The relationship between risk and performance improvement is an increasingly complex and central business challenge, with business performance directly connected to the recognition and effective management of risk.
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Increased government reporting requirements have forced those responsible for internal controls to do more. The global recession has required them to do more with less. While regulators press for accountability, investors press for performance. Now, those responsible for internal controls must take charge by assessing their processes and tools, and...
Expectations around what the business needs from the IT function have changed radically in response to a very different global economy. The IT function can play a central role in helping businesses adapt to and thrive in this new status quo, and the survey reveals that businesses are increasingly looking towards IT to play a supporting role in change...
The new economy is more competitive than the old. Greater variation in market performance, sharper market volatility, ceaseless pressure on margins and demanding stakeholders has made for an increasingly interconnected - and interdependent - global economy.
In our first Competing for growth report, we interviewed some 1,400 companies from around the...
Companies across all sectors and markets are expecting the new economy to be even more competitive than the old over the next two years, according to our survey of 1,400 executives from around the world.
The increased competitive pressure extends across the value chain for labor, input materials and capital. And those from emerging markets expect...
Although companies worldwide have been dealing with opportunistic cyber attacks for years, many now find themselves the target of the advanced persistent threat (APT), which is characterised by more sophisticated and concentrated efforts. APT attacks are focused on a single target and aim to collect information over a long period of time. They leave...
In the global push for improved performance, effective software asset management (SAM) can make a significantly positive impact by helping to reduce licence-related expenses, better manage compliance-related risk, and even improve overall operating efficiencies. Leading IT directors and the CIOs are realising that effectively managing software assets...
Hardly a day goes by without some headline-grabbing revelation about a corporate data leak; identity theft or breach of privacy security that threatens to undermine brand and reputation. In an era of ‘anytime, anywhere’ access to information, traditional measures designed to protect privacy are under constant threat due to what seems to...
The goals, approaches and concepts of strategic management are actually experiencing a fundamental revolution driven by an effect termed the “dematerialization” of the economy.
Products and related business models are becoming increasingly intangible. In this context, the company’s ability to manage its knowledge and apply it strategically...
Monitoring customers’ software usage in a complex world
Software asset management survey
Ernst & Young’s software asset management survey reveals that most vendors and customers are actively addressing the issue of licence compliance, but also identifies some gaps on both sides. Faced with increasingly complex IT estates and software...
The success of a change program largely depends upon the performance of the change leadership team. Lack of authority and inexperience of the leadership team can derail the change program in its course. While overly focused on a financial or results-driven approach, the change leadership team too often fails to recognize the impact of the change program...
By keeping a firm focus on internal controls from the very start, organisations can get far more out of their change programmes. This should help businesses manage future risks effectively and give stakeholders greater confidence in sustaining change. Very few change programmes consider controls upfront. As a result, organisations may have to spend...
Business transformation plans are developed and implemented by organizations in an effort to improve efficiency, productivity and financial performance. Yet the majority of these plans never survive beyond a year or so after implementation.
The main reason they fail is because the focus of the change is at a strategic or financial level, and the operational...
In recent years, Internal Audit has been focused on control and compliance efforts to address internal control requirements. Now senior executives and audit committees are looking for more. Executives and audit committee members want to broaden the role of Internal Audit beyond reliable assurance and efficient audits.
They want to be able...
Companies across all sectors and markets are expecting the new economy to be even more competitive than the old over the next two years, according to our survey of 1,400 executives from around the world.
The increased competitive pressure extends across the value chain for labor, input materials and capital. And those from emerging markets expect...
As a result of the financial crisis, many companies are focusing on reducing their costs and getting more flexibility into their procurement, manufacturing and distribution facilities. It is crucial to gain true visibility of the total supply chain's delivered cost. Moving to new markets has a profound impact on the supply chain, but only through a...
Companies have started to revisit their business model and look for ways to evolve so they can approach new challenges head on. We believe one of the major lessons companies should learn from the financial crisis is the value of gaining business flexibility in the operating model, the processes and in the cost structure. In a world getting faster and...
Operational flexibility and accelerated decision-making are dependent on access to the latest data, and that in turn relies on the IT systems that companies put into place to facilitate and manage knowledge. Business intelligence systems are also critical in supporting the innovation and consistency required. Availability and accuracy of data ensures...
The success of an enterprise rests on the people it has, and the ability to harness human capital will distinguish the leaders from the laggards. Lending primacy to the human resources function can indeed be a vital differentiator, and even more so where business models of organisations are continuously evolving in their effort to 'stay ahead of the...
Companies around the world are giving increased attention to governance, risk and compliance. Improving performance means balancing growth with the appropriate controls to avoid problems, and improved flexibility by integrating risk management and strategy into a company's thinking. Business flexibility increases risk, so the risk function needs to...
