Businesses may have to become their own regulators, as unwilling as they are to face the possibility of catastrophe, says Peter Firestein.
Disasters should be our teachers. Among the lessons we can take from the financial meltdown and the catastrophic Gulf of Mexico oil rig failure is that we have fallen short in understanding the risks we've created for ourselves. And just as risk is not quantifiable, neither is the possibility of damage to corporate reputation. In a
business culture that runs on metrics-where decisions are made on the basis of return on investment, margins, earnings, debt ratios, and dozens of other measurements-the imprecise nature of risk makes it difficult to discuss. There is often a powerful temptation to ignore what is not measurable-particularly with regard to so
uncomfortable a subject as risk-in favor of what is. A program to identify and avoid catastrophic events adds nothing to the confidence of customers and employees. And, perhaps most important,...
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Meet public enemy No. 1 in today's workplace.
If you're reading this article sitting down-the position we all hold more than any other, for an average of 8.9 hours a day-stop and take stock of how your body feels. Is there an ache in your lower back? A light numbness in your rear and lower thigh? Are you feeling a little down? These symptoms are all normal, and they're
not good. They may well be caused by doing precisely what you're doing-sitting. New research in the diverse fields of epidemiology, molecular biology, biomechanics, and physiology is converging toward a startling conclusion:...
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CFOs aren't the only ones with a lot on their minds. A new study looks at board members' top concerns and their impressions of their management teams.
Ever wonder what your board members are talking about when you're not in the room? While strategies for dealing with the recession and recovery have topped most board agendas recently, a new study of more than 100 board members conducted by the accounting and business advisory firm Eisner LLP identified other key areas of concern. "As the
economy is starting to turn, we wanted to find out what boards are thinking about besides financial risk," says Steven Kreit, a partner at Eisner and co-author of the study. Respondents, half of whom identified themselves as audit-committee members, called:...
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In volatile markets, it pays to keep an eye on the foundations of effective hedging.
Recent fluctuations in currencies and commodity prices have once again highlighted the importance of hedging expertise. The dollar's continued rise against the euro, pound sterling, and Australian and Canadian dollars promises to eat into the operating income of companies that earn the bulk of their revenues in those geographies. Crude-oil
prices journeyed from the low $70s to almost $90, then dipped below $70 - all in four and a half months, making it difficult for companies of all types to forecast energy costs. Global sugar prices soared to historical highs earlier this year, then halved, wreaking havoc on the input costs of food producers. Exposure to currency risk is
widespread across industries. In a 2010 survey by the Association for Financial Professionals, 51% of organizations said they have an exposure to foreign-exchange risk, and 72% of them hedge their exposure. Only 13% of companies are exposed to agricultural commodity risk, but 80% of those companies said that exposure has a
"significant" impact on profitability. Unfortunately, in their rush to tame risk, some companies leap into hedging before looking at their appetite for risk, identifying their objectives, or evaluating hedging tools. Reviewing the first principles of a hedging strategy is essential, even for companies that have hedged in the past. To help
with that review, here are seven pillars of hedging wisdom, based on interviews with several experts...
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Trouble can sneak up on the best presenters-just ask Steve Jobs about his Wi-Fi connection at Monday's iPhone 4 announcement.
But you can use strategies to mitigate PPT meltdowns and awkward silences, says presentation expert and The Presentation Secrets of Steve Jobs author Carmine Gallo. Here are his expert tips...
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Obama, Bernanke pile on debt when de-leveraging is needed.
If policymakers do not understand the real cause of a problem, they will in all likelihood be unable to provide a genuine solution. Messrs. Barack Obama, Benjamin Bernanke and Timothy Geithner do not understand the real cause of this debt crisis. They are politicians first and economists or students of the market second--if at all.
Therefore, it is not wise to count on them to tell us when the Great Recession is over, or to provide a plan to prevent another one in the future. The cause of the Great Depression in the 1930s, and the Great Recession beginning in 2007, was one and the same:...
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A showdown between credit unions and banks could have serious implications for small-business lending.
Credit-union lobbying groups in Washington are pushing for legislation that would lift a 12-year-old law that curtails credit-union lending to 12.25% of total assets. Raising the cap to 25% and easing other restrictions would allow credit unions-important sources of financing for many small operations-to extend up to $10 billion in additional
business loans in the first year the cap is lifted, according to the Credit Union National Association in Washington. The proposed legislation, however, faces stiff opposition from banking lobbying groups, which argue that an increased cap would create a distorted competitive environment detrimental to community banks, also big lenders to
small businesses. "It's a test of...
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Nothing breeds success like success, at least according to the old proverb. However, this is not always the case when it comes to business growth.
Many organizations, from Polaroid to Sony, have become victims of their own success: they achieved enormous growth by introducing new products - the Polaroid camera, the Sony Walkman - but as the marketplace matured this growth slowed and they were left looking for alternative paths. Few companies can
sustain product growth for more than a couple of years. As this slows, many turn instead to acquisitions. This is a risky strategy as 50-65 percent of acquisitions actually destroy value - just look at what happened with AOL and Time Warner. Instead, organizations which want to maintain business growth over longer
periods of time need to extend their thinking to include services, solutions or families of products. To get this right, they must start using "strategic intelligence" - a coordinated combination of research,...
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Betting on the Bad Guys The bad guys are the ones who will come out on top of the money pile in this cartoonist's eyes...
Cartoonist Scott Adams's personal road to riches: Put your money on the companies that you hate the most.
When I heard that BP was destroying a big portion of Earth, with no serious discussion of cutting their dividend, I had two thoughts: 1) I hate them, and 2) This would be an excellent time to buy their stock. And so I did. Although I should have waited a week. People ask me how it feels to take the side of moral bankruptcy. Answer: Pretty
good! Thanks for asking. How's it feel to be a disgruntled victim? I have a theory that you should invest in the companies that you hate the most. The usual reason for hating a company is that the company is so powerful it can make you balance your wallet on your nose while you beg for their product. Oil companies such as BP don't actually
make you beg for oil, but I think we all realize that they could. It's implied in the price of gas. I hate BP, but I admire them too, in the same way I respect...
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Few people would want to swap jobs with collectors . especially these days.
These real-life examples aren't likely to change any minds. With cash scarcer, debtors are getting craftier (and sometimes much more brazen) about preserving their cash flow at the expense of yours. And while some excuses are legit, others are downright crazy. We've collected 13 of the most off-the-wall reasons actually given to finance
staffers. Let's hope you've never been told any whoppers like these:...
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