Problem

LIBOR is the reference rate for millions of contracts worth more than $400+ trillion, ranging from mortgage products to derivatives.  LIBOR terms and conditions (T&Cs) are hardwired into virtually all manners of financial activity, such as risk, valuation, performance modelling and retail / commercial contracts.  Unfortunately, LIBOR fall back terms are buried in unstructured documents that are not machine-readable thereby impeding the industry’s ability to identify, prioritize and execute necessary actions to manage this transition with the needed transparency, speed and confidence to minimize operational risk and expense.

Solution

Execute a repeatable capability to digitize unstructured source documents to identify LIBOR fall back T&Cs for the alternative rate in the event LIBOR is unavailable.  This capability allows for:

  • identification of the population of unstructured documents that contained LIBOR T&Cs
  • creation of exportable data sets categorized by each type of language variation for LIBOR T&Cs allowing the client to develop and execute a fact-based mitigation plan across all contact types
  • creation of auditable, documentary evidence of data lineage directly from the original contract

Value

Our clients utilized Pendo to accelerate the understanding of where and how the firm was exposed to a transition from LIBOR allowing more time to prioritize/risk rate contract renegotiations and develop and execute an evidence-based mitigation plan across the firm – from product strategy and customer/counterparty management – through to risk models, contract management, operations and finance processes and systems.