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.