The challenge

Over the past three years, General Electric (GE) has embarked on a global, multi-phased cash and risk transformation project. The aim of the programme was to unlock and repatriate cash from across the business and identify and manage risk more effectively at a group level.

The key risks of liquidity, country risk, geo-political, regulatory, counterparty, credit, interest rate, cyber and operations/execution risk were all targeted by GE’s treasury team. It had to align and centralise its resources to manage and streamline these risks, without impacting its current operations.

The solution

As part of this major initiative, GE established a regional treasury centre (RTC) in Singapore in mid-2018 to centralise cash and manage risk exposures and operations for the Asia Pacific region. It then leveraged digital opportunities to optimise operations and reduce execution risk.

In doing so GE implemented a multi-entity, cross-border, multi-currency cash consolidation structure for liquidity mobilisation and risk management, across all non-restricted markets in Asia Pacific.

Best practice and innovation

Over many years, GE has continuously made shifts to evolve to the needs of its business and exceeded shareholders’ expectations of risk framework and governance.

GE’s RTC is a new operation, and as such, it can leverage industry best practices and innovative technologies to optimise visibility over cash, exposures and counterparty risk and reduce execution risk. Key to this is the multi-entity, cross-border and multi-currency cash consolidation structure.

This innovative structure has helped GE dynamically manage liquidity, FX, counterparty and geopolitical risks in an automated way with minimal manual intervention. This very powerful but highly automated solution has significantly reduced the manual intervention required to measure and manage both cash and risk. The RTC creates a consolidated view and helps make informed decisions that optimise the ability to reduce interest rate risk and cost.

One of the main challenges of implementing cash and risk mobilisation solutions in Asia Pacific is the complexity of tax and regulatory requirements and currency restrictions in some of the markets. As such, GE worked with partner bank Citi to understand the constraints and opportunities of each market in which the company operates.

Digital tools also have an important role to play in enabling the RTC to fulfil advisory and business partnering function. GE developed requisite data and digital expertise that helped to identify ways to refine processes and enhance the use of data quality to create better intelligence and visibility over both cash and risk. Additionally, GE has embraced tools on payment monitoring using AI and machine learning which has helped contain cyber risk.

By bringing together cross functional teams – moving the treasury team to Singapore and under one roof, it has created a framework for managing treasury in the time zone where most business units are operating. This has enabled GE to improve operational efficiency and decrease execution risk around cash, FX and other treasury processes.

Key benefits

• Greater certainty over liquidity and risk planning through improved visibility of cash balances.
• Digital dashboards help to forecast future liquidity and risk exposures.
• Support from the RTC to ensure that liquidity and FX exposures are managed effectively.
• Unlocked cash balances held in local entities, including reducing ‘trapped’ cash.
• Reduced both counterparty risk to local banks, and country risk through the cross-border liquidity structures.
• Achieved visibility over liquidity and risk across Asia Pacific as part of a consolidated global position.
• Machine learning created an extra layer of security for payment processing and cyber threats.