Perspectives

CFO Journal

Deloitte writes and compiles a regular stream of CFO-centric content and timely features - research, topical digests, perspectives, insights, and technical analysis - which appear in a separate module of CFO Journal, an online publication from The Wall Street Journal

Perspectives

The value killers revisited

A risk management study

The last two decades have seen a number of events driving major value losses in individual companies and collectively in the global economy.

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Review the five major risk management themes uncovered.

Since Deloitte LLP's first value killers study in 2005, risk management has grown in importance to corporations worldwide. We find boards, management, and regulators paying increasing attention to risk management and governance. New disclosure requirements seek to help shareholders become more aware of company-specific risks. Yet, many companies experience significant value losses in a short period of time.

“The value killers revisited” reexamines the 2005 study, in which we assessed the drivers of 20 percent or greater value losses in a company within a one-month period relative to a broad market index. Following up on our prior research, this latest study examines the drivers of major value losses from 2003 through 2012. The losses, while distinct, were often driven by similar underlying risks. Deloitte LLP’s CFO Program, in conjunction with Deloitte Touche Tohmatsu's Global Risk & Capital Management practice, analyzed the factors contributing to severe losses in value to identify strategies for protecting shareholder equity. In all, we observed five major themes:

  1. High-impact, low-frequency risks
  2. Correlated and interdependent risks
  3. Liquidity risks
  4. M&A risks
  5. Culture and compensation risks

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Explore the key drivers of value loss.

View an infographic display of the five major risk management themes observed.

 

 

 

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Meet the author

Ajit Kambil

Ajit Kambil

Global Research Director, CFO Program

Dr. Ajit Kambil is the Global Research Director of...More

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Ajit Kambil

Global Research Director, CFO Program

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Sanford A. Cockrell III

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