Risk Management

The Great Risk Myth:  There is a widely held belief that financial risk is easily measured – that we can stick some sort of riskometer deep into the bowels of the financial system and get an accurate measurement of the risk of complex financial instruments. Misguided belief that this riskometer exists played a key role in getting the financial system into the mess it is in.

Source: Business Spectator

Risk Management: Why It Failed, How to Fix It:  The recent financial industry meltdown and transformation leaves many questions — how did it happen? Could it have been avoided? Will it happen again? Though there are many theories about how the crisis began, there's no simple explanation.

Source: The Institute of Internal Auditors

Risk Management or Risk Manipulation:  Value at risk (VaR) financial models are the latest game being played by those on Wall Street who profess to manage risk, a troubling trend detailed superbly by Joe Nocera in a January 2nd New York Times Magazine article, They give bankers a false sense of confidence in their risk control while, in reality, they increase the level of risk for society as a whole.

Source: GoldSeek

ERM: The Big Picture:  Over the past 10 years, one of the most talked about topics in some business circles has been enterprise risk management (ERM). In general, progress of the ERM movement has been slow and disjointed - two steps forward and then one step back.

Source: Insurance news net

Many Enterprise Risk Management Programs Lack Fundamentals: Many companies fall short in three critical areas of their enterprise risk management (ERM) program -- risk culture, risk management processes and technology -- which can hinder their effectiveness, according to a survey of internal auditors and board members.

Source: PR Newswire

Credit crunch aftershocks continue to put risk management in the spotlight:  The annual top-ten ranking survey, reveals that the top strategic business risks facing companies globally during 2009 are credit crunch aftershocks, regulation and compliance, and deepening recession.

Source: AME Info

7 best practices in risk management:  Process and oversight to drive implementation of robust risk management procedures is the responsibility of the Board, and a significant trend around the globe is of independent directors playing an active role in overseeing the risk management functions of corporations.

Source: The Hindu

 Governance & Compliance 

Former Company Secretary Pleads Guilty to Insider Trading:  A former Queensland Gas Company Ltd (Queensland Gas) executive and company secretary, has pleaded guilty by ex-officio indictment in the Brisbane District Court to four insider trading charges arising from an ASIC investigation.

Source: ASIC

Smart Boards Focus on Cash as Risk Puts Profit on Back Burner:  Boards are asking management to reassess risk-management models, to test and scenario plan, and to provide the confidence that present and emerging risks are measured, managed, and mitigated.  The importance of risk management is not new, but with debt hard to come by, liquidity problems present a real risk to solvency.

Source: The Age

E*Trade Fined $1 Million for Inadequate Anti-Money Laundering Program:  Two E*Trade Financial Corp. subsidiaries were fined a total of $1 million for failing to implement money-laundering screening to detect suspicious securities trades, the brokerage industry’s main regulator said.

Source: Bloomberg

RIMS Claims Financial Crisis Caused by Failure to Adopt Enterprise Risk Management:  The financial crisis of 2008 was due to companies' failure to embrace risk management, said leaders of the Risk and Insurance Management Society Inc.

Source: Trading Markets

Why CSR reporting is broken - and how it should be fixed:  Sustainability reporting will undergo a revolution in the next few years. This can only be a good thing.

Source: Ethical Corporation

 Occ Health, Safety & Environment

US Panel Calls for Changes to EPA's Risk Assessments:  EPA's process of generating risk assessments -- which estimate the potential adverse effects posed by harmful chemicals found in the environment in order to protect public health -- is bogged down by unprecedented challenges, and as a decision-making tool it is often hindered by a disconnect between available scientific data and the information needs of officials.

Source: OHS Online

 Government

How the inner-west was undone - councils prepare for the worst:  Sydney's inner-western councils have spent about $80,000 on a draft report identifying the most catastrophic hazards that could occur in the area.

Source: Sydney Morning Herald

 Financial Management

Rethinking Risk:  According to a survey of 125 CFOs last September, 62 percent of finance executives blamed the crisis on risk management's inability to understand complex financial instruments; nearly three quarters of the respondents said risk management now outranks in importance such issues as long-term and short-term debt financing.

Source: CFO.com

 Can we help?

If you have any risk management, governance, audit or business continuity matters you would like to discuss, contact InConsult on 02 9241 1344.  

C We’re moving...

We’ve outgrown our existing premises so effective from

2 March 2009, we are moving to:

 NAB House

L9, 255 George St

Sydney NSW 2000

Our phone number stays the same: 

02 9241 1344

Client Update

InConsult congratulates our clients RealCover Insurance and Pacific International Insurance for obtaining their licences from the Australian Prudential Regulation Authority (APRA) to carry on insurance business in Australia.

