Payments Risk: Exploring and Managing Treasury Management Product Risk

All treasury products involved in money movement have some level of risk for both the bank and its clients.

Boston, July 29, 2021 –Treasury/cash management products and services introduce risk to both the user of the services—the bank’s client—and the offering bank. Most banks have a process in place, variably defined as total operating exposure, total exposure, or settlement risk, that attempts to measure and manage the operational risk and periodic exposure associated with the short-term extension of credit related to demand deposit accounts and certain cash management products. The level of exposure per customer or legal entity is often significant and is therefore reviewed and approved by portfolio management and credit risk teams with input from treasury management sales, product, and operations officers.

This report looks at several components of treasury product exposure and explores the level of collaboration among various parties involved in establishing, monitoring, and reviewing the requisite limits. It is based on responses to a survey conducted in April and May of 2021 with 19 U.S.-based banks having diverse asset sizes. Participants described their organizational role as officers/managers from treasury management sales, operations, product, and risk.

This 26-page Impact Report contains 12 figures and one table. Clients of Aite-Novarica Group’s Commercial Banking & Payments service can download this report, the corresponding charts, and the Executive Impact Deck.

Related Content

Fraud in Small-Business Lending, 2021: Lenders Under Attack Fight Back

SMB lenders remain a primary target for a variety of fraudsters and credit abusers.

Payment Trends: Embracing the Shift to Electronic Payments

Businesses not embracing the shift to electronic payments may find themselves at a competitive disadvantage.

Lenders’ Perspectives: Commercial Loan Origination Automation

CLO can give rise to processes that are costly, labor-intensive, loss-inducing, and off-putting to borrowers.

Get Summary Report

"*" indicates required fields

This field is for validation purposes and should be left unchanged.