst can provide an invaluable aid. And, for firms that are struggling with a particular challenge along the lines of Facebook’s mobile adoption dilemma, working with a financial project consulting service can help ensure that solutions strike a balance between short-term concerns and long-term needs.

Executives should look at the big picture when evaluating potential partnerships

Business leaders should draw an important lesson from the recent break up of the partnership behind MSNBC. Microsoft and NBC terminated their cooperation after Comcast – the company that owns NBC – bought out Microsoft’s share in their joint venture.

Business leaders should draw an important lesson from the recent break up of the partnership behind MSNBC. Microsoft and NBC terminated their cooperation after Comcast – the company that owns NBC – bought out Microsoft’s share in their joint venture.

NBC and Microsoft first teamed up in 1996 and, for a time, the partnership was mutually beneficial. By combining NBC’s broadcast experience and journalism resources with Microsoft’s technological capabilities, the two companies were able to produce a cable channel and website that offered quality news.

However, over time, the situation started to deteriorate as the two businesses began moving in different directions. Microsoft pulled out of the cable channel in 2005.

In recent years, this caused cross-media ad sales to become a major source of tension between the two partners. According to the New York Times, NBC was receiving an increasingly large amount of interest in the purchase of advertisements that would run on both the televised programming and the website. However, Microsoft ran the ad-sales for MSNBC.com – making the process unnecessarily complex.

Therein lies the lesson for CFOs and other financial professionals who may be tasked with evaluating the long-term outlook of particular partnership opportunities. Joint ventures and other cooperative efforts should enhance your company’s capabilities and empower your staff to achieve top-notch performance levels. If a deal with another organization will eventually restrict your business’ ability to innovate, adapt and succeed in a constantly changing market, it is not a partnership that is worth pursuing.

Working with an interim investment analyst can help your company thoroughly examine the long-term value that will be provided by a particular partnership opportunity, as well as the inherent risks.

Internal audit consultants can help businesses maintain integrity

The latest scandal afflicting the banking sector offers an important lesson for all businesses in terms of the importance of conducting regular internal audits and keeping a sharp eye out for any instances of indiscretion by its financial professionals.

The latest scandal afflicting the banking sector offers an important lesson for all businesses in terms of the importance of conducting regular internal audits and keeping a sharp eye out for any instances of indiscretion by its financial professionals.

The current controversy is centered around manipulation of the London Inter-Bank Offered Rate (LIBOR), which is calculated daily by Thomson Reuters based on a number of major banks’ responses to a survey that asks what interest rates they would expect to pay loans in particular currencies. LIBOR is used to determine payments related to a variety of financial agreements, including mortgages. It was previously held that, because the rate was calculated based on multiple banks’ suggestions, it would not be possible for any one bank to manipulate the rate for its own benefit.

Of course, as the scandal has developed, investors’ confidence in LIBOR, and the financial institutions involved in setting it, has plummeted. Lawsuits have begun and many more are being contemplated by organizations that believe the return on their investments was affected by banks’ manipulation of rates.

Barclays has already admitted to manipulating LIBOR and paid out $450 million to settle the charges that had been laid against it. However, even after reaching a settlement, there will still be repercussions for any bank found to be involved in the price-fixing scheme. Especially for financial institutions, reputational damage can have a major effect on future revenue.

All of this goes to show that it is extremely important for businesses to ensure they are operating with appropriate practices. Guaranteeing that a LIBOR-like scandal isn’t around the corner can be invaluable for any firm that has long-term success as its goal.

Working with an internal audit consultant can help in this regard by bringing an outside perspective to a company’s auditing process. This enables internal auditors to uncover hidden liabilities or even discover a scandal-in-the-making before it becomes an albatross around the organization’s neck.

Financial professionals should prepare for effects of U.S. presidential election

The United States’ quadrennial presidential campaign often creates economic uncertainty in the country and election results can have a significant impact on markets, as they influence the laws that will be passed and the regulations that will be enacted.

The United States’ quadrennial presidential campaign often creates economic uncertainty in the country and election results can have a significant impact on markets, as they influence the laws that will be passed and the regulations that will be enacted.

National elections can cause variations in the value of a company’s investments or alter the demand for its products and services, as the U.S. Federal Government is a major purchaser in various sectors and influences the economy through regulatory action. Businesses should take these factors into account in their strategic planning efforts.

This election involves an especially contentious set of issues that concern the direction of the U.S. economy and the policies of the country’s elected officials can have a dramatic effect on businesses across many industries, from energy production to finance.

If your company currently lacks the trained staff necessary to perform this kind of specialized analytical work, it may be beneficial to partner with a firm of professional recruiters in order to carry out a targeted financial professional search that will quickly match your company with a number of high-caliber candidates that can meet your needs. Recruitment firms offer their clients access to a vast pool of experienced financial professionals and provide human resource expertise that helps you identify, evaluate and recruit the right individual to bolster your team.

