@Risk

Japan and the US have the highest economic exposure to natural hazards.

But, new research from Maplecroft concludes that the emerging economies of China, India, Philippines and Indonesia pose the most risk to investors –because these countries lack capacity to combat the impacts of a major disaster.

According to Maplecroft’s Natural Hazards Risk Atlas 2011 (NRHA), China, India, Philippines and Indonesia are not only at ‘high’ and ‘extreme risk’ from economic exposure to natural hazards (earthquakes, tsunamis, tropical cyclones, floods, drought, etc);  they also lack the resilience to mitigate the disruption a major event would have on their societies and economies.

Maplecroft points to Japan to illustrate the point. The UN states that Japan has nearly 40 percent more people exposed to tropical cyclones than the Philippines. Yet, if both countries experienced similar sized cyclones, fatalities in the Philippines would be 17 times higher than in Japan.

What’s more, due to the rising economic power of those major emerging countries, the occurrence of a major natural disaster there may also have global economic impacts and severely affect the supply chains of business. Maplecroft advises investors who are currently diversifying portfolios into Asian countries to factor in natural hazards risks into their investment strategies. (more…)

Is the world becoming more risky than it has ever been?

On the one hand . . .

It’s only August, and analysts already have concluded that natural hazards have been more costly to the world economy in 2011 than in any other year on record. Researchers estimate that the tsunami in Japan, tornadoes in the US, the Christchurch earthquake and flooding in Australia all have contributed to a massive $265 billion –and that’s for just the first six months of the year.

In addition to natural hazards, cyberattacks are on the rise. Counterfeiting continues to flourish. Terrorism remains a significant threat. Do I even need to mention the wild swings on Wall Street? The list of risks goes on and on.

But, on the other hand . . .

Some may argue that there’s actually less risk than before. After all, risk managers are growing increasingly sophisticated about measuring and mitigating threats. And, there are other significant reasons for optimism. Both men and women in the US are living longer. Violent crime is down. The number of US property crimes has decreased, and motor vehicle fatalities have fallen, too.  (See infographic here.)

So, which is it? Do you think the world is becoming more risky, or less? (more…)

Earlier this month, the US Food and Drug Administration, together with its European and Australian counterparts, released two reports detailing the results of pilot programs focused on increasing international regulatory collaboration with regard to drug quality and safety.

One report reviewed the Good Clinical Practice (GCP) initiative and assessed the success of information-sharing and collaboration on inspections relating to clinical trials.

The second report reviewed the Active Pharmaceutical Ingredients initiative and presented results of the information-sharing among the FDA, Australia’s Therapeutic Goods Administration and for Europe, the EMA, France, Germany, Ireland, Italy, the United Kingdom and European Directorate for the Quality of Medicines & Healthcare (EDQM). Based on the shared information, the FDA was able to refine its decisions, such as whether to postpone or expedite certain inspections, and in some cases also prohibited imports into the US of a firm’s products based on negative findings from a European inspection. According to the FDA, the information-sharing and collaborative inspections were important milestones in establishing a sense of mutual trust and common purpose among the drug regulatory agencies involved.

In June, the FDA released Pathway to Global Product Safety and Quality, a report which unveiled a new strategy to meet the challenges posed by rapidly rising imports of FDA-regulated products and a complex global supply chain. This FDA report calls for the agency to: (more…)

Despite widespread awareness, cyberattacks are becoming  increasingly common.

As remarkable as it sounds, a new study from HP and the Ponemon Institute found that over a four-week period, the organizations surveyed experienced 72 successful attacks per week, an increase of nearly 45 percent from last year. (Note: More than 90 percent of all cybercrime costs were caused by malicious code, denial of service, stolen devices and web-based attacks.)

Of course, the financial impact of a cyberattack can be devastating. The Second Annual Cost of Cyber Crime Study also revealed that the median annualized cost of cybercrime incurred by a benchmark sample of organizations was $5.9 million per year, with a range of $1.5 million to $36.5 million each year per organization. This represents an increase of 56 percent from the median cost reported in the inaugural study published in July 2010. (Note: More than 90 percent of all cybercrime costs were caused by malicious code, denial of service, stolen devices and web-based attacks.)

Interestingly, the study looked deeper into the economic costs of cybercrime and found that: (more…)

Accenture recently polled 1,000 chief financial officers (CFOs) and chief marketing officers (CMOs) and found that most are “holding the reins tightly” when it comes to price competitiveness and increasing costs.

The vast majority (85 percent) of those who participated in the study said they do anticipate growth. But they also reported that continued economic uncertainty is forcing a more disciplined approach, one that focuses on cost management and the prudent use of cash.

For example:

• Nearly 90 percent of survey participants said price competitiveness is a primary strategic issue and that they expect to continue to maintain or cut costs and build cash positions further.

• Nearly three out of four CMOs surveyed (71 percent) said pricing is now among their companies’ top three strategic priorities. More than two thirds (71 percent) of the combined group of CMOs and CFOs believe they will have to maintain pricing, or even drop prices, given the current economic environment.

• Virtually all are eyeing additional cost-cutting. Continued pricing pressure, combined with persistent uneasiness among executives about the prospects sustainable global economic growth led 99 percent of survey participants to indicate that their companies would be pursuing some additional level of cost-cutting.

• 70 percent of respondents indicated that their companies have optimal-to-excess cash positions relative to current business demands, and nearly 90 percent have teams in place (some permanent, some temporary) focused on continuing to improve working capital productivity.  Roughly one third of the CFO participants indicated the need to continue generating cash to allow for opportunistic investments, increased R&D and/or future operational necessities.

Coupled with this disciplined approach to cost management, the study found that the CFOs and CMOs polled expect major impacts to their growth to result from improved product value, innovation and promotion across their businesses. (more…)