Interest Rate Risk Management

 
Tuff Risk believes foremost in maximizing earnings and locking in financial spreads, while at the same time protecting the long-term profitability of our clients.

Market risk is a natural component of a profitable financial institution. Tuff Risk therefore strongly believes that risk can and should be managed not eliminated. It is our belief that this strategy is a key differentiator of the most successful financial institutions.

Before risks can be managed, however, they must be identified. In this regard, Tuff Risk excels. The contribution of each financial product, currency and investment is analyzed in the context of the organization’s overall risk profile.

Tuff Risk also believes that interest rate risk should never be managed solely for regulatory purposes. The primary objective of risk management should ultimately be to ensure current financial margin is safeguarded. After achieving this stage, then implement strategies designed to maximize both current and future earnings of the organization, regardless of the present market environment.
 

Foreign Exchange (FX) Management

 
Managing on-balance sheet FX successfully adds significant income to the bottom line. Currently, Tuff Risk Treasury delivers to its FX clients, on average, $72,000 per year per $100,000 risk accepted. Eighty percent of financial institutions overlook this source of revenue, deciding instead to increase customer fees to gain much needed additional revenue.

Tuff Risk views foreign exchange as a trending commodity. One that typically overshoots its optimal target, before correcting. This environment is ideal for strategies that position a financial institution’s foreign exchange asset/liability mismatch to take advantage of such trends.

Tuff Risk offers both skill and experience in managing FX, both essential components of a successful strategy.
 

Business Intelligence

 
Managing a financial institution without clear insight into the various sources of profitability takes a lot of work. Unfortunately, knowing where the profit comes from is not enough, as there are most likely and equal amount of unprofitable sources that make little money or worse yet, loose the organization money.

Tuff Risk believes that is is even more important for followers, those institutions that simply match the competitor’s rates, to understand the various levels of profitability within their organizations.

CUSTOMER PROFITABILITY	Without clear insight into customer profitability, there is a real chance that non-profitable customers receive 80% of the attention, leaving the profitable clients wondering.
PRODUCT PROFITABILITY	Without clear insight into product profitability, the alternative is to merely follow the competition, making it difficult to create profitable product campaigns. The goal then becomes product retention and not product profitability.
BRANCH PROFITABILITY	Without clear insight into branch profitability, how does one know the top performing branches or better yet, the worst performing branches. Tuff Risk understands that some branches are better situated than others. Still, it is important to know, on a daily basis the business each branch underwrites, who writes the business, the rate and financial spread on each loan or deposit, not to mention upcoming branch maturities.
ENTERPRISE PROFITABILITY	Tuff Risk understands the need to see the big picture. Daily financial margin, year over year and month over month comparisons, month-to-date income statements instead of only month end, financial margin and sales target dashboards. Tuff Risk does not understand how a financial institution can be competitive without this insight?