Firms should prepare for the LIBOR transition with respect to six key areas: 1. Transition plan: The detail and scope of each firm’s transition plans should be commensurate with its LIBOR exposures. Large firms should have a LIBOR transition plan with defined timelines, a governance structure that clearly defines roles and responsibilities, and an appropriate budget and resources to support the plan. 2.
Financial exposure and risk assessment: Each firm should accurately measure its financial exposures to LIBOR and report them to senior management. Large firms should measure their exposures frequently—for example, quarterly—identifying exposures by product, counterparty, and business line and identifying the proportion of exposures that will run off before the relevant LIBOR tenor ceases. 3.