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.
Since Deloitte'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'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:
- High-impact, low-frequency risks
- Correlated and interdependent risks
- Liquidity risks
- Merger and Aquisition risks
- Culture and compensation risks.