A look at what’s on International Treasurer’s radar screen.
Several topics came out of International Treasurer’s weekly editorial meeting, including what goes into a mature enterprise risk management (ERM) program, creating an external cash manager scorecard and an update on what’s happening on the corporate tax reform front.
Mature ERM. ERM has been around for many years now but nonetheless it’s still a work in progress at most companies. At a recent NeuGroup ERM Group meeting, one company with a mature program gave members an overview of its approach. The two major features of the program were that it had executive buy-in and sponsorship and an earlier effort to embed ERM throughout the organization had paid off. The company took a bottom-up approach, where the ERM team looked at the lowest rungs of the organization and went up from there. ERM was also incorporated in the company’s strategic plan and also went as far as talking risk exposures with the company’s vendors. Employees at the company also know that ERM isn’t just something that needs to be complied with, but an effort that adds value to the company.
Manager scorecards. Members of The NeuGroup’s Treasury Investment Managers’ Peer Group recently discussed the utility of external manager score cards. Members reviewed various metrics to determine the value and effectiveness of each in order to develop an optimal list for a manager scorecard. These included portfolio performance and the fact that, depending on the mandate, portfolio returns may be measured as total return, risk adjusted return, comparison to benchmark, comparison to other managers being used, other managers not being used, return attribution, returns in adverse environments, or combinations of all of the above. Service levels, experience and compliance were also discussed.
Tax Reform. A repatriation tax holiday is all but dead (see related story here) but members of The NeuGroup universe feel good about more comprehensive tax reform in 2013. One of the big issues (or hurdles) of course is the coming tax Armageddon coming at the end of 2012. That’s when many current tax provisions are set to expire. This could possibly cause a $4 trillion increase in taxes unless the provisions are extended. At the forefront of the tax reform movement is Republican Representative Dave Camp of Michigan who is proposing a more long-term revision of the tax code. This would include the elimination of many provisions and loopholes for corporations. He would like to see the tax rate capped at 25 percent and does not support higher taxes for millionaires or other provisions designed for specific groups. We’ll take a look at what’s upcoming and how members of the The NeuGroup peer groups feel about corporate taxes going forward.