In my first newsletter of 2012 I have gone ‘back to basics’ and focussed on identifying and understanding Key Business Drivers.
Too often in management presentations, investor briefings and risk assessments - both enterprise and credit risk assessments - there is excessive focus on relatively unimportant aspects of a business or organization. This can be to the detriment of a full and through analysis of the true underlying drivers of revenues, cashflow and earnings.
I would welcome any thoughts/comments on the article and the concept of ‘Key Business Drivers’.
Comments
I have read some interesting papers on this site of late, this is another good one.
Quote un Quote "Whilst risk managers must be across the full spectrum of risks to be identified and managed, it is imperative to ensure focus on areas affecting Key Business Drivers."
There are too many risk managers out there who aren't close enough to the valuation end of the business in my opinion. To many operational risk scorecards, compliance check lists and not enough quantification is going on.
As you write "In managing shorter term fluctuations, develop a hedging / price management strategy for your business." This is perhaps one of the biggest areas where risk management is falling down ~ risk manager need to understand how to value optionality and volatility.
And on this ...
"Review and assess the counterparties that any term purchase arrangements are entered into with" - Away from banking and in the corporate world, the way business model credit risk and monitor such is pretty average in most cases.
This is a straight forward read and there are some key messages here for all corporations and risk teams.