Is Your Cash Secure? Are You Sure?

Working from home and moving money creates additional risk for treasurers, CFOs, operations personnel and – ultimately – investors. Hackers have taken note of the decentralized work environment and are looking to take advantage of any weakness.  It comes as little surprise to see a multi-million dollar loss and the closure of Levitas Capital, a Sydney-based hedge fund. While Levitas Capital was small, similar risks and principles apply to every fund manager regardless of size, geography, and banking counterparties.

One of the fundamental roles of the treasury function is the secure movement of cash into the organization, safekeep cash during its lifecycle, and ultimately secure the return of capital (and gains) to the rightful owner. In an increasing number of asset management organizations, treasury is a standalone function responsible for cash and liquidity management, financial risk management (interest rate/FX rate exposure and credit exposure), banking and trading partner relationships, rates/fee management and optimization, and treasury policies and procedures. If not standalone, treasury is normally managed by the finance department or CFO.

For many investment managers there is often no “treasurer” role. The treasury function is not always clearly defined. Treasury tasks are allocated – sometimes loosely – to individuals or groups in the organization with the necessary skills to manage one or a few parts of a treasurer’s responsibility.

  • Operations may be responsible for day to day cash management.
  • The short-term Cash/Bond fund manager may manage surplus cash and the interest rate, FX and credit exposure.
  • The CFO or COO may be responsible for the banking relationships and generation of treasury reports.
  • There are some policies and procedures but unless there is a loss, breach or potential mishap they are seldom reviewed.

The recent Levitas Capital debacle has resulted in the investment management industry in Australia reviewing systems and process to ensure there is no repetition. Is email a suitable way of instructing cash movements?

Do you have the necessary treasury capability and controls for:

  • Accurate cash forecasting and reporting.
  • Multi-level approvals for cash movements.
  • Rules-based optimization based on your internal policies.
  • Secure and auditable movement of funds.

Do you need help with Treasury and in particular Cash management? See how Hazeltree can help