Learning

I’m still learning. A couple of weeks ago, I attended the Compliance Week conference in Washington, D.C. I learned new terminology — such as “flash crash” and “liar loans” — from the roundup of exceptionally powerful speakers. Much of the discussion focused on the U.S. Senate and House bills being reconciled to bring new regulation to the financial services industry. It is a fascinating time we live in. 


Many of the breakout sessions dealt with ERM — clearly a hot topic at the moment. I’m surprised more attendees weren’t talking about the deep-water oil geyser in the Gulf of Mexico. Maybe the problem was just too unimaginable to discuss. Or maybe it was still too early. It seems the 24/7 news cycle can’t stop reporting on it now.  

Do you wonder if the oil industry had deep water oil catastrophe in their risk inventory? I bet they did. I bet they even had plans to solve the problem. Unfortunately, the world is dealing with something that has never happened before, for which there is no easy solution. This is really an example of a convergence of a number of different risks. Individually, they can all probably be addressed — but when they crash into each other — that’s another issue altogether. And hurricane season has just started — which is sure to change the situation once more.  

If prayers help — all involved in this crisis certainly have mine.

Posted on Jun 8, 2010 by Kiko Harvey

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  1. I agree with your comments on the complexity of risks converging affecting a common man's life apart from eroding the cash reserves and bringing down the profit margins of such oil companies. Rightly said again, such disasters were never faced and handled earlier by such companies or governments across the globe.  The natural calamities also add to the woes of the public giving no respite to the public and  solution to avert such losses, irespective of what amount of precautions taken or serious business continuity and disaster recovery management plans in place. 

    let us talk something on the man made disasters some other time,for reasons beyond our understanding. 

  1. It's one thing to be aware of the risks whereever they may lie in the business, and mitigate for their eventuality, however the key seems to be actually exercising those mitigation strategies to provide assurance that they will operate as intended, if needed.  Trust is not a control.

     

     

  1. However, I read that BP for example was requested to present their Contingency Plan, and it was deemed to be inadequate because amont other things include key suppliers reference outdated.

    So it came to my mind that a better contingency plan might have helped them better.   

     

  1. Times are cahngnig for the better if I can get this online!
  1. By contingency, we ausmse you mean “financing contingency,” and if so, yes, the broker should include that as a material element to the offer, so that the seller can properly evaluate it. In the absence of a discussion about contingencies in the offer stage, an offer that includes financing should be presumed to be one that is contingent on financing, as most deals in the current market are, in fact, contingent on financing.

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