What’s Your View on Corporate Actions Risk?

September 30, 2019

Whichever way you look at it, there’s a lot of risk involved in processing corporate actions. But the more clearly you can see and understand that risk, the easier it is to manage and respond to.

To date, however, it’s been challenging for organizations to gain a complete, timely, well-defined view of the corporate actions risks they face. Typically, firms have used spreadsheets to log individual events and report manually on how they meet certain risk criteria.

Now, in the age of digital analytics, it’s possible to represent these details visually – and therefore more clearly – in a dynamic risk dashboard.

With a dashboard’s top-down view of events, organizations of all sizes can both define and track corporate actions risk in its many forms and from different user perspectives.

In the front office, for example, portfolio managers can use the tool to set their own customized risk parameters, based on any number of criteria – and understand the timelines and status of corporate action events.

Missing out on these mainly voluntary opportunities could cost the organization money. And with new light shed on the risk factors, election decision-makers are in a stronger position to make the optimal choice before the deadline.

The modern dashboard also adds value for back-office users. It may be that a corporate action event is taking place for a security that’s held overseas. So, it could take longer for processors to populate and scrub all the necessary data and make sure it’s accurate and complete.

And if you manage a larger number of shares in that security than others, there’s a bigger chance overall of leaving money on the table.

In both cases, the dashboard will capture and convey the associated risks to your organization, again according to customized criteria. Critically, it will also dynamically update throughout the corporate actions life cycle, as shares are bought and sold, positions change on your accounts or offer details are updated.

Perhaps most importantly, the dashboard clearly presents firms with all the data they need to make informed decisions, including calculations that show whether an offer will be in or out of the money. As not all corporate action elections are created equal, this helps you consistently make choices that are financially the most appropriate.

Ultimately, by organizing and visualizing all the relevant information, digital dashboard technology brings unprecedented visibility to the management of corporate actions risk.

In fact, with such a clear view of what’s at stake, you could say things are looking good for the future of corporate actions processing.

About the Author
Adam Brill, VP,Product Management, Corporate Actions Solutions & Services, FIS
Adam BrillVP,Product Management, Corporate Actions Solutions & Services, FIS

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