Category Archives: Risk Management

Top 10 Global Risks Underscore Business Concerns

Posted on by

Risk managers around the world appear to be closely aligned when it comes to top concerns for their organization, according to findings of two studies.

One was preliminary results of a study, Global Risk Management Research, which is due in September by Accenture. Executives from 446 organizations across eight industries were asked what they see as the biggest risks over the next two years. Out of a list of 10 “external pressures,” legal risks topped the chart at 62%. Second on the list were business risks at 52%, and third were regulatory requirements at 49%.

There was a tie at 46% between the fifth, sixth and seventh concerns, which were credit risks, operational risks and strategic risks.

Interestingly, the 2013 Global Risk Management Survey by Aon Risk Solutions found that of 1,415 respondents from 70 countries and a broad range of industry sectors, the top concern was economic slowdown/slow recovery. Second was regulatory/legislative changes and third was increasing competition.

Last on the Accenture study’s list was reputational risk at 38%. I find this surprising, given the financial crisis and ongoing examples of tarnished reputations over the past few years for a variety of reasons. The Aon study, however, listed damage to reputation as the fourth concern.

In a slowly recovering economic environment, with more and more organizations merging and acquiring other companies, and expanding across the globe, the top concerns of both of these studies make sense. In fact, other surveys and experts I’ve talked to indicate that M&As more often than not result in legal actions and trigger other business risks and regulatory requirements.


Illustration courtesy of Accenture

Garbage In, Garbage Out

Posted on by

Last week I wrote about a train derailment on the line I take to work every day. It was the third derailment in only a few months for the MTA. It turns out that two sets of tracks were destroyed as the result of a derailment of 10 cars on a CSX train hauling garbage at night.

The MTA responded promptly and by the next morning had plans in place, using buses and a subway line to get people to work in Manhattan. That was a Friday, and by Monday garbage had been removed from the tracks and one track was replaced so that service could mostly be restored. The second track was back a few days later.

But a recent letter to the editor of our local newspaper gave the incident a new perspective.

The reader pointed out that a CSX garbage train makes a trip four times each day to and from the Bronx, through Albany, to Virginia.

He stated, “The garbage is loaded next door to two gas-fired electric generating plants,” and pointed out that “every advanced country is converting garbage to gas for electric production – we are not.” Instead, we are hauling it to faraway locales to be placed in landfills.

Randy Leonard wrote in a column for The New York Times in September 2012 that strides have been made with a process called plasma arc gasification, developed by the U.S. Air Force. The gasification process was designed as an alternative to the open pit burns of garbage that some Iraq and Afghanistan veterans claim made them sick.

He noted that David Robau, an environmental scientist for the Air Force, “tours the country promoting a system that sounds too good to be true: It devours municipal garbage, recycles metals, blasts toxic contaminants and produces electricity and usable byproducts — all with drastic reductions in emissions.”

New York City and some waste companies are interested in the process, which is favored by some because it can destroy medical waste, asbestos, hydrocarbons and PCBs, he said.

Robau added that not all environmentalists are convinced, believing that complete disposal of waste will discourage recycling and development of renewable products. They also feel that gasification will still create toxic substances such as dioxins.

David Wolman reported in Wired Magazine, February 2012 that a huge garbage operation in Northern Oregon has included a plasma gasification facility. It is run by a startup company called S4 Energy Solutions – the first commercial plant in the U.S. to use the process to convert household garbage into gas products like hydrogen and carbon monoxide. The products can be burned as fuel or sold for other industrial applications.

So far gasification has not taken off, because the value of the product has yet to offset the energy required to power the high temperature furnaces needed to melt the trash. But I have faith (fingers crossed) that eventually solutions to many of the issues at hand will be found.

After all, garbage is cheap fuel.

As open land gets scarce and water tables are threatened, we will realize that capping landfills is not a long-term solution. Fossil fuels will also become too expensive, making that cheap fuel look better and better. In fact, I predict that we will eventually be mining garbage out of our landfills.

It’s only a matter of time.

Buyers Dealing with Rise in Total Cost of Risk

Posted on by

Keeping insurance costs down is a priority for risk managers, but with the total cost of risk up 5% since last year, according to the newly released RIMS Benchmark Survey, this task has become increasingly difficult. One risk manager at a live web event last week said he is looking closely for coverage overlaps in his international operations.

A key finding of the 2013 RIMS Benchmark Survey, released this month, was that the average total cost of risk (TCOR) for all companies increased 5%, from $10.19 per ,000 of revenue to $10.70 per $1,000 of revenue – the result of hard market conditions.

