Archive for November, 2011
The Lion Partnership: Risk Management for Competitive Advantage
Ken Armstrong of The Lion Partnership, a sponsor company at the upcoming marcus evans CFO Summit 2012, on identifying and managing risks for competitive advantage.
Interview: Ken Armstrong, Managing Partner, The Lion Partnership
FOR IMMEDIATE RELEASE
Chief Financial Officers (CFOs) can save their companies millions of dollars if they correctly identify and manage risks, according to Ken Armstrong, Managing Partner, The Lion Partnership. “Companies do not have to insure the risks that are managed well,” he adds.
From a sponsor company at the marcus evans CFO Summit 2012 in the Gold Coast, Queensland, Australia, 4 – 6 March, Armstrong turns the spotlight on risk management, cost reduction and making the organisation much better in the process.
How should risks be identified and managed?
Ken Armstrong: The only way companies can ensure the survival of the business and achieve their goals and objectives is by identifying and managing risks well. Once identified as insurable or non-insurable risks, the CFO must then make sure that the company’s insurance programme is properly covering (transferring) the insurable risks and that there is an effective risk management plan in place for the non-insurable risks. This way, the corporation has a much greater chance of achieving its goals and becoming successful.
How can the cost of managing risks be minimised?
Ken Armstrong: CFOs should review their insurance programme by benchmarking the policy wording, premiums, deductibles, excesses and the indemnity levels, to ensure they have the best coverages and are not paying more than they should. These could reduce insurance costs by 25 per cent, while substantially improving overall coverage.
If there is a risk culture in the organisation and risks are managed well, some risks would not need to be insured or they could be insured only for catastrophes i.e. with a higher deductible.
A company that is paying EUR 20 million in insurance premiums a year could reduce that to EUR 5 million. Effective risk management eliminates the need for buying insurance. Not only would this save the company money, but it would also make it a much better organisation in comparison to competitors. If there are no assembly line breakdowns or employee injuries, it would have a much better profile and employee morale, and no disgruntled suppliers or customers. This would give the company a competitive advantage over others and drastically reduce insurance costs.
How can CFOs leverage the up-side of risk?
Ken Armstrong: Some risks affect the viability of the business, whilst others provide a competitive advantage. Most companies look at risk and for example may say, “Let’s not take this product into South America for these specific reasons.” But if the down-side of the risk is mitigated they might find a way to take the product to South America concentrating on the up-side of the risk thereby having a competitive advantage over rivals. They can leverage the up-side of risk by mitigating, minimising and managing risks, not just being afraid of the down-side.
What is your outlook on the economy?
Ken Armstrong: Companies today should prepare for the worst. If that does not occur, they will generate more profits for shareholders and employees. Ensuring business continuity and an effective risk transfer programme appropriately costed can be a tremendous advantage.
The risk culture of an organisation starts at the top, with buy-in from the most senior stakeholders. That should then permeate to the bottom, where even the receptionist is looking for and reporting risks. In most companies near-misses are not reported, but those are still risks for the business. Developing a risk culture takes time, but the organisation will have a substantial competitive advantage over all those that do not have that culture.
marcus evans, Summits Division
Tel: + 357 22 849 313
About the CFO Summit 2012
This unique forum will take place at RACV Royal Pines Golf Resort & Spa, Gold Coast, Queensland, Australia, 4 – 6 March 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on improved finance strategies, technological innovation, astute leadership, and the impact of climate change on finance.
Complementing our summit format, the Finance Network – marcus evans Summits group delivers peer-to-peer information on strategic matters, professional trends and breakthrough innovations.
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Please note that the summit is a closed business event and the number of participants strictly limited.
About The Lion Partnership
The Lion Partnership assists companies to identify and manage risk so they can leverage the up-side of risk for competitive advantage and manage the down-side by cost effective risk transfer, avoidance and management.
The Lion Partnership has offices in the Asia Pacific, North America, the UK and Europe and can assist Chief Financial Officers and Risk Managers with global benchmarking of coverages, indemnity levels, excesses and premiums.
For more information: www.thelionpartnership.com
About marcus evans Summits
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings. For more information, please visit www.marcusevans.com
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