Friday, September 23, 2011

Marsh: the board of directors face five big risk management ...

A few days ago, the practice of insurance brokerage company (Marsh) issued the report of a ?risk management on the board of directors agenda,? says, risk management consciousness, attitude, and implementation in the past 3-5 years has profound changes have occurred in the coming year, the board of directors face the risk management of the main challenge for: political risk and emerging economies, the role of the supply chain risk and business strain capacity, capital investment and project risk, network risk and compliance with regulatory risk.

The report points out that the practice, the Middle East and north Africa region is volatile political situation large-scale events such as the existence of the clear political risk. In addition, the from all walks of life in China, consensus forecasts, headed by ?compound shikoku? economies will rise, become the important power on the world stage, all that means political risk profile and western forces will be permanent change political influence. If the rise to risk management is more complex, in view of the domestic and foreign government lobbying and even in the impact on the political risk and the likelihood of the adverse consequences, this to committed themselves to expand overseas Chinese enterprises in is very important.

Political risk another expression is ?illegal economy? of the prosperous of the development. The world economy BBS (WEF), which published the 2011 global risk report ?(the sixth edition) pointed out, illegal trade currently account for up to 7% of total global economy-10%.

In a supply chain risk and business strain ability, the report said, the practice of further economic globalization makes supplier layer of the supply chain, the surge in an increasingly global and complicated, often lack of contingency ability. Earlier this year in particular of the Japanese earthquake will be facing the enterprise supply chain risk reflect incisively and vividly. Along with the economic situation and the tsunami, ash events such as exposed supply chain compressive capacity of the fragile, companies have started to shortcomings know the supply chain to interrupt may bring is serious financial risks, and realize the past 20 years development up outsourcing and overseas operation trend, rely heavily on suppliers, so some company is seeking ?returning?, in order to enhance on supply chain and related risk control.

Capital investment and related risk and is not new, but the risk for expanding overseas Chinese enterprises in the risk of accurate information to help distinguish those who return similar but risk different project. Marsh, a project that expected returns on capital should be based on the risks of the measured, for example, national/sovereign risk, trade service business risk, moral/human rights to the company the influence of reputation. For ?risk adjusted return on capital? began to be used to recent phenomenon, and it is easy to see: the risk management should be as a capital investment decision into the a central issue.

Network risk be a hot topic, as the electronic commerce and the rapid growth of the Internet, the wide application of the parties and to IT systems, now widely rely on network related risk to corporations is particularly outstanding, and also by the company?s close attention. In the case of theft, network, network, and network spy network terrorism, war of network risk, data storage of safety is a need to deal with the major challenges, marsh think enterprise should will ?network risk? into the risk management process itself.

Social media/network has become an important field of the threat, the international association of the internal auditor general audit management meeting a recent poll shows that 38% of companies have no social media, 71% of the company is policy without any formal training or compel employees know relevant policies. Marsh Suggestions, enterprise should formulate the policy and social media to actively promote training, ensure that social media into crisis public relations planning and business impact scene.

With the coming of the era of new corporate governance, the board of directors to undertake the unprecedented pressure, need to ensure that the company comply with new regulatory system. As regulators supervision is more and more strong, regulatory activities, with the globalization of the company also has brought serious problem for director of personal responsibility risk. In the United States for the securities class action lawsuits accusing enterprise, individual directors is listed as the defendant. ?The sarbanes-oxley act? and ?the Chris dodd-frank act require executives to personally guarantee the accuracy of the financial statements, if once prove incorrect, chief executive officer and chief financial officer, will be ordered to return and corporate earnings and share price about salary income. In Britain, the new bribery and environmental responsibility law strict requirements for corruption and environmental pollution company responsible for. If executives to sit back, no matter will be charged.

Marsh said, in such an environment, ensure enterprise dong responsibility risks keeping up with the pace of the regulatory changes, are particularly important.

In addition, the practice still reminds, in addition to focus on the above five key risks, the board also need to consider the large ?emerging? risk, for example: resources security (water, food and energy), the new technology and the long-term threat population changes, etc.

Source: http://youandmeinsurance.com/2011/09/marsh-the-board-of-directors-face-five-big-risk-management-challenge/

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