Treasury operations risk

When it comes to identifying operational risk, the team at ETOS has more experience than most. CEO Lesley Mitchell works with some of New Zealand and Australia’s biggest corporates and high profile medium-sized businesses, here she outlines the seven most common areas of middle and back office risk.

1. Failure to segregate duties

This is a common starting place for many auditors. However, some businesses, simply don’t have enough treasury operations work to justify the required number of staff to separate out distinct areas of responsibility. Outsourcing your middle and back office function is a cost-effective way to gain sufficient segregation and treasury-specific expertise – and you only pay for the hours you use instead of a full-time salary.

 2. A single knowledge holder

If only one person really knows the structure, functions and processes that support your treasury department, alarm bells should be ringing loudly. Transitioning seamlessly from one knowledge-holder to several requires a sound plan and a reasonable timeline. Start now.

3. Lack of a procedures manual
When you have a greater number of people involved in your treasury function it’s important that the left hand knows what the right hand is doing. To minimise risk, capture key treasury information and processes in a central procedures manual and consider moving away from a paper-based system to a more automated one. This will create better transparency around day-to-day systems and reporting.
4. Spreadsheet and paper-based systems

The ‘owner’ of a spreadsheet is often the only person who really understands it. We commonly find multiple hidden errors on spreadsheets which often compound key person risk and risk integrity of data. Taking processes away from being manual and paper-based, introduces system integrity and strengthens controls.

5. Under-use of systems

In our experience, most treasury teams simply don’t have the time to invest in learning to use their treasury management systems to full capacity; including reporting, risk management and integration with other risk functions. Engaging an external team of operations experts proficient and experienced in systems can help here. For example, ETOS staff understand the leading TMS’s and will help to get systems and operations working efficiently and to best practice.

6. No back-up

Business continuity isn’t just something that’s important in a civil defence emergency. What happens when treasury people are away sick or on holiday? We often find that settlements staff are reluctant to go away because it is so hard to catch up on their return. Many businesses use ETOS as a holiday back-up service because we are available all-year round and can efficiently step in to offer cover when staff take a break, enabling senior staff to confidently concentrate on their key strategy deliverables.

7. Treasury controls that are out of step with your business environment

The pace of change in most businesses is on the increase, so how do you ensure that processes and systems keep up? Some key questions to ask are:

  • Do you actively monitor and record risks?
  • Are you using paper-based or automated systems as your ‘centre of truth’?
  • Are you keeping up to date with innovations in payment processing like straight through processing?
  • How often is your Treasury Policy reviewed?   How is it being followed and benchmarked against?

A simple Treasury ‘health check’ can help to document observations of current workflows, recognise potentially simple system improvements, deliver greater efficiencies, analyse operational costs and provide additional treasury expertise. If you’d like to find out more, give ETOS a call on +64 9 9173476 (New Zealand office) or +61 2 9042 2686 (Australian office).

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