the effective consulting in the new financial environment | akkizidis nikolaos

The Effective ConsultingIn The New

Financial Environment

Akkizidis Nikolaos | +44(0)7478411090 | [email protected]

Within the new financial environment in the new global norm where the game is changing, it is

the effective consulting that will drive individuals and companies in higher levels. Assessing

global economic conditions is the first of the fundamental steps following the path to

effectiveness. Finding why the economic conditions have changed, how should we react and what

should be done, engrave this path. Choosing the appropriate strategic components, such as

focusing on strategic risk management, inspiring asset & risk managers, manage wealth in

transferring to the next generations, is what makes clear the view of the path. In the coming years,

dynamic policies should follow risk culture awareness and the appropriate instructions to keep us

on the track. Trust, commitment and clarity regarding leadership and governance ensures long

term horizons and exceeds obstacles for a long path.

Abstract

The Effective Consulting In The New Financial Environment

Assessing markets and global economic conditions is the most important factor to everyone who is related in advising or taking decisions in financial markets as well as in business development. To achieve this, strong academic knowledge and lot of experience are required. The target is to understand the underlying dynamics that can cause major economic policy decisions, thereafter, exame investment choices and forward threats.

Current conditions: Global debt has increased to an all-time high. The method that nations use to control or reduce the real value of debt is a process which economists refer to as "Financial Repression". On past form, this method has taken an average of 25 years to work. For the governments, their main tool has been quantitative easing (QE). There are positive and negative affects implying QE programs. We are facing serious threats such as possible errors in monetary policy, markets that remain volatile, slowdown in BRIC economies, currency war etc. There are also investment choices in global equity markets, on real assets, investing on high yield bonds and alternative credit.

ECONOMIC AND MARKET CONDITIONS


The game has changed and the following have to be examined: why has this happened? how should we react? what should be done?

[WHY: Explanations] For understandable reasons, the national debt seems somewhat abstract to most people. But what history shows us is that how nations reduce debts is deeply personal and even life changing for the individual citizens of that nation. Policy makers chose complex enough methods like Financial Repression method so that the average voter never understands how it works. Thus, allowing governments to use this potent but subtle method of taking vast sums of private wealth, year after year, decade after decade, with almost no political consequences. Participation in this process is not optional, it is mandatory, and pretending it does not exist – offers an individual no protection whatsoever. Financial repression has changed the game affecting financial markets and society for the next coming years, possibly decades.

[HOW: REACTION] Risk mitigation is now the name of the game. The emphasis is thus shifting from asset management to risk management. But risk management is no longer seen to be about creating firewalls around trading positions via stop-loss mechanisms and options contracts. It is about embedding risk controls at the design and execution stage of a portfolio.

[WHAT: IMPLEMENT] In the new global norm, holistic monitoring and control processes should be developed and implemented, measuring and - most importantly - procedures focusing in transferring risks from those who are ill-equipped to manage risks to those who are able to manage them and not vice versa should be established.

NAVIGATING IN NEW WAYS


What are the components of the appropriate strategy that should be followed in current times?

Strategic Risk Management. Strategic risk has become a major focus rather than a limiting focus to traditional risk areas such as operational, financial and compliance risk. Concentrates on major risks such us reputation risk, investing in human capital and the innovation pipeline to be a step ahead of the competitive market.

Asset & Risk Management Inspirations.

Inspire those who manage assets to become trusted advisors. As markets have disconnected from their value drivers, the role of a trusted advisor is gaining traction. This new role as trusted advisor has come to the fore in the face of changing perception of risk.

New approach in defining asset classes; according to the methodologies used in making forecasts and in forming asset allocation strategies.

Control the Risk of Fluctuations. Focusing on a greater asset class diversification, dynamic investing, risk factor investing, duration management.

Strategic Asset Allocation has always been a more important driver of returns than the selection of Asset Managers that pursue outperformance versus a market benchmark.

Wealth Risk management. Transferring wealth to the next generation and beyond. Decision making by managing wealth & mitigate risk, based on investment rules and embedded in four critical directions regarding: financial analysis, strategic management choices, institutional sponsorship and estimating market trends.

STRATEGIC COMPONENTS


Policies for the Coming Years – Decades. Avoid Static Policies for the Coming Years Probably Decades. Global economy will move in sideways for the next coming years-most likely for the next decades- but with small and also big turbulences from time to time.

Risk Culture Awareness. It’s not easy to find mechanisms to manage risk culture, which is clearly everywhere, but nowhere to be seen. It is the talented people and teams who shape the risk culture of a company. Yet, risk culture is little-understood in investment organisations and is too often under-emphasised. Creating risk culture effectiveness by embedding talented people and teams.

Appropriate instructions are in place

Internal Controls. Work with compliance officers in proactively managing operational risk and further strengthen the internal controls

Motivating Fund Managers. Ensure that the importance of investment decision-making processes are fully understood, offer products and services consistent with the client's objectives and risks they take.

Advising the key stakeholders. Produce reports to a high standard, advising the key stakeholders of risks and threats to the institution. Ensure that risk issues are properly considered in all material decisions and reported appropriately.

FOCUS ON POLICIES, CULTURE, INSTRUCTIONS


Key Questions. Prepare and interpret recommendations for action based on three key questions “Why? How? Can I trust you?” to distinguishing the appropriate actions, structures and people in forming efficiency.

Building high-performance teams. Holding commitments, playing hard, fight fair, protecting your teams even standing in the line of fire.

Governance practices. Focusing on clarity in plan, clarity on investment beliefs and time horizons, clarity of roles between board and executives.

LEADERSHIP AND GOVERNANCE ENSURING LONG TERM HORIZONS


Thank you


Akkizidis Nikolaos | +44(0)7478411090 | [email protected]

the effective consulting in the new financial environment | akkizidis nikolaos

Economy & Finance