How to Achieve Secure Growth in a Time of Risk
How to Achieve Secure Growth in a Time of Risk
From supply chains to cyber security, the concept of risk is broader than ever for today’s modern, high-growth companies
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Risk has always been inherent in doing business, but perhaps never more so, or more ubiquitously, than today.
“We see risk everywhere,” says John Mostofi, Central Region Executive
of Bank of America Merrill Lynch’s Global Commercial Banking group.
“The traditional risks—market risks, labor risks, macro risks—still
apply, but what we’re seeing now is increased risk around several other
existing areas and several new ones.”
According to the World Economic Forum’s Global Risks Perception
Survey 2015, cyber attacks rank near the top of the risks landscape in
terms of likelihood and impact. These technological risks are rooted in
the fact that information now instantaneously flows around the globe and
represents a significant business driver for most companies.
In another study, more than 500 risk managers and corporate insurance
experts were surveyed for the Risk Barometer 2015, the fourth annual
survey conducted by the global insurance company Allianz. Of that group,
58 percent named business and supply chain disruptions as the primary
risks facing U.S. companies. Twenty-six percent cited cybercrime, IT
failures, espionage and data breaches as their top concerns.
It comes as little surprise that supply chain risk tops the 2015
list. Port strikes and labor disputes, commodity price swings, liquidity
problems—all pose a continuous threat. “As companies have increasingly
gotten more comfortable with communications and have expanded supply
chains, there’s vendor risk, currency risk and various country risks,”
Mostofi observes.
Financial institutions are hard at work mitigating these risks. One
way is through the use of proprietary technology that can mine data from
a bank’s database to identify risk and benchmark it against
competitors, as well as analyze a client’s working capital. Using such
methods allows financial institutions to be proactive as they deal with
cyber threats. As Mostofi emphasizes, “The focus is not just on finding a
solution, but on finding the optimum solution.”
There is also a growing public dialogue on the topic of
cybersecurity, which has included the passage of cyber-related
legislation in both houses of the U.S. Congress, as well as new
requirements from regulatory bodies all over the globe. With this
growing focus on information sharing and disclosure, companies are being
forced to rethink how they both look at and communicate about their
cybersecurity efforts.
Many companies are shoring up their cybersecurity with partners that
can help them assess and mitigate these risks. “Just about every board,
and every COO and CIO, is spending a lot of time on cybersecurity,”
Mostofi notes. “Instead of clients shrinking from risk, they’re looking
at it, analyzing it and adjusting to it. This is something that banks
are uniquely suited to doing—helping clients think about and analyze
risk, and ultimately solve their problems with respect to risk.”
By migrating clients’ antiquated systems to a bank’s systems, it is
possible to provide a safe, secure and user-friendly environment while
saving clients the expense of acquiring and maintaining proprietary
systems of their own.
But there are other ways to protect and streamline client operations.
“We’re seeing client companies come to us every day to help them move
to an all-electronic platform,” Mostofi says. “They’re looking at
opportunities to take anything that is paper to an electronic
solution—everything from receipts to cash register and merchant
transactions—in order to centralize operations, and also to increase the
velocity of the payment cycle and manage liquidity.”
Grounding these and other client services is BofAML Global Research,
the result of the bank’s immersion in the industries, businesses,
countries and communities it serves. That research includes an analysis
of over 3,500 companies in 25 industries worldwide, and coverage of
global equity and fixed-income strategies, rates and currencies, and
commodities and derivatives. Clients also have access to the bank’s
wealth of proprietary reports.
“There are just a handful of organizations that can do this,” Mostofi
says. “It’s the combination of having operations locally along with a
world-class research team that ties all our global capabilities together
for one unique solution tailored to each client’s needs.”
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