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jerryking : internal_controls   3

Due Diligence Gets Tougher: A loose term now means a whole lot more work
Aug 5. 2002 | The Investment Dealers’ Digest | by Barbara Etzel.

What constitutes enough due diligence anyway? It may be vague enough for attorneys to argue about, but there is no doubt that the bar has just been raised due to the steady diet of scandals and investors' mistrust of Wall Street. Attorneys say that the level of due diligence will continue to increase. That is because it will be up to advisers on all types of deals, stock and bond offerings as well as mergers and acquisitions, to make certain the company is complying with all the new laws that are being instituted. Corporations will need a policy for setting up internal controls and to have an independent audit committee. Their top officers will be required to certify the accuracy of their financial results, and those who falsely do so will face jail time and million-dollar fines. Companies will also be taking a closer look at their internal disclosure policies. That means that underwriters and their attorneys must understand what the company's policies are and make certain they are following them.
due_diligence  scandals  Wall_Street  investors  mistrust  financial_advisors  internal_controls  audits  disclosure 
september 2012 by jerryking
Go Ahead, Take a Risk
June 22, 2004 | WSJ | By ADRIAN SLYWOTSKY

What are the risks you should be taking but aren't? Most managers treat risk as an unwanted byproduct of the business. They think narrowly of financial, operating, and hazard risks, such as currency fluctuations, employee fraud, and earthquakes. And they defend themselves through practices like hedging, internal controls, and insurance.

But disruptive strategic risks can be a much larger source of value destruction for a firm. I looked back to the bull market of the 1990s to analyze movements of the Fortune 1000 stocks; even then, before the market collapsed, 10% of stocks lost over one-quarter of their value in a single month, primarily because of strategic-risk events.

The most successful companies do not try to simply minimize strategic risk; they embrace such risk by making prudent bets in their growth-oriented strategies. Strategic risks include not just the obvious, high-probability events that a new ad campaign or new product launch will fail, but other less-obvious risks as well: Customers' priorities will change quickly -- as when baby-boomer parents quickly migrated from station wagons to minivans, catching most automakers off guard. New technology will overtake your product -- as mobile telephony has stolen market share from fixed-line voice. A one-of-a-kind competitor will render your business model obsolete -- as the Wal-Mart tidal wave has washed over mid-range department stores.

Although insurance and hedging can't address strategic risks, there are an array of countermeasures that can, including these three:
1) Smart sequencing for new growth initiatives. Look for incumbents that are moving deliberately, leveraging existing assets and customer relationships to gain the experience, knowledge, and reputation necessary to take the next step with confidence.
2) Proprietary information to reduce the risk of each new initiative. Gather and generate proprietary information that produces a depth of insight into the customer's needs and activities that traditional suppliers cannot match. This will make you a supplier of choice, reducing bidding volatility and allow you to plan with greater certainty.
3) Double betting to minimize the risk of obsolescence. When several versions of a new technology are competing to become the standard, it's impossible to predict which will prevail. So smart managers make double bets. Betting on both Windows and OS/2 positioned Microsoft to be the winner, regardless of which operating system prevailed.

Traditional risk management seeks to contain losses. But that's just one-half of the growth equation. By embracing strategic risk, Cardinal, JCI, and other risk-savvy companies have raised their growth potential in addition to reducing their economic volatility. That's important at a time when aggregate market growth is sluggish: The biggest risk of all is not to take the right growth risks for the business.
leaps_of_faith  Adrian_J._Slywotzky  risk-taking  proprietary  sequencing  scuttlebutt  information  growth  strategic_thinking  Mercer  Oliver_Wyman  product_launches  nonpublic  low_growth  slow_growth  insights  customer_insights  value_destruction  disruption  insurance  new_products  obsolescence  countermeasures  volatility  customer_risk  one-of-a-kind  hedging  overly_cautious  risk-aversion  de-risking  double_betting  risk-management  bull_markets  customer_relationships  dark_data  risk-savvy  internal_controls  financial_risk  risks 
june 2012 by jerryking
Clinical depression | NOW Magazine
October 23-30, 2003 | NOW | By Ali Sharrif.

African Canadian Legal Clinic in turmoil over shocking audit.

the leak of a thick audit conducted by the clinic’s funder, Legal Aid Ontario, over the last week, all hell has broken loose. The document was sent to media, including to this reporter, by a clinic employee upset by the audit’s contents.

The audit, released in April, raised questions about the possible misuse of funds and inflation of client numbers, and pointed to the existence of "weak internal controls with respect to the payment of expenditures.’ Documents suggest that some $418,000 was received from various funders but not reported to Legal Aid Ontario, which backs the group to the tune of approximately $628,000 yearly.
African_Canadians  lawyers  law  irregularities  mismanagement  audits  internal_controls 
november 2011 by jerryking

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