Risk resilience

Risk resilience

 
Risk in challenging times
CEOs from Zurich Financial Services Group, TIAA-CREF, Enel Green Power SpA and others discuss the challenges to maintaining reputation, achieving growth and adding jobs.

Local risks can be amplified into global ones
The speed with which risk events unfold – and the extent to which their impacts on the business spread across different risk categories – appear to be escalating. In the past 12 months alone, 56% of CEOs said their businesses were financially impacted by the sovereign debt crisis in Europe; 29% cited an impact from Japan's earthquake and tsunami; and 21% cited the political upheaval in the Middle East.
Disruptions in 2010 and 2011

 

Many risks differ in their importance by region
Three-quarters of CEOs in Western Europe are concerned about instability in capital markets and government responses to fiscal crises. Many in North America also believe rising public deficits are a threat although they’re the least concerned about rising taxes. Exchange rate volatility and unstable capital markets are potential constraints on expansion in both Asia-Pacific and CEE economies. Rising taxes and over-regulation loom large for CEOs in Latin America. And exchange rate volatility is high among the concerns of CEOs in the Middle East and Africa – as is the availability of key skills. In fact, talent shortage is a common concern across most regions.
CEO ranking of risks to growth 2009-2012

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Quotes

Baba Kalyani
Chairman and Managing Director, Bharat Forge LTD
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We have opted for a flexible manufacturing system that allows us to increase or decrease operations by 25%, without any issues. We have implemented this in Europe as well.
Nancy McKinstry
CEO and Chair of the EB, Wolters Kluwer
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There is much more need for scenario planning than there was a few years ago. Much more need for dashboards that senior executives can look at and understand risk.
Zsolt Hernádi
Chairman and CEO, MOL PLC
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The Arab Spring is a case example that justifies our view that it is impossible to anticipate the unexpected. Our business cannot be protected from certain kinds of risk, even such as countries sinking into a prolonged crisis. So, this reinforces the importance of diversification in terms of the amount of capital we have invested in any given country; and the advisability of working with local partners in certain circumstances so that we do not have to bear risk alone.
Richard O’Brien
President and CEO, Newmont Mining Corporation
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Last year’s BP oil spill in the Gulf of Mexico has led many companies to re-ask the question, is enterprise risk management one of those unfortunate check the box activities that every company should be doing because people tell us we should, or is it one that we embrace?
Laércio José de Lucena Cosentino
CEO, TOTVs SA
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These are good times for Brazil; the state could already have been slimmed down. There’s no way you can be competitive with a tax burden like ours. And to reduce that burden, the government needs to close the purse. There’s only one way: spend less and spend right.
Yoshio Kono
President and CEO, The Norinchukin Bank
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Our bank has branch and office managers in the Miyagi, Fukushima and Iwate Prefectures, which were all hit by the disaster. I told these local heads, who were the on-the-spot commanders, not to panic but to sit tight and issue explicit directions, and that if things went wrong, I as the president would assume full responsibility.
Tidjane Thiam
Group CEO, Prudential PLC
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We certainly invest a lot around regulation. If you look at the functions of finance, risk and compliance, they are our highest growth areas. We invest a lot in beefing up our resources and our capability to deal with regulators at the right level, because it is strategic for us.