Business values risk management

The increased economic uncertainty has altered the way financial markets function. Companies have discovered that their value is subject to various financial price risks in addition to the risk inherent in their core business. New risk management instruments and hybrid securities have proliferated in the market, enabling companies to manage financial risk actively rather than try to predict price movements. 

Risk management benefits present a convincing business case for sustainability alone. Companies need to anticipate and address potential problems before they become liabilities. Companies that do not manage their risks have seen their value drop significantly. 

By focusing on sustainability, a company can anticipate and deal with potential problems before they become serious liabilities. The ability to anticipate and manage such risks is invariably rewarded by investors, customers, and employees. Conversely, companies that do not manage risks have seen their value (stock price) plummet. Indeed, the risk reduction and risk management benefits alone constitute a convincing business case for pursuing sustainable development. 

Quality is not merely a regulatory requirement it is also a crucial determinant for business success or failure in modem performance-oriented markets. The business strategic value of quality relates inter alia to improvement of the enterprise s competitive position, increased productivity, improved risk management and increased profitability. 

Sustainability is gaining more and more relevance on managers agendas since it can positively contribute to the firm s value creation process. The benefits are numerous, ranging from cost reduction, through risk management and business innovation, to revenue and brand value growth. In the textile sector, several... 

Segal, Sim, Corporate Value of Enterprise Risk Management The Next Step in Business Management, John Wiley Sons, Inc, New York, 2011. 

What was lacking a decade ago in terms of process principles and examples has now been supplied by David Reay, Colin Ramshaw, and Adam Harvey in this book on Process Intensification (PI). The authors chronicle the history of PI with emphasis on heat and mass transfer. For the business manager and project manager the PI Overview presents the value proposition for PI including capital reduction (smaller, cheaper), safety (reduced volume), environmental impact, and energy reduction. In addition, PI offers the promise of improved raw material yields. The authors deal with the obstacles to implanenting PI, chief of which is risk management. 

Business ecosystem theory is closely related to the value network risk management consideration. A business ecosystem can be oirtlined as the enviromnent beyond the core business and the value network. Sometimes the term business ecosystem has been used more as a conceptualization or analogy to value networks. As defined by lansiti and Levien (2004), the business ecosystem can be seen as interdependencies between several business actors and the business environment in which they operate. 

A business ecosystem should survive unforeseen technological change, just like a biological ecosystem must tolerate environmental changes. The health of the ecosystem is an important indicator of how the ecosystem is able to produce value and share it between the members of the system. From the risk management standpoint, companies should position themselves within the business ecosystem that is most able to generate value now and also into the future, and which is committed to sharing wealth with its members. 

Eany Common stockholders take the ultimate risk in a business ecause they have no right to a return on their investment. However, they have the right to elect the direciors of the company, who in turn are responsible for the management of the business. Stockholders are likely to vote the board of direciors out if adequate dividends are not paid. Usually the hability of stockholders is limited to the nominal, or par, value of their stock, and hence they can lose only what they have already paid for the stock. If the hability is not hmited by law, the personal assets of the stockholders are at risk in the event of company bankruptcy, in proportion to the amount of stock held. 

---