The LIBOR Iceberg Is Dead Ahead – Now Is The Time
To Start Steering Clear
By Jeffrey Catanzaro, Senior VP of Contracts, Compliance and Commercial Services at
Banks preparing for the LIBOR transition can consider this 4-part plan:
Assess: Estimate the expected difficulty and risk for each task. Using Artificial Intelligence
(AI) tools and experienced personnel, scope out what must be transitioned/developed
(documentation, systems, fallback provisions, standard operating procedures, limiting new
transactions, training, etc.). This is not only a repapering project but is a complex process
requiring both human and technology resources. Analysis and metadata should be provided
by producers in a user-friendly format. AI and enhanced machine learning technology is
incredibly helpful for identifying active and active agreements and pinpointing their contents.
Prioritize: Determine risk profile, order and priority. Identify potential pain points and bottlenecks so they can be eliminated preemptively. Six Sigma principles can be enormously helpful throughout this process. Clear priorities will then dictate what to assign internally and what external help will be needed from ALSPs or law firms.
Strategize: Map out a detailed and strategic roadmap for success, complete with specific
steps, stakeholders, vendors, resources, order and procedures. A transition initiative this
massive will live or die by its strategy. Create standardized approaches/playbooks for legal
document drafting, remediation, amendment and outreach.
Execute: Execution is everything. Deploying the strategy in a streamlined, sensible and
diligent way is the final step toward transition. Track your strategic plan to ensure all
milestones are met and compliance is achieved. The initiative/transition team must be able to pivot as new risks come to light. For example, new analysis of bank balance sheets could alter the risk profile of certain transition action). Transition activities will need to be re/deprioritized on the fly. Throughout execution, a strong communication function and rigorous calendar must be maintained to keep stakeholders informed and hold all participants