The best practices advanced in our original “Governance and Controls” [2002] white paper touted clear independence of front, middle, and back offices, as well as an independent risk function. Recently, CCRO members have suggested that given significant advancements in CTRM technology and the transaction complexities of today's changed markets, such traditional principles for governance over a trading business may need to be revisited. Awareness of this situation surfaced after one of our members highlighted internal pressure to evaluate their back office as a standard accounting function, with possible replacement by a third-party service function to reduce costs. In contrast, our subsequent member poll in April 2024 showed that 85% of risk professionals see their back office of today as a "specialized group with commodity business knowledge, understanding of commodity invoices, CTRM knowledge, and an ability to create shadow invoices and dispute them with counterparties." Our most recent discussions focus more on optimum assignment of duties rather than sharp organizational lines. Could a more collaborative relationship between the F/M/B offices and risk bring opportunities for performance improvement while maintaining effective governance?
Workstream 1: Establishing Governance and Optimal Functional Effectiveness
We plan to evaluate non-traditional organizational structures found in some member organizations today. The goal is to advance the effectiveness of critical trade support functions while still maintaining effective governance over risk.
Workstream 2: Managing Back Office Performance and Risk
To support improvements in these trade support functions, we will be advancing the
Development of a clear framework to enumerate the critical duties of the support functions and their optimum assignment to appropriate staff
Development of a peer KPI data benchmarking service in order to support management of the risk of poor performance in these support functions
Group Leadership Team
Acknowledgements for the Leadership Team
All CCRO members have opportunities to comment on our draft works as they are shared internally. However, those CCRO members that are most interested in this topic are encouraged to be a part of our Leadership Team to have the greatest impact on this initiative.
Our leadership team meets regularly to drive the group’s direction, calendar, choices for deliverables, and share related expertise.
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