Prepare for Property-Related Hazards Study Finds Many CFOs,Treasurers and Risk Managers Need to Do More A new study of Fortune I000 chief financial officers (CFOs), treasurers and risk managers across a broad range of industries reveals more than 50 percent say their companies are not well-prepared to recover from a "major disruption to their top earnings driver," and less than 25 percent of respondents believe their current contingency planning efforts are adequate. More than 75 percent of the nearly 200 respondents indicated such a disruption either would cause sustained impact to their firm's earnings or threaten their business continuity.The 'Protecting Value Study' was conducted by commercial and industrial property insurer FM Global, the National Association of Corporate Treasurers and management consulting firm Sherbrooke Partners to better understand the role and value of risk management in major corporations. Most respondents indicated that property-related hazards encompassed the majority of threats that could impact their firm's earnings. Such hazards reported included natural disasters, fire/explosion, terrorism/sabotage/ theft, mechanical/electrical breakdown or service disruption , rather than casualty-related or other hazards such as product tampering or political risk. Moreover, the study found significant differences in how CFOs, treasurers and risk managers see the risks threatening their firms compared with their superiors' views. More than one-third of CFOs, treasurers and risk managers believe their company's senior management team lacks a complete understanding of the impact a major disruption would have on their firm's earnings and shareholder value, their level of preparation for such risks, and what is covered by insurance in such an event. Additionally, the study discovered a clear difference of opinion between risk managers and CFOs/treasurers regarding contingency planning efforts, underscoring the need for beuer communication between these groups. CFOs and treasurers say they are less confi-
dent in their company's contingency planning efforts and consistently understated the scope of such planning completed compared with what their risk management counterparts state. The results also indicated significant challenges have yet to be addressed , including scenario planning and identifying production bottlenecks - even though contingency planning is a core process now instituted across most of the participants' businesses. On the insurance front, 50 percent of respondents from companies with less than $1 billion in sales report they have "fully transferred" to others the overall risk associated with their top earnings driver, including damage, liability and business interruption. In sharp contrast, only 26 percent of respondents from companies with more than $1 billion in sales ("Fortune I000") cited full risk transfer, while the remainder of respondents chose to retain some risk on their balance sheets.The comments of more than 80 percent of respondents indicated they consider the events of Sept. I I, 200 I, largely an insurance event, underscoring the need for adequate coverage and thorough disaster-recovery plans. "It is a mistake to overlook or under appreciate the value of good risk management efforts," said Ruud Bosman, executive vice president of staff operations and planning at FM Global. "The results of this study indicate there are real , ongoing property hazards that affect a company's top earnings drivers. In particular, the potential impact property-related hazards can have has become more prominent as traditional insurance markets become less willing to indemnify all the associated risks after Sept. I I . "The Protecting Value Study serves as a benchmark that financial executives and risk managers can use to convey the importance of prudent risk management in addressing property risks. We encourage them to use these findings as a framework for important discussions at the highest levels of their organizations."
UNC Charlo tte to Develop Prototype for Supercomputer Memory Chip Yasin Raja to Lead Collaboration Team The Air Force Research Laboratory at WrightPauerson Air Force Base, under a direct appropriation from Congress, has awarded $1,675,249 to Yasin Raja, physics and optical science, to complete work on a 3-D high-density non-volatile memory chip. Raja is the lead researcher for a team consisting of Stuart Smith, mechanical engineering; UNC Charloue research associate, graduate and undergraduate students; and collaborators at the International Technology Center in the Research Triangle Park, NCA&T, the University of Florida and William & Mary. The chip on which they are
40
working will have eight to I0 times more memory than is currently available and it will pack all that supercomputing memory in a chip the size of a sugar cube. Size and power are just two of the chip's valuable features. 'The best thing is that it's nonvolatile, so if the power goes off, users won't lose memory," Raja said. "In a hospital, if a computer is monitoring a patient's vital signs and power is lost when the patient is being transported between rooms, the chip makes sure the data isn't lost. It's like RAM that doesn't go away when the computer is turned off."
greater charlotte biz