During the banking crises involving Silicon Valley Bank and Credit Suisse, it became clear that Bristol Myers Squibb (BMS) had opportunities to enhance its reporting and risk mitigation strategies. Market volatility raised concerns about bank counterparty exposure, necessitating data aggregation across multiple systems. Concurrently, interest forecasts dramatically changed daily along with Fed expectations, requiring frequent updates to CFP&A and management. BMS also needed to improve its FX trading processes to mitigate operational risks, particularly when dealing with weaker bank counterparties. Additionally, BMS faced rising insurance premiums due to inflation, especially in international employee benefit policies. Despite higher interest rates benefiting insurers’ returns, insurance premiums did not decrease.

“Throughout 2024, we implemented a variety of strategies which addressed these issues – improving our agility in the face of volatile markets while saving the company expense and improving earnings forecasts,” explains Ravi Patel, Director Financial Risk Management.

Before 2024, BMS could track daily cash investments but lacked the tools to integrate commercial paper (CP) investments and derivative exposures into a comprehensive counterparty exposure view. The volatility of the projected Fed Funds rate curve caused its interest income forecasts to fluctuate by over US$100m within weeks, highlighting the need for better interest rate risk management.

While BMS’s FX processes were effective, they could be enhanced by upgrading its trading platform, 360T, which offered a range of customisable features. Additionally, insurance premiums paid to insurers consistently exceeded annual insurance claims. To reduce costs and capitalise on the higher interest rate environment, BMS explored opportunities to self-insure the company’s business risks.