WDPG App 4.1 Analysing the business and operating models
1To analyse the business and operating models effectively, a firm should:
- (1)
place emphasis on understanding how its balance sheet generates profit and loss and the details of operations;
- (2)
carry out a review of the sources and uses of both its capital and liquidity by reviewing, among other items, revenue drivers, cost drivers and sources of cash inflows and outflows;
- (3)
consider which areas may be difficult to wind down, e.g. due to longer notice periods of some employees, certain transactions or contracts with third parties that are subject to a longer cancellation period; and
- (4)
consider internal and external connectedness, i.e. the dependencies the firm has on other parties or group members and the dependencies others have on the firm.
Effective |
Less effective |
The working group carefully studies the data gathered from the workshops, and assesses which areas may be difficult to wind down. |
The working group does not draw out vulnerabilities and pinch points from the workshops. |