@Risk

In its January 2010 “Citizens United” decision, the Supreme Court lifted all but a handful of restraints on corporate spending on politics.

How have companies responded? Are they spending on politics? And, if they are, how are they navigating disclosure, board oversight and the associated risks?

A new study from the Center for Political Accountability, in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania, gives us some intriguing insights.

I found the results encouraging. The research, which is the first of its kind since Citizens United, revealed that many leading companies are taking steps to increase corporate political transparency and accountability. They are disclosing political spending and working to safeguard shareholders from its potential risk.

In fact, based on seven key indicators, the CPA-Zicklin Index identified the following S&P 100 companies as the top 10 for political transparency and accountability: Colgate-Palmolive Co., Exelon Corp., International Business Machines, Merck & Co. Inc., Johnson & Johnson, Pfizer Inc., United Parcel Service Inc., Dell Inc., Wells Fargo & Co. and EMC Corp.

Here’s a look at a few additional findings: (more…)

New research from PwC reveals some disturbing details which suggest that most companies aren’t necessarily providing investors with a complete view of the strategic opportunities and threats to the business.

Even though there’s considerable uncertainty in global markets these days, PwC’s new study showed that less than half (45 percent) of the 350 largest listed UK companies clearly explain the potential impact of the risks they have identified or how they intend to buffer their effects.

What’s more:

• Only 16 percent of the FTSE 350 clearly based their reporting on their strategy throughout their accounts,
• Just 35 percent clearly align their key performance indicators with strategic priorities and
• Two-thirds are failing to clearly define their business models in their annual reports.

Although these statistics may seem concerning, the study also uncovered a bright side: In many ways, reporting has improved from last year. For instance, back then, a mere 18 percent of the companies studied were clear about the impact of their risks.

In other positive developments: (more…)

The US Department of Justice, the Securities and Exchange Commission and the FBI have joined forces on a rigorous anti-corruption campaign, and they’re cracking down on businesses that aren’t compliant with the Foreign Corrupt Practices Act (FCPA).

Many have already felt the heat. Last year federal agencies initiated a record number of FCPA enforcement actions. Plus, the penalties associated with FCPA violations have become increasingly severe.

Who’s the most at risk?

That’s a tough question to answer, of course, knowing that the US government is targeting not only a company’s employees, but also its agents, contractors, investors and suppliers. In my estimation, supply chain and procurement executives of all multi-national corporations now face distinct risks and business challenges.

If you’re looking for an in-depth analysis of recent trends in anti-corruption enforcement, check out the new report from international law firm Chadbourne & Parke LLP.

The Chadbourne Compliance Quarterly Special Report, authored by partner M. Scott Peeler, reviews the circumstances surrounding 61 individuals who were the subject of government-initiated civil or criminal action alleging FCPA violations over the past six years. Interestingly, the study found that: (more…)

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…)