What risks are actual embedded in the approach of our public debt. It is clear that we should listen to one another, because one strategy seems not to fit all. Our public leaders Sarkozy, Obama and Merkel circle around the facts and the different strategies. This article shares a light on the different angles and aspects of the different approaches.
“Austerity measures to cut public debt and rein in speculation on the euro are threatening to kill the fragile economic recovery, warned policymakers ahead of a summit aimed at strengthening budget discipline in the European Union. Maria João Rodrigues, former special advisor at the European Commission and an economics professor, spoke to EurActiv in an interview. Maria João Rodrigues was a special advisor to the European Commission on the Lisbon Strategy for growth and jobs.
EU leaders are meeting on Thursday to agree on the Europe 2020 agenda for growth and jobs. What do you see as the main advances of the new strategy compared to its predecessor, the Lisbon Agenda?
There was an effort to update the strategic priorities taking into account the extent of the challenge. The group of challenges is wider today than in 2000 because we are confronted with competitors from all around the world. There are lots of emerging economies, not just the United States and Japan. On the environment, the central challenge now is climate change and regarding demographic trends, the ageing problem is now deeper. ‘Europe 2020’ made an effort in coping with these challenges.” Read more >
Source: INSEAD Knowledge
“The ability to assess risk and uncertainty is critical for investment banks and businesses. While some may advocate the use of complex models, INSEAD Dean of Faculty and Professor of Decision Sciences, Anil Gaba, believes that if you’re looking to forecast risk, you’d do well to keep it simple.
He’s on a search for convenient rules of thumb – or what he calls ‘frugal parsimonious heuristics’—to help managers and investors make better decisions more easily. There’s been enormous theoretical progress in the past fifty or sixty years in understanding how people should make decisions in business, politics and economics. Read more >
One of the main causes of the currency crisis in the eurozone is that virtually all countries involved have breached their own self-imposed rules.
Under the convergence criteria adopted as part of economic and monetary union, government debt must not exceed 60% of GDP at the end of the fiscal year. Likewise, the annual government deficit must not exceed 3% of GDP. However, as the maps show, only two of the 16 eurozone countries – Luxembourg and Finland – have managed to stick to both rules. Read more >
Source: Bloomberg Businessweek
“A critical issue on the agenda for most directors these days is determining the board’s role in overseeing risk. That was the topic of a recent peer-to-peer discussion hosted by Directorship and Deloitte. A group of leading board directors and industry professionals explored risk-related issues in the aftermath of the economic crisis, which most agree was a catastrophic failure, particularly on the part of finance institutions, to recognize and rein in excessive risk.
“When we talk to senior stakeholders about risk, it’s really about finding a balance across the entire organization. This balance refers to addressing the sensitivities between strategic, operational, and compliance risk, and ensuring the right information and transparency exists,” said Henry Ristuccia, partner and U.S. leader of governance and risk management at Deloitte. Read more >
“What challenges are likely to affect your company in 2009 and beyond? The credit crunch aftershocks and the deepening global recession, rank as the most important business risks for 2009, displacing regulation and compliance from the top spot. Green initiatives, competition from new entrants, human capital issues, and reputational risk all rose in the new Ernst & Young report.
It identifies the top 10 global business risks
PricewaterhouseCoopers launched its report “Economic crime: People, culture and controls” on the basis of eight years of data on trends, perceptions and incidents of fraud: “Despite heightened efforts at regulation and companies’ investments in controls, fraud remains a major threat to companies around the world. From simple theft to more complex schemes involving management and corruption, the threat continues regardless of a company’s size, location or industry.
PricewaterhouseCoopers’ Global economic crime survey 2007 points to the continued evidence of the intractability of fraud. Entitled Economic crime: People, culture and controls, the report reveals that internal controls alone are not enough to fight it. Instead, controls must be backed by a strong ethical company culture, a broad risk management programme, and “zero tolerance” of executives or other employees who commit economic crimes.
This year’s survey is based on months of interviews of over 5,400 companies located in 40 countries. It is the largest, most comprehensive international survey of economic crime. The report also includes the results of over 1,500 interviews of senior company executives about their experience doing business in seven emerging market economies.” to Survey PWC.
By Anders Søborg, Ernst & Young Advisory Services Denmark
How are companies from developed markets managing risk as they invest and operate in emerging markets? Ernst & Young surveyed over 900 companies to build a picture of best or leading practice.
The survey deals with key principles for managing risk in emerging markets. Although it is not a framework to follow, establishing a risk culture, improving communication, and aligning organization structure and risk management processes can set a strong foundation for better risk management.
Ernst & Young also identifies ten of the key ‘risk management lessons’, taken from executives’ experience across emerging and developed markets. Some key findings from the survey:
• The main goal in emerging markets is growth. Companies have moved on from the traditional view that the primary objective of investment in emerging markets is cost saving.
• Risk priorities differ by location. Developed markets focus on political, operational, and supply chain risk. Emerging markets are more likely to focus on market, competitive, and pricing risk.
• Board focus does not always translate into strategy. There is a consensus that Boards are giving enough attention to risk in these markets. However, only 41% of developed market companies have a risk strategy for emerging markets.
• Opinion differs on risk communication. While 71% of emerging market subsidiaries feel they provide sufficiently regular and robust information on risk, only 44% of the parent companies would say the same.
• Opinion also differs on internal audit. Developed market companies have less confidence in the quality of the internal audit testing of their subsidiaries than the emerging market subsidiaries themselves do.
To learn more about the survey you can contact Anders Søborg, manager, Ernst & Young Advisory Services Denmark.
Mobile + 45 51 58 25 16, Phone + 45 35 87 25 16, Email: anders.Soeborg@dk.ey.com
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