Why you need specialised talent for your LIBOR transition
The LIBOR transition will require a different approach when it comes to ensuring that you have the right people in place for your business. Compared to traditional new-talent adoption measures, LIBOR transition specific skills (or more pointedly a lack of them) can pose a significant risk if the process of identifying and placing the right people for the project is not done correctly.
In this article, we will discuss and discover why the right mix of the appropriate automation and skills is crucial to ensuring your preparedness for the LIBOR transition process.
According to data from Oliver Wyman, 14 of the world’s top banks expect to spend more than $1.2 billion on the LIBOR transition project between contract reviews, product development, customer communication, and project management processes[1].
How are market players staffing for their transitional needs?
There are many ways in which impacted businesses can plan their resourcing needs to equip or build new or existing LIBOR teams. Many have turned to various types of solution providers or consultancy firms, and some have tried to tackle the mammoth task in-house.
Whichever route is taken, all contracts indexing or relating to LIBOR need to be reviewed and adequate processing methods need to be put in place to ensure the efficient and effective oversight of these reviews. This process needs to be defined by the internal working group to ensure that all aspects of the transition and all areas impacting the transition are reviewed and met (especially those from a policy and regulatory perspective).
This will mean multiple workstreams, verticals, and jurisdictions of companies will need to work collaboratively to ensure single outcomes are met.
With this potentially overwhelming task at the forefront of their minds, many global organisations are turning to dedicated contingent resource in order to help hasten transition times in accordance with new regulatory requirements, whilst also contacting all clients relating to new developments and updates with regards to how their contracts have been transitioned.
Can you rely upon technology alone?
Many are turning to technology to help speed-up and streamline processes. AI, one of the most popular methods adopted, is being used to review and change fallback language. It could even be argued that this is the optimal method of remediating contracts. It is after all believed in some quarters that any human error commonly associated with these types of reviews can be mitigated by using this type of technology.
However, when conducting such intricate work, a combination of people and technology is very much the standard-bearer approach to achieving optimal outcomes. What AI unquestionably lacks is the human experience and eye for detail where complex contracts (such as tough legacy contracts), will need the expertise of a subject matter expert.
With this type of review work, it is crucial to get it right the first time. There is after all really no time to waste with a looming deadline that is fast approaching.
In our vast experience of recruiting and placing contingent workforce teams on behalf of our clients, we have found that a combination of automation and people who can continue to analyse and monitor this process unquestionably works most efficiently.
You still need human eyes to oversee automation
If you are going to completely automate your contract remediation process, it’s best to still have human resource to continuously monitor progress of this process. Reviewing fall-back language can be laborious and will take a team of legal professionals to review, even if you automate this process.
Of course, certain contracts will require more hours than others, simply due to the complex nature of their fall-back provisions. More complex processes such as that of working out new swap rates can be done by allocated experts.
Throughout the legal process of reviewing and remediation, it is always of course good business practice to make a note of any areas of improvement that need to be made with a view bettering long-term processes.
What are the benefits of working with contingent specialists?
Working with a contingency resourcing company such as Momenta ensures a thorough and consistent review of the project at hand is completed and any areas of improvement are always highlighted. This will be an imperative practice as regulatory and policy changes are bound to happen (oftentimes as short notice) and firms need to ensure that deviations are identified promptly and addressed accordingly.
Why Momenta?
Momenta are a global contingent resource solutions firm who has, for over 30 years, been partnering with companies in the financial services, legal, technology, and training and development sectors to cost-effectively provide the right people, with the right skills, at exactly the right time.
Momenta can and already does for many of our clients provide the right resource in key areas, allowing you to focus on the strategic oversight of the project at-hand, while we help to implement your vision.
This flexibility allows you to ensure there is always the right balance amongst your team, delivering an effective solution which will produce the desired end results.
We also specialise in scaling resource requirements from the ground-up during the lifetime of a project in order to meet all key requirements, including cost control, whilst maintaining delivery capacity capability.
With the huge task ahead facing so many businesses during the LIBOR transition period, Momenta can provide and build teams to support in all aspects the transition, specialising in areas such as:
- Identifying the contracts that need to be swapped
- Re-paper according to an appropriate index rate
- Reviewing fall-back language
- Calculating fluctuated pricing with each contract as a result of the new IBOR attached to any
calculation or swap
- Contract negotiation and review
- Communication to the end customer regarding their new rate
Dedicated and specialised additional resource for your business during this process will help you to avoid wasted time and allow you and your clients to transition their contracts to a new index in an efficient and effective manner.
If you require assistance in the form of additional resource (no matter how far you are progressed with regards to your transitional plans), contact us today to see how we can help to ensure your firm is prepared for LIBOR’S cessation in December 2021.
Cited works:
[1] Macciola, A. (2020). Council Post: Can Your Business Processes Handle the LIBOR Transition? [online] Forbes. Available at: https://www.forbes.com/sites/forbestechcouncil/2020/11/17/can-your-business-processes-handle-the-libor-transition/?sh=3b8c5bba42be [Accessed 14 Jan. 2021].