After the crisis, the only certainty is uncertainty
The market and economic changes witnessed by businesses over the last few years could never have been predicted. Globally, the crisis hit quickly and hit hard. Yet despite the severity of the crisis, the recovery is happening faster in some markets than many could have either hoped or expected but...
Since the immense scale of the economic downturn became apparent in 2008, Ernst & Young has been helping business around the world to respond effectively to the market changes. Early in 2009, we launched our Opportunities in adversity program to help companies identify and implement the right course of action for their situation. In October 2009,...
This new report provides fresh insight into what it is to be a CFO today. The study based on a survey conducted by the Economist Intelligence Unit of nearly 700 CFOs across EMEIA explores the expectations and aspirations of those in the job and the skills and relationships that a successful CFO needs to master the challenges of the role
The DNA of...
The ability to anticipate threats, respond and continually adapt is as critical a part of the risk management process as it ever has been. Our Business Risk 2010 report is part of an ongoing conversation about business risk - a conversation that has been taking place for several years, asking the question: How frequently are companies scanning their...
As a result of initiatives taken by governments in many countries, their citizens are having to accept the increasing use of biometric technology for security authentication. This technology can be used to help overcome a number of technical and practical hurdles.
Rising concerns about identity theft and related financial fraud, the indirect costs...
The finance function has become increasingly complex in a rapidly changing financial environment. As a result, the expectations of the CFO have steadily increased in recent years. For global companies, it is all the more difficult to evolve a strategy for the finance function strategy that comprehensively fits all circumstances. The size and character...
Asia is in the midst of strong stimulus-driven recovery
Growth in Asia and Australasia (excluding Japan) is forecast to strengthen from 4.6% in 2009 to 7.2% in 2010 with only a limited slowdown to 6.3% in 2011. These are impressive growth rates, but well below the peak levels before the global downturn. Asia had been hit badly by its high exposure...
Five categories of risk:
Internal Audit can best understand the risks associated with climate change and sustainability by dividing them into five general categories:
1.Strategic
2.Compliance
3.Financial
4.Reputational
5.Operational
Climate change and sustainability are fundamental business issues in the emerging low-carbon economy. This...
The recession brought an understandable focus on cutting costs, as businesses struggled to survive in the face of falling demand. Salaries were frozen or reduced, bonuses withheld, marketing budgets slashed, and recruitment and travel downscaled or eliminated. Projects and orders were cancelled and supplier and contractor prices hastily renegotiated....
Continued investment in sales can help companies thrive in an economic upturn. That’s the view of top sales leaders interviewed by Ernst & Young. However, 50% of those leaders don’t believe they currently have the capabilities to meet future needs. Those who do have the confidence to succeed have continued to invest in their sales force,...
Sophisticated technology can certainly help remote teams communicate better. But if your virtual team is still unproductive, it’s probably because of human, rather than technological, issues, says Zara Seager
Picture the following scenario: A smartly dressed Martin is sitting in the main conference room at a small office in the heart of Kensington...
The inaugural issue of 2010 global private equity watch looks at the challenges presented in 2009, while providing a window into the industry's flexibility in adapting to a changing economic environment. Specifically, our report highlights an encouraging start to 2010 with more deal activity and private equity (PE) exits on the horizon.
Key themes
...
One of the greatest changes to affect power and utilities (P&U) in over 100 years is the implementation of smart technologies. Worldwide, P&U companies are expected to invest US$200 billion by 2015, upgrading their metering and in some instances their grid infrastructures to be “smart.”
So what is smart? It’s a more technologically...
This is the third in our series of reports that highlight the most critical issues in the telecommunications sector. The report includes details of the top 10 risks for the telecommunications sector, how risks are evolving in the sector, and the ‘Below the radar’ risks for telecommunications. These are the issues we think are likely to...
The failure experienced by many large scale change initiatives is all too familiar. In the rush to deliver a programme on time, 'change management' can become an afterthought, consisting of a hastily conceived communications plan that fails to excite employees.
This report argues that an effective leadership team should have a change architect: someone...
The performance of the UK in securing foreign direct investment (FDI) continues to be extremely strong and a remarkable economic success story. Despite the recession which was global in nature and had a large impact on the UK economy, FDI projects recorded in the UK remained at virtually the same level as in 2008. As a result of this performance, the...
Although companies worldwide have been dealing with opportunistic cyber-attacks for years, many now find themselves the target of more sophisticated and concentrated efforts, known as advanced persistent threat (APT) attacks. APT attacks are focused on a single target, lasting until “they are in,” and are meant to collect information over...
The 11th Global Fraud Survey has challenged those responsible for leading the response to corporate fraud and corruption to look back over two of the most difficult years in the economic cycle in living memory. The feedback has been both candid and revealing in an area of business risk that is always more sensitive to economic decline. Once again,...
A common risk language in an organisation is critical. Without it, companies will be slow in detecting and reacting to new risks and they miss out on the chance to transform risks into opportunities.
A common risk language in an organisation means shared definitions, company-wide priorities and a common culture of risk awareness....
