Morpho Advisory was set up to offer treasury consulting and virtual treasurer services, both here in New Zealand, or abroad.
The business world is increasingly aware of capital, market, funding & liquidity, credit and investment risks. Companies are expected to have dedicated risk management frameworks that specify risk appetite and detail how these risks are to be managed. This is not just for regulatory and IFRS compliance, but to avoid potential losses and to attract investment. It is ‘best practice’.
Only the largest companies can afford to employ the required skill to operate front, middle and back office functions. Nevertheless, most companies, especially SMEs, have a material exposure to these risks. Many businesses address their obvious exposures (e.g. FX risk for importers and exporters) but only do so in a rudimentary fashion. They do not have a risk management framework, treasury policy or hedging strategy. Nor do they have specialist skills to manage this risk or systems to measure their exposures. This problem will only be exacerbated with the new IFRS requirements for fair value measurement (IFRS 13) and financial instruments (IFRS 9).
Morpho Advisory can assist your business to address these short-falls and fill the gaps in your market risk management, compliance and governance. You can engage Morpho Advisory as your virtual treasurer, treasury adviser or market risk consultant.
It is surprising how little discussion around credit valuation adjustment (CVA), debit valuation adjustment (DVA) and funding valuation adjustment (FVA) there has been in the local market. These are real issues for all businesses with market exposures that comply with IFRS. They are technically complex matters requiring the ability to calculate probability of default (PD), exposure at default (EAD) and loss-given-default (LGD). You also need an understanding of how to price credit risk and financial instruments. The larger accounting firms (e.g. the big 4 and firms of that magnitude) may have the staff to address these issues, but most wouldn’t. At some stage businesses are going to have to engage skills to develop internal processes and systems to meet these obligations. Engage Morpho Advisory and stay ahead of the competition.