The Importance of Transparency in Risk Management

The Importance of Transparency in Risk Management Risk managementis about how organization identifies risks, assess all possibilities and threats, and prioritize which one to deal with. That is why it is important to manage effectively those risks before they create unfortunate situations. In this sense, business transparency in every level of organization is a must.

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Reputation Risk Series – Part 2: Sources and Impacts of Reputation Risk

Reputation Risk Series – Part 2: Sources and Impacts of Reputation Risk by Antonius Alijoyo Chairperson, ERMA What are the sources of reputation risk? The vast majority reputation risks stem from what companies produce or provide, how their staff behave, how the company behaves and what its guiding principles are. Some of the sources of reputation risk are included below:

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Security Expenditure Will Strike $96 Billion in 2018, as Forecasted by Gartner

Security Expenditure Will Strike $96 Billion in 2018, as Forecasted by Gartner Organizations face so much security challenges which result in a hike in the cost of regulation, awareness of the threat, as well as the development of an advanced business strategy. Gartner, Inc made an estimation of the total expenditure incurred by organizations for security to a whopping $96.3 billion in 2018, which represents an increase of 8 percent as compared to 2017 estimation.

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The Failure of Green Product Brands

The Failure of Green Product Brands Dr Joseph Zammit-Lucia, the president of WOLFoundation, stated that the reason why brands failed is because of the social or environmental consciousness, which is only one part of what are much boarder and more complex cultural shifts. He also emphasizes that contrary to popular belief, ‘lack of consumer demand’ does not take a part of the failure. If a company tries to build their green product brand in that kind of environment by using traditional marketing paradigms, the chance for success is quite low. Moreover, they also failed because their branding efforts were not relevant to the complexity of current cultural change, resulting in sending message to the wrong audience.

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Reputation Risk Series – Part 1: Basics of Reputation Risk

March 21, 2018

Reputation Risk Series – Part 1: Basics of Reputation Risk by Antonius Alijoyo Chairperson, ERMA In a volatile global marketplace, where media coverage is almost simultaneous across the world and where reputation is seen as a key source of competitive advantage, trust and confidence are now understood to be the key business drivers. Reputation is the mirror of company’s trustmark. However, reputation is subjective and elusive. It is not readily defined. Every time a company sells a product, provides a service, enters into a contract, builds a new facility, invests in research or technology, or enters into litigation, it is making decisions that define its reputation. It is an intangible asset. While it exists primarily in the minds of customers, shareholders and the public, it can have a profound impact on the balance sheet and economic profit of companies. Given the potential impact of reputation, it is only prudent to manage it judiciously, with all the care given to any other company asset. Indeed, the value of reputation extends over a long period of time. Strong management, authentic human capital, positive customer relations and favourable media coverage can – and do – make tangible and measurable contributions to the company’s resilience and future earnings. Customers and potential buyers, investors and creditors are constantly evaluating these intangibles in their decisions to purchase, invest or lend. Similarly, employees and future recruits are evaluating companies and making choices about where to work. What is reputation? Reputation reflects the perception, good or bad, that the different groups of people who interact willingly with or are affected by an organisation – the stakeholders – have of the company. They form their perception based on their evaluation of the organisation’s performance through the available information. It changes all the time, reflecting both the things we say and do and the trends and events that change the way our words and actions are interpreted. The reputation of any organization of any size is complex. It exists in the minds of both those with whom we interact directly, and in the minds of those who become aware of us as word of our actions circulates. What is reputation risk? In a survey of 269 executives, conducted by EIU (Economist Intelligence Unit – 2005: Reputation: Risk of Risks), reputational risks emerged as the most significant threat to business out of a choice of 13 categories of risk. The respondents also felt that risks to their company’s reputation had increased significantly over the past five years. Whilst there is a long outstanding debate on the categorization of reputation risk – whether reputation risk is an issue on its own right or simply a consequence of other risk (risk of risks) – the followings are some working definitions which can be used (quoted from various sources): Reputation risk is the current and prospective impact on earnings and capital arising from negative public opinion. This affects the organisation’s ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the organisation to litigation, financial loss, or a decline in its customer base. Reputation risk exposure is present […]

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Reputation Risk Series – Part 3: Reputation Risk Management