What is a company’s risk appetite, i.e., which risks does it want to take in the pursuit of rewards?
The board must define this appetite based on the risks and rewards that come with various scenarios and alternatives.
An explicit, comprehensive discussion of risk appetite should form part of any process...
“What are your three most profitable risks?” Risk-taking is part and parcel of entrepreneurship and business: no risk, no reward. The strategic challenge for business in risk management is therefore not to avoid all risks at all costs, but to gain a competitive edge by transforming risks into opportunities.
To that end, directors should...
Brussels may solve, or at least paper over, the sovereign debt troubles in Greece, but financial markets are now also focusing attention on other troubled nations on the periphery of the euro-zone. Leeway for addressing fiscal problems may be constrained by the halting pace of recovery in the region's stronger core, notably in Germany.
After...
Investors get out their chequebooks for electric-car start-ups
THE idea of the "Netscape moment", a fund-raising that signals the spawning of a whole new industry, is dear to Silicon Valley types who think back fondly to the browser firm's spectacular initial public offering in 1995. So it was not surprising that in late January Shai Agassi,...
Business will have to learn how to manage an ageing workforce
MARTIN AMIS and Christopher Buckley are writers who are entering their silver years and are worried about the costs of an ageing population. Mr Amis, who has a new novel out, recently compared the growing army of the elderly to "an invasion of terrible immigrants, stinking out the...
Albeit painful, progress ultimately results from crisis. The current downturn is causing companies to challenge their risk management processes and ask how they can further improve their risk management efforts. Against this backdrop, we conducted a survey to provide a snapshot of the current risk environment and to understand organizational...
Over the past decade, globalization has helped many companies improve their competitive positions. Organizations that pushed their supply chains to become ever longer were often rewarded with lower input costs and increased sales to emerging markets. But today, growth in many global economies has slowed, and the economic prosperity of the past...
This new world is competitive in ways that it’s never been before. Ask any company’s customers how many times they’ve been approached and aggressively pursued by their competitors. And then ask that company if it can be optimistic about keeping its customers happy on a day-today basis. The number of competitors has increased...
Outsourcing: time to review the value in a recession
The current economic crisis puts pressure on expectations from third-party providers. At a time when the natural tendency may be to shut off contact with the outside world to focus on core competencies, companies may feel trapped in long-term outsourcing arrangements with external suppliers. These...
Creating and protecting a unique and secure identity for citizens or customers is a major challenge for public and private sector organisations. The rise of identity theft in the internet age is well documented. Recent figures reported a 36% increase in the number of victims of impersonation during the first nine months of 2009 – when compared...
Ernst & Young has organised a series of breakfast briefings that assemble leading CFOs from a variety of industries with specialists from Ernst & Young. The following summary encapsulates the main points of the discussion, which was conducted under Chatham House rules.
The session started with an overview of the research conducted by Ernst...
In the course of a downturn, businesses put cost reduction at the top of their agendas. In a recent Ernst & Young Opportunities in adversity report, cost reduction was identified as one of the principle initiatives undertaken by global enterprises. We now consider the next logical steps: once savings have been implemented, does a business consign...
CFOs face a broad series of competing priorities ranging from effectively managing legal and regulatory compliance, managing complexity and information technology, managing short term profitability and driving those strategic decisions that underpin medium and longer term performance.
Protecting shareholder value has risen as a key focus area in...
The recent downturn has put unprecedented pressures on businesses, with the Finance function being one of the places where organisations have experienced the effects. The cost of finance has fallen relative to the revenues of most organisations.
The economy is showing signs of recovery and businesses are turning their attention to new market opportunities....
The role of information technology (IT) is evolving. IT is being called on to do more than simply ‘keep the lights on’. Board members, C-suite leaders and other stakeholders are looking for IT to make even greater contributions to the success of the enterprise – to create value, rationalise costs and more effectively manage risks...
The rise of complex, integrated supply chains, along with the recent global downturn, has increased the probability that critical suppliers will encounter supply disruptions and financial duress. The consequences – from an ability to deliver on promises to customers, to losing access to a supplier’s intellectual property – can be...
The current financial crisis is having a fundamental impact on the outsourcing environment. Companies may feel trapped by long-term contracts agreed in market conditions far removed from today’s economic reality.
Report highlights
Outsourcing has a clear role to play in helping manage the impact of the current economic turmoil...
Over the last year, we have witnessed unprecedented changes in the global economic environment. Increased pressure to reduce costs, coupled with increased government and industry regulations, has presented new risks and challenges — challenges that many organizations are now struggling to address and which can significantly affect their information...
The world is still reeling from the biggest financial downturn since the 1930s. Trillions of dollars have been lost, millions of people have become unemployed and the global economy has all but shuddered to a halt. During the past two years, the seemingly infinite pool of global funding that delivered a decade of cheap and abundant credit has dried...
