Regulatory compliance costs are skyrocketing!
The focus of safety and soundness examinations continues to move towards asset/liability management and ensuring financial institutions are complying with the guidance issued in the last several years.
But, have you ever stopped and added up the true cost of what your institution spends on your interest rate risk management program?
There are the obvious costs:
- The cost of IRR model software and licenses;
- Data processor fees for ALM files/extracts; and
- IRR Independent review/audit expenses
Many stop there and consider these line items just another cost of doing business.
But what about all the time your organization spends administering and managing your IRR program?
Grab a pen and add up all the hours you spend each month, or quarter, or year on:
- Developing institution-specific model assumptions (or fees to pay a third party to develop assumptions)
- Gathering files and uploading data into the model
- Verifying core data is usable (balancing accounts and reconciling differences)
- Operating/running the model
- Re-running the model if results aren't what you expected
- Trying to figure out why results aren’t what you expected
- Preparing ALCO and board reports
- Preparing for, and presenting reports to the ALCO and Board
- Preparing for, and responding to issues during on-site Regulatory examinations
- Preparing for, and dealing with IRR independent reviews and audits
Once you’ve totaled up the time, multiply it by your all-in hourly labor costs (salary and benefits). You might be shocked at the total!
We work with hundreds of financial institutions each year, providing them with anything from advisory services in some of these areas to fully outsourced IRR modeling and reporting.
Most of our outsourcing clients find that they actually save money by switching to IRR outsourcing. They save time and add the expertise necessary for:
- Reliable model reports and results
- Comprehensive assumption development and documentation
- Complete exam and audit support
- Peace of mind that it’s done right
While you’re required to be well organized and prepared, it doesn’t mean you have to go it alone. At Plansmith, our team of former examiners and top-level bank management personnel know what it takes to develop and implement a comprehensive IRR management program.
If you’re ready to reduce your costs, get reliable IRR reports, and the support you need to get through exams and audits, contact us today to schedule your free consultation.