Treasury Counterparty-Concentration Board Adviser

The mandate

The group measures bank risk by deposit and mark-to-market limits, but the same institutions provide hedges, letters of credit, inventory facilities, collections, payments and commodity-document processing. A downgrade could therefore remove liquidity and operating capability while derivative exposure moves adversely. The board’s standing question is how much aggregated dependency is acceptable and whether proposed diversification can function during stress rather than merely distribute balances in normal markets.

The adviser will review monthly exposure and dependency packs, meet treasury and operating owners before committees, attend three Zurich sessions and observe a stressed-exit exercise. The cadence will challenge group structure, netting and collateral, contingent trade instruments, intraday payments, uncommitted facilities, operational substitution, market capacity and wrong-way risk. Advice will distinguish legal exposure, economic exposure and time-to-replace capability.

The appointment runs for nine months through bank renewals and two seasonal working-capital peaks. Renewal requires a new committee minute naming a distinct risk question after management has produced aggregated counterparty views and executed one substitution rehearsal. The role should end when directors can challenge concentration with operational and financial evidence, not become an external signatory on ordinary bank allocation.

The adviser has no line authority and accepts no executive responsibility for deposits, hedges, credit limits, facility draw, collateral, bank appointment, payment operations or risk acceptance. Treasury proposes and executes actions; authorised committees decide limits. The adviser may record dissent when diversification is cosmetic but cannot instruct banks, move funds or approve a counterparty.

Conflicts must be disclosed for banks, trading houses, insurers, rating advisers, treasury vendors, commodity firms and investors. The adviser will recuse where a reviewed institution is a material current client, accept no placement or introduction fee and avoid personal dealing in relevant securities using confidential information. No downstream bank-selection or funding mandate may be sought during the term.

Why the board wants this voice

Relationship banks package services in ways that obscure substitution cost, and internal limits divide deposits, derivatives and trade finance among different owners. Directors therefore receive several compliant views of one concentrated dependency. An independent commodity-treasury operator can aggregate those paths, test exit feasibility at realistic seasonal volume and challenge diversification that disappears when markets or documentation are stressed.

What you will own

• Challenge aggregated exposure across deposits, derivatives, collateral, facilities, trade instruments, payments and operational processing.
• Examine group entities, guarantees, netting, set-off, collateral and wrong-way relationships that alter apparent counterparty risk.
• Test replacement capacity for hedges, letters of credit, collections, payments and document handling during a downgrade.
• Review limit proposals for stress utilisation, liquidity withdrawal, basis cost, trapped balances and seasonal commodity flows.
• Assess diversification plans for legal readiness, operational onboarding, systems connectivity and willingness of alternative banks.
• Give directors clear choices on tolerate, reduce, collateralise, substitute or insure with timing and cost explicit.
• Leave a board scorecard combining financial exposure, operational criticality, substitutability, concentration and early-warning evidence.

Candidate qualifications

• Has governed bank counterparty concentration for a global commodity, trade-intensive or similarly seasonal operating group.
• Understands deposits, derivatives, collateral, trade instruments, facilities, cash operations, netting and wrong-way exposure together.
• Has executed or rehearsed withdrawal from a relationship bank without interrupting payments, hedging or physical trade flows.
• Can challenge diversification that spreads balances while preserving the same parent bank, infrastructure or documentation dependency.
• Has advised directors through a downgrade or bank stress event where financial and operational exposures moved simultaneously.
• Preserves formal treasury and risk authority while expressing dissent and uncertainty in concise board decision material.

Non-negotiables

• Can attend all Zurich risk sessions and the stressed bank-exit exercise within the nine-month appointment.
• Will disclose banking, commodity, insurance, rating, investment and treasury-technology relationships before receiving exposures.
• Brings aggregated treasury counterparty governance; standalone credit analysis or deposit placement alone is insufficient.
• Will not accept referral, placement or transaction compensation from any incumbent or prospective financial institution.

1. 49 words maximum. Which non-balance-sheet bank dependency most changes a commodity group’s concentration view?
2. 49 words maximum. How would you test whether a replacement trade-finance bank is operationally usable under stress?
3. 49 words maximum. What disclosed relationship would require your recusal from this committee discussion?