Leasing Life
October 2002

Risk Governance - New Compliance System
With Basel II and other regulatory "risk" regimes placing increasing governance requirements on financial institutions - including leasing companies - monitoring corporate exposures is becoming a significant responsibility of executive and non-executive directors. A new software package called Risk Governance from Risk Governance Ltd (RGL) has the potential to enable lessors to meet their compliance obligations and, at the same time, enhance their business perfomance.

RGL managing director Lindsay John Cox explained: "the product has already attracted interest from some 70 FTSE 350 companies and is recommended by many practitioners as an innovative enterprise software solution". In September, the UK on-line bank Egg plc went live with the system to identify, delegate and manage risk across its business.

John Armitage, RGL's director of business development, confirmed that the system had been reviewed by a major international operating lessor with very positive results. He explained: "numerous client meetings have identified the need for a system that is intuitive and easy to use, increases 'risk-owner' input and accountability and is sufficiently flexible to meet the diverse and changing needs of a business".

The company maintains that since September 11, and following high-profile corporate failures such as Enron, there is a heightened awareness of the need to manage risk exposure better. "Insurance premiums have soared and insurers are requesting more solid evidence of properly managed risk before cover will be given," stressed Cox, "organisations will be forced to demonstrate that they understand and are managing all their business risks".

For lessors, those risks include business portfolios/receivables, operating and tax risk and residual value (RV) exposures. The RGL system can be used in conjunction with lessors' existing administration applications and RV monitoring models to provide risk-exposure information in a graphic format.

"The system enables total risk management from the few to the many in an organisation," Armitage explained. "Once the risk culture is embedded into a lessor's culture risk reporting can become clear and accountable. Senior executives will then be able to 'dip in' to the system to support board presentations and assurances." Cox stressed: "in the current environment, more companies are looking for a degree of independence from their auditors. The system provides an automated check on a company's health and performance."

Article written by: Vic Lock, Editor Leasing Life. October 2002