For businesses that are not currently interested in recruiting new financial professionals, working with an interim investment analyst can aid your company in preparing for election-related turmoil or any other events. Partnering with a qualified financial project consulting service can help your company manage risk, keep costs down and complete any project efficiently.

Why top MBA programs are changing

Recently, we’ve reported on the changes taking place at some of the country’s top business schools. Today, we’ll take a closer look at what’s driving these ongoing updates and where American business education is heading in the near future.

Recently, we’ve reported on the changes taking place at some of the country’s top business schools. Today, we’ll take a closer look at what’s driving these ongoing updates and where American business education is heading in the near future.

The main shift involves measures centered on encouraging MBA recipients to develop practical skills that will allow them to pursue entrepreneurship.

One MBA candidate blogging for business school analysis site Poets & Quants explains that “Business schools are all about finding and developing leaders that make an impact; and right now, there is no greater impact that can be made than building a wildly successful organization that is then able to help thousands (or millions) of people. When universities can tout founders and top executives behind brands like Google and Facebook, it not only works wonders for the cache of the school’s name but it validates that they (and their alums) really are as good as they say they are.”

Taking this view, it is possible to see the startup-centric changes occurring in the nation’s business schools as a sort of natural evolution. Other changes taking place in the business environment can also be viewed as part of this trend.

For instance, many firms are finding that it is beneficial to partner with a financial project consulting service as they scale up their operations, rather than rapidly recruiting accountants and other financial professionals to meet short-term needs. Especially for a startup, working with outside experts on an interim basis can be an effective way for a company to bolster its staff’s capabilities and overcome immediate obstacles without overextending itself with too many new long-term personnel commitments.

The economic landscape may be shifting, but academic institutions and financial project consulting firms are working to provide aspiring business leaders with the tools they need to adapt to the changing times and succeed.

Core values drive corporate success

In a recent article for Inc. Magazine, entrepreneur Curt Richardson drew on his experience as a business leader to show how staying true to core values provides a source of strength that empowers a company to thrive over time.

In a recent article for Inc. Magazine, entrepreneur Curt Richardson drew on his experience as a business leader to show how staying true to core values provides a source of strength that empowers a company to thrive over time.

When Richardson first started making waterproof cases in the early ’90s, it was little more than a hobby. He made the first prototype in his garage. However, by establishing a solid identity for his business and holding to certain core values as it expanded, he was able to make his small company into a big success.

One of the values emphasized by Richardson was adaptability. Being able to respond to unexpected events and avoid service disruptions are key factors in a company’s ability to maintain high customer satisfaction. But, any adaptive moves must also account for the future and fit within the organization’s overall strategy.

For instance, if a business is currently in a “crunch” period, it may be beneficial to partner with a financial project consulting service. This can help a company overcome short-term obstacles while ensuring that present success doesn’t impede long-term goals.

Of course, it can be a challenge to maintain consistency in corporate values over time, as new employees bring their own ideas into the business and even long-serving staff members will change over time. This speaks to the need for focused recruitment efforts.

Hiring should be about more than just filling chairs. When you work with professional recruiters, it ensures that every candidate is being closely scrutinized. Recruitment firms examine more than just technical qualifications when they look at an applicant, because they understand the importance of finding a good fit between an individual’s outlook and an organization’s core values.

Studies show firms plan to hire more MBAs

Two new studies conducted by the Graduate Management Admission Council (GMAC) show that 2012 is shaping up to be a good year for business school graduates.

Two new studies conducted by the Graduate Management Admission Council (GMAC) show that 2012 is shaping up to be a good year for business school graduates.

GMAC reported that 62 percent of newly graduated individuals with MBAs or other business degrees already have job offers, up from 54 percent a year ago. The average respondent who had received a job offer said they submitted nine resumes, landed four interviews and received two job offers. This compares favorably with 2011, when the average was 16 resumes and six interviews for the same number of job offers.

Also, 79 percent of the companies surveyed said they are currently recruiting MBA-holders, up from 72 percent in 2011. Encouragingly, 36 percent of employers said they were expanding hiring because of an increased volume of business while 14 percent said increased profits were allowing them to hire new staff members.

Leadership and management talent topped the list of desired competencies, although survey respondents indicated that organizational and analytical reasoning skills are also of critical importance.

Businesses that are looking to take advantage of economic growth to expand their workforce should partner with professional recruiters to ensure that they are hiring top-quality individuals. Recruitment firms have the experience and full-time focus necessary to thoroughly evaluate candidates for employment and consider how they will fit in a particular position.

Any company that is not currently in a position to hire new staff members but has to address an increasing workload may benefit from working with a firm that offers financial project consulting. Using temporary support services can help a business succeed and continue to expand until it is ready to begin searching for permanent staff.