March 21, 2018

Reputation Risk Series – Part 3: Reputation Risk Management by Antonius Alijoyo Chairperson, ERMA Managing Reputation Risk Series – Part 3: Reputation Risk Management While it is commonly acknowledged that reputation risk is difficult to manage, there is a consensus on the key elements of managing reputation risk: Understanding of stakeholders’ expectations, information requirements and perceptions of the organisation; Prompt and effective communication with all categories of stakeholder; Strong and consistent enforcement of controls on governance, business and legal compliance; Ensuring ethical practice throughout the supply chain;  establishment and continual updating of a business continuity and crisis management plan and the team required to support them; Continuous monitoring of threats to reputation; A clear vision: ‘what we stand for and are prepared to be held responsible for’; Clear values, supported by a code of conduct, setting out expected standards of behaviour; An open, trusting, supportive culture; A robust and dynamic risk management system which provides continuous monitoring of threats to reputation and early warning of developing issues; Organisational learning leading to corrective action where necessary; Reward and recognition systems which support organisational goals and values. The first point is accomplished through identifying the parties with whom the company needs to relate to effectively in order to fulfil its business goals, and establishing an ongoing dialogue with them to clarify and update the expectations of each party. Looking forward, businesses will clearly go a long way towards making a more resilient company if they both identify and address the potential impacts of risks to their reputation. In addition, reputation risk management can be developed as an opportunity where superior products and customers can increase market share at the expense of competitors. Reputation can be enhanced through the ‘emotional attachment’ that stakeholders have with the company. Those companies that address global warming issues, tackle waste and recycling, support third world producers and are socially responsible, will engender respect and trust. Reputation risks – both up-side and down-side – must be managed in an integrated enterprise systemic approach, as there is no such thing as reputation risks – rather, all risks may impact on reputation. Thus the effective management of risks to reputation is sound ERM (enterprise risk management) and GCG (Good Corporate Governance), where all insiders are involved and outsiders’ interests are taken into account. In this regards, managing reputation risk is therefore an essential part of the strategic role of the board of directors, who must take into account all stakeholders, whose perception of the organisation will determine its reputation, hence the trustmark of company which may sustain over generations. Editor’s note: The Reputation Risk Series is a three series article on reputation risk. For your reading convenience, we have divided the whole topic into several sub-topics that covers a specific area on reputation risk. To obtain a full understanding on the series focus, we strongly suggest that you read all parts of the series.

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Intangible Assets & Enterprise Risk Management (ERM)

Intangible Assets & Enterprise Risk Management (ERM) by S. Varadarajan, CSQA People are familiar with one form of Asset, which is the tangible Asset. Owning, using, accounting, depreciating, disposing are the activities in the lifecycle of a tangible Asset. These are reflected in the Enterprise’s books of accounts, while deriving the profit or loss. The tangible Asset are visible to the naked eye. . According to the experts the intangible assets are either Customer related, technology or market related. Design of product, know-how, patents, licences, brand equity, non-compete agreements, trademarks, goodwill form part this group namely the intangible assets.

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Cyber Risk – Trends and Critical Infrastructure

Cyber Risk – Trends and Critical Infrastructure The U.S. federal government, banks, and businesses are spending big bucks in a war against hackers and cyber criminals. Cybersecurity budgets are rising in all industries alongside the cyber crime figures. Consider some of the latest market summary and forecast data: British insurance company Lloyd’s estimated that cyber attacks cost businesses as much as $400 billion a year currently and growing, which includes direct damage plus post-attack disruption to the normal course of business. Juniper research recently predicted that the rapid digitization of consumers’ lives and enterprise records will increase the cost of data breaches to $2.1 trillion globally by 2019, increasing to almost four times the estimated cost of breaches in 2015. The global cybersecurity market reached $75 billion in 2015, and it is expected to reach $175 billion by 2020.

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Bangladesh and Reasons Buildings Collapse

Bangladesh and Reasons Buildings Collapse by Timothy J. Corbett Certification Board, ERMA / President, SmartRisk USA Introduction On 24 April 2013, an eight-story commercial building, Rana Plaza, collapsed in Savar, a sub-district near Dhaka, the capital of Bangladesh. At least 547 people died and around 2,500 were injured with many still missing. It is considered to be the deadliest garment-factory accident in history. It has been reported that the elected mayor of the municipality has been suspended for alleged negligence in approving the design and layout of the building including the addition of three stories for the Rana Plaza. The risk of a building collapsing increases significantly when the proper review and approval process of the design and construction is not followed.

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Main Risks In Cocoa Sector of Cameroon

Main Risks In Cocoa Sector of Cameroon By: Lawong Kinenla Edith Program Coordinator at Douala School of Business Many nations like Cameroon are emerging hence additional businesses are springing up, other are taking advantage of their strategic position in the ventures. All these businesses expose themselves to various risks through normal courses of their activities despite the cushions which management of the companies puts in place. No business can be conducted without a certain level of risk accepted. Main risks in Cameroon like for most agricultural depended countries are centered on commodity prices especially those been exported. Many African nations have a huge potential in agriculture which isaccommodating technology hence risk too is getting a peak.

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