Inappropriate valuations create risks. These risks can be to the financial markets generally, to parties relying on valuations or to those providing valuations.
The potential risk to the wider financial markets of misstated or unreliable valuations means that their preparation and use is often regulated, typically by government agencies, government mandated standard setters or by recognised professional bodies. For such regulatory measures or standards to be effective they need to be based on a proper understanding of the valuation process and its practical operation in the relevant market.
Those who regularly rely on valuations need to minimise risk by ensuring that their procurement procedures produce valuations that are appropriate for their needs, and that they understand the parameters of the valuations received.
Those providing valuations need to ensure that their service and its delivery meets their clients’ requirements without exposing them or their firm to unnecessary risks.
Professional Organisations need to develop obligations for their members that create and maintain trust in their professionalism, while providing their members with support by way of relevant information and training.
With a combined experience of more than thirty years working with the valuation profession around the world to improve practice and develop standards, Marianne Tissier and Chris Thorne have established Valuology so that professional organisations, regulatory bodies, valuation firms, valuation users and all those with an interest in better valuation practice can benefit from this experience.
To effectively manage risk, valuation firms need to maintain effective procedures and protocols for preparing and reporting valuations. These obviously need to comply with any applicable statutory regulations or professional standards. However, simply complying with standards and regulations does not eliminate the risk involved in providing valuations. Steps need to be taken to ensure that relevant risks are considered at each stage of the process and that actions consistent with the service being offered are taken to reduce or even eliminate these. This includes how inspections are made, how data is collected, what information is recorded and the wording of engagement letters, reports and other client communications.
In firms with multiple valuers it is also important to make sure that all understand and correctly apply the firm's procedures, as even the best designed system is not without risk unless it includes appropriate quality and compliance checks.
We offer a range of services for valuation firms, including:
Reviewing existing standard documents and templates used in the valuation process, and suggesting any improvements.
Running workshops with valuation teams to identify risks in their day to day work and steps to avoid or mitigate them.
Working with the firm’s valuers to design procedures which maximise efficiency while adequately considering and managing risk.
Undertaking audits of completed files to ensure compliance with the firm's policies and procedures.
Every firm is different in its structure, resources and the type of work it undertakes. We recognise that there are many ways of complying with standards and managing risk, and something that is appropriate for one firm may not be for another. Our aim is to help firms find solutions that work for them and that enable their valuers to be more efficient by making compliance and risk management intrinsic to their work. If these are seen as creating additional work or making the job more difficult then something is wrong.
Valuations are generally commissioned to enable the commisioning party to achieve another business objective, for example informing an investment decision or reporting to regulators or other stakeholders. We work with those who regularly commission or rely on valuation services to identify exactly what their valuation needs are to meet their objectives. We can then suggest appropriate wording for their valuation policies and procurement documents to ensure that they get the valuations they need.
Regulators and Standard Setters
Our experience of different valuation standards and valuation practices around the world means that we are well placed to help any organisation with responsibility for developing standards or regulations within their domain or market. We have worked with governmental bodies to develop appropriate laws and regulations for the regulation of valuation activity and with professional bodies seeking to ensure that their own membership rules are consistent with international standards.
We provide in house training on regulatory requirements that are relevant to the valuation work undertaken by a firm, and how these may impact on the way in which these valuations are undertaken or reported.
Our long experience of working with international organisations setting standards and publishing guidelines for the financial markets enables us to develop customised training seminars for valuation professionals on the special requirements for valuations being undertaken for purposes such as financial reporting, fund valuation, or secured lending.
We are able to provide this training for valuation firms looking to provide bespoke training for their teams or by working alongside professional bodies or educational institutions as part of wider valuer training programmes.
Support for Professional Organisations
We have many years' experience of working with professional organisations seeking to improve or maintain the quality of valuation services offered by their members. These organisations have ranged from those that are well established to those at a very early stage of development. This has provided us with insight into how such organisations are structured and the benefits they bring both to their members and the wider public in the markets they serve.
This experience enables us to provide professional organisations with support to supplement their own resources. This support can be for a single project or for a specific role on a continuing basis. Some examples include:
Developing a new constitution or bylaws that take into account current IVSC guidance for valuation professional organisations.
Monitoring emerging regulations and standards that could impact on an organisation's members' professional activities, producing suitable alerts and collating responses to consultation documents.
Drafting or reviewing proposed new valuation standards, or advising on changes required to existing standards to ensure compliance or consistency with the International Valuation Standards.
Providing a regular news feed on matters of interest to valuers, such as notable legal decisions, emerging regulations and standards or published technical papers.