Value And Capital Management - A Handbook For The Finance And Risk Functions Of Financial Institutions

A ‘handbook’ for Chief Financial Officers and Chief Risk Officers outlining a practical but theoretically sound framework for helping financial institutions create and manage value. This framework consists of three important elements, with one section of the book devoted to each element:

Section 1 – Value measurement: How do we measure value for banks, insurance companies and asset managers? First, a quantitative performance, capital and valuation framework tailored specifically to banks and insurance companies and reconciled with shareholders’ view of value creation for financial services firms. This section covers how to measure the value of a bank, insurance company or asset manager, recognizing the unique role that risk and capital play in these businesses. It includes concrete industry examples to illustrate current practices and issues.

Section 2 – From Measurement to Management: How can Finance and Risk help create value? A qualitative management decision framework for the finance and risk functions, covering both decision processes and organization, which can be by CFOs and CROs who want to move from measurement to management. This section covers the key areas within the responsibility of CFOs and CROs, including risk management, asset / liability management, balance sheet and liquidity management, strategic and business planning and, finally, performance management and incentivization; and,

Section 3 – Challenging the Business: Business unit insights. Strategic and operational insights and case examples of value enhancing initiatives, structured around the unique value tree for each business. The businesses covered include commercial and retail banking, life and property & casualty (re-)insurance and asset management; the case studies focus on, for example, sales and distribution channel management, customer segmentation and portfolio management, expense management, etc. They are designed to help CFOs and the Heads of Strategy to challenge business unit plans and give CEOs of business units concrete ideas regarding operating initiatives which can help create more value for their companies. My intention is to work with a consulting firm in order to create the case studies; I have already contacted a consulting company where I used to head the Risk Practice in this regard.

THOMAS C. WILSON is the chief risk officer for Allianz Group, where he is responsible for global risk controlling and risk management policies and guidelines. He has spent nearly 30 years working in finance and risk for such companies as UBS, McKinsey & Company, Swiss Reinsurance, Oliver Wyman & Company, and ING.