@Risk

Of course, members of your Board of Directors worry about financial risk.

But, new survey results from EisnerAmper clearly indicate that financial risk isn’t the only issue that has board members biting their nails.

EisnerAmper’s second annual Board of Directors Survey, Concerns About Risks Confronting Boards, showed that in addition to financial risk, board members are also concerned about:

• Reputational risk (69 percent)
• Regulatory and compliance risk (61 percent)
• CEO succession planning ( 55 percent)
• IT risk (51 percent)

More than 140 board members, sourced from both NACD Directorship and EisnerAmper databases, participated in the survey. Respondents represented both public and private companies, and 31 percent identified themselves as serving on audit committees.

Deep-diving into the regulatory and compliance risk category, EisnerAmper found that the board members polled are most concerned about: (more…)

Even though the number of cases related to the financial crisis dropped, overall federal class action filing activity rose last year, reaching its second highest level in the last five years.

The 15th annual Securities Litigation Study, released earlier this month by PwC US, found that the total number of filings for 2010 (174) jumped by 12 percent from 2009 (155) –an increase PwC says is driven in part by the signing of the Dodd-Frank Act last July.

“The anticipated effects of Dodd-Frank, and particularly the whistleblower program, could lead to a reinvigorated volume of reported securities violations and associated class actions,” Grace Lamont, partner and US securities litigation and investigations practice leader for PwC, said.  “Other exogenous factors, such as the possibility of WikiLeaks targeting specific industries and the advances in global communication and networking access, may have far larger implications.”

The most commonly sued industry remains the financial industry. The health industry came in second, followed by the technology industry. Not surprisingly, the utilities industry, specifically oil and gas, experienced the highest percentage increase of filings for any one industry during 2010 due to an increased number of cases related to mergers and acquisitions (M&A) and the Gulf oil spill.

PwC’s 2010 study also found: (more…)

Will new regulations be effective in preventing any repeat of the global financial crisis?

I suppose we can all agree that to some degree regulations are important. But, as a new report points out, new rules alone will not be sufficient. In addition to regulatory oversight, companies need to completely revise their own attitudes towards risk, as well.

The report, released by Korn/Ferry International, is based on interviews with chairmen, CEOs and board directors of leading companies including Kingfisher, Legal & General, Balfour Beatty and National Grid in the UK, Deutsche Bank, UBS, Nestlé and Lagardère Group in mainland Europe and CB&I, US Steel and Owens Corning in the US.

These interviews reveal that large global businesses see their own attitude to risk as more important than regulation, and they suggest these attitudes are dramatically changing –not only because of as the threat of new regulation, but also because of

• the increasing complexity of risk,
• heightened public interest in corporate behavior and
• the ability of contentious issues to go viral on the Internet.

According to Korn/Ferry, companies can enhance strategic decision-making by paying more attention to six specific aspects of risk management, including: (more…)

In the wake of the worst global financial meltdown since the Great Depression, most corporations are turning the spotlight on their risk management practices and company culture. But, new research suggests that many enterprises have a long road ahead of them as they work to develop robust risk strategies and improve disclosure.

For instance, in a recent analysis of proxy statements from the Standard & Poor’s (S&P) 500, filed in 2010, Deloitte found that only 22 percent cited that the company’s chief executive officer had any involvement or responsibility for risk management.

What’s more, Deloitte also discovered that among the 398 companies it studied: (more…)

Optimists are known for saying, “Every cloud has a silver lining,” and now, new survey results indicate that, at least with regard to the recession, they may be right.

The July 2010 Korn/Ferry Executive Quiz, which polled senior executives and board members from across the world, shows that in the aftermath of the recession and multiple high-profile financial meltdowns, many organizations are approaching risk differently. In fact, they’re now actively identifying and addressing their own risk management issues more than ever before.

For example: (more…)