Around 50% of US chief financial officers (CFO) doubt their companies would recover from a "major disruption to the top earnings driver", a new study has found.
The report, conducted by commercial ...
Around 50% of US chief financial officers (CFO) doubt their companies would recover from a "major disruption to the top earnings driver", a new study has found.
The report, conducted by commercial and industrial property insurer FM Global, found that more than 75% of the 200 CFO's canvassed said such a disruption would cause sustained impact to their company's earnings or threaten their business continuity.
Less than 25% of respondents also said their current contingency planning efforts are adequate.
Called `Protecting Value Study', the report, which was also commissioned in conjuction with FM Global by the National Association of Corporate Treasurers and management consulting firm Sherbrooke Partners, set out to understand the role and value of risk management in major corporations, particularly in the aftermath of September 11.
The majority of companies said property-related hazards were the greatest threat which 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.
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.
Around 50% of respondents from companies with less than $1 billion in sales said 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% of respondents from companies with more than $1 billion in sales (the Fortune 1000) said they had transferred the risk fully, while the remainder chose to retain some risk on their balance sheets.
The comments of more than 80% of respondents indicated they consider the events of September 11, underscoring the need for adequate coverage and thorough disaster-recovery plans.
To download a free executive summary of the study results, visit www.protectingvalue.com