The drivers of these increases were global catastrophes, including the tsunami/earthquake in Japan, flooding in Australia and Thailand, and earthquakes in New Zealand and Turkey – which impacted property rates, explained Wesley DuPont, executive vice president and general counsel at Allied World.

On the casualty side, “There has been an uptick in loss severity,” DuPont said. “Claims that had previously settled for less than $5 million were settling for more than $5 million.”

Danny Holtsclaw, director of risk and insurance for the Wildlife Conservation Society, said he is working to keep the cost of risk down by examining duplication of coverage globally. “There has to be an internal review on the risk manager’s side to make sure we don’t have overlapping coverage and if we do, we try to minimize that as much as possible,” he said.

He is also “getting back to the basics of loss control,” by doing “what we do best internally to mitigate the risks we have.” But at the same time, “as our premiums and our cost of risk are growing, we’re looking to our risk partners – not only our carriers, but also our brokers.”

Despite all efforts to evaluate exposures for accuracy, however, at renewal time underwriters are requesting “better data.” Meanwhile, Holtsclaw said, “I’m giving the best data I have, but it’s still not enough.”

What’s more, at midyear renewals, “if you’re adding particular exposures, there seems to be more supervisory underwriting review,” he said, adding that “Sometimes a handshake is not necessarily a handshake – you have to wait for validation to come back. I’m seeing that for the first time in the last year.

online pharmacy strattera with best prices today in the USA

”

Bobby Bowden, executive vice president, marketing and communications with Allied World said that risk managers can get a better response from insurers by having thorough knowledge of their business and industry. “To come in and know your business inside-out gives us a better understanding,” he said. Better understanding allows the underwriter to price properly, “and ultimately the best deal is the result of that communication,” he added.

What Holtsclaw looks for from carriers is, “for those experts to become an added extension of my team, to help implement our risk management goals.

online pharmacy bimatoprost with best prices today in the USA

” Because at the end of the day, “I’m having to do more with less and I’m trying to take advantage of those resources.”

Companies with advanced enterprise risk programs are proving to have an advantage, said Carol Fox, director for strategic and enterprise risk practice for RIMS. “We found a correlation in a study we did a number of years ago, that companies with better ERM programs had better credit ratings.

online pharmacy arimidex with best prices today in the USA

So it’s not just the insurance piece, but making the organization more efficient overall and protecting the value of the organization.”

High Taxation Tops the List of Biggest Business Risks

Posted on by

High taxation is the number one risk faced by North American businesses, according to a new survey from Lloyd’s of London.

buy amoxil online imed.isid.org/wp-content/uploads/2023/10/jpg/amoxil.html no prescription pharmacy

Lloyd’s Risk Index 2013, which was also published in 2009 and 2011, surveyed more than 500 C-suite and board-level executives to determine the threats that they were most concerned with. High taxation, which only came in 13th in 2011, took the top spot. Lloyd’s Chief Executive Richard Ward pointed to the increased debate around economic issues and the perception of how corporations pay their taxes as one reason for the increase in concern:

The public scrutiny given to corporate taxation has become increasingly intense over the last two years, with governments and the taxpayer alike demanding greater transparency and changes to legislation. Since 2011, this pressure has clearly been felt by respondents, who now rank the risk of high taxation as their highest overall risk, up from number 13 in 2011. In the U.S., the priority scores given to this risk are particularly high.

After high taxation, the rest of the top five risks cited were:

  • loss of customer/cancelled orders
  • cyber risk
  • price of material inputs
  • excessively strict regulation

Of these, only the loss of customers was a top 5 risk in 2011:

The survey findings seems to indicate that large companies are more prepared for these risks than their smaller counterparts. But since the balance sheets of smaller companies are more vulnerable, they especially need to find ways to address these issues. Overall however, Ward warned against taking a short-term outlook and said it will take “expert risk management” to insulate companies from these threats.

“With business tax in the spotlight and rising up the political agenda, executives are understandably concerned. Yet the danger is that an emphasis on near-term, operational issues comes at the expense of significant, strategic decisions that have previously exercised business leaders.

buy nolvadex online imed.isid.org/wp-content/uploads/2023/10/jpg/nolvadex.html no prescription pharmacy

With the timetable for global economic recovery likely to be much longer than we hoped, a focus on long-term sustainability and effective risk management should be a priority for boards across the world.

buy inderal online imed.isid.org/wp-content/uploads/2023/10/jpg/inderal.html no prescription pharmacy

”