WELCOME: We recently welcomed a number of new clients to InConsult – Pillar Administration, Stewart Title, Cessnock City Council and Great Lakes Council.

SPECIAL ANNOUNCEMENT: All Councils insured with Metro Pool, one of the most successful insurance pooling groups in local government have unanimously selected our GuardianERM.net as council’s risk, governance, compliance and audit tool.   InConsult will work with each council to firstly help embed ERM and roll out GuardianERM.net to put the theory into practice.  Council’s   include Holroyd City Council, Marrickville Council, Rockdale City Council, The Council of the City of Botany Bay, Lane Cove Municipal Council, The Council of the Municipality of Hunters Hill and Auburn Council.

Do you see risk or opportunity?

What do leaders do in an economic environment characterised by increasing uncertainty, lower sales volumes, lower investment returns, shedding staff and cutting discretionary spending? 

For some, cutting the compliance, risk management and/or internal audit budget is a ‘no brainer’…it is often seen as a quick win…saving dollars to the bottom line.  Some leaders fail to see the inherent risks in weaker governance processes, weaker internal controls and an under resourced internal audit department.  In fact, according to Clayton Utz, regulators including ASIC, APRA and AUSTRAC - as well as overseas bodies - fear that compliance breaches will increase in the current market and that "those regulators are speaking to people where these sorts of issues might be to the fore".

What are the seasoned leaders doing?  They know the economy moves in cycles, they remember the crisis at Enron, AWA, Barings Bank, HIH, One.Tel and Ansett.  They know that poor internal controls and risk management could eventually cost them dearly.  They understand that a failure of a competitor presents an opportunity for them.

Two of our clients are using risk management thinking to tackle the current economic conditions and exploit opportunities.  In one case, our client has used the opportunity to add a new product line, well suited to current economic conditions.  In another case, the Board are undertaking a workshop to not only help prepare for the downturn but also identify opportunities than can be exploited against weaker competitors.  

Business Continuity and Resilience

The 10 Golden rules for the crisis spokesperson:  Speaking on behalf of an organization in the white heat of a crisis can be harrowing, even for experienced executives.  But analysis of a host of crises reveals that the best spokespeople usually embrace the following golden rules.

Source: Continuity Central

Business ignoring pandemic risk ... planning apathy highlighted in latest study:  The Continuity Forum has found wide disparity in planning for a pandemic in our latest research covering over 1500 organisations. All organisations in the public and private should have created plans to curb the effects and mitigate the impact of the disruption caused by a Pandemic yet our study shows 73% do not have proper plans to protect the business or its employees.

Source: Continuity Forum

What to avoid:  The ten most common mistakes people make when writing business continuity plans.

Source: Continuity Central

Crisis prevention: How to do it, how no make it work:  With the global financial crisis swirling around us, crisis prevention is more urgent than ever. As the new shock waves unfold about the Madoff meltdown; job losses; and Wall Street abuses, they join the parade of earlier crises, including Hurricane Katrina, the Enron collapse and others. And it is clear they all have one thing in common: EARLY WARNINGS IGNORED.

Source: Continuity Central

 Internal Audit

Internal audit in local government: A framework for best practice:  On 9 March 2009 the IIA–Australia will host a one-day forum focusing on key issues in creating and overseeing internal audit in local government.  The forum tackles key issues in creating and overseeing internal audit in Local Government and presents practical guidance around audit planning, governance, risk and asset management. It is aimed at lord mayors, general managers and those responsible for the strategic implementation of internal audit and governance programs; as well as finance, audit and risk professionals operating in the internal audit space. InConsult will also present a paper on risk management in local government.

Source: Institute of Internal Auditors Australia

Internal Auditors: Mission Unaccomplished: 

Companies want the "compliance police" to get more involved with process improvements and enterprise risk assessment, but they may be unprepared to make the change.

Source: CFO.com

Guidance on Monitoring Internal Control Systems:  The Committee of Sponsoring Organizations of the Treadway Commission (COSO) has released its Guidance on Monitoring Internal Control Systems to assist companies in ensuring the effectiveness of their financial, operational, and compliance-related internal controls.

Source: COSO 

 Financial Services

Time for a rethink on risk:  Fund management has emerged, thus far, relatively unscathed from the credit crisis. But there is evidence of complacency in the sector and this should serve as a warning sign. Some firms simply cannot assess the type and size of the risks they are taking, and court disaster.

Source: Business Mirror

Crackdown: SEC Gets Tougher on Rating Agencies:  As part of a new set of rules adopted today, the Securities and Exchange Commission will prohibit credit rating agencies from helping to structure the same financial products they rate.

Source: CFO.com