For any company contemplating an acquisition the following reality check from Justice Neville Owen is very pertinent.
"A Board which does not understand the strategy may not appreciate the risks, and if it does not appreciate the risks it will probably not ask the right questions to ensure the strategy is properly executed."
For two Boards contemplating a merger it is probably a deal breaker.
Tuesday, 27 May 2008
Tuesday, 20 May 2008
Two words connected
Shakespeare when we wrote Hamlet had frequent recourse (66 in fact) to hendiadys which is "the expression of an idea by two words connected by 'and' instead of one modifying the other". Examples such as 'law and order',house and home' are hendiadys as well as Shakespeare's own 'sound and fury' and "the book and volume of my brain".
James Shapiro in his book about Shakespeare "1599 " remarks that "when conjoined in this way the nouns begin to oscillate, seeming to qualify each other as much as the term individually modfies." They press on the audience's imagination, stretching the possible meanings and creating new connections.
I think it accounts for the discomfort and excitement that the phrase " risk and reward" provides.
James Shapiro in his book about Shakespeare "1599 " remarks that "when conjoined in this way the nouns begin to oscillate, seeming to qualify each other as much as the term individually modfies." They press on the audience's imagination, stretching the possible meanings and creating new connections.
I think it accounts for the discomfort and excitement that the phrase " risk and reward" provides.
Monday, 19 May 2008
Misleading percentages
"House sales to fall by 40%" is the headline used to attract attention by Yahoo to a report from the Chartered Surveyors.
This is serious, but it is also misleading. When you read on you find that house prices are expected to fall by 5%, whilst house sales plummet 40%.
The immediate downside risk is to the estate agents, the surveyors, and the removal companies.
But sales and prices are easily confused and most will think that the prices are to fall precipitously. They may, but that is not what the report expects.
This is serious, but it is also misleading. When you read on you find that house prices are expected to fall by 5%, whilst house sales plummet 40%.
The immediate downside risk is to the estate agents, the surveyors, and the removal companies.
But sales and prices are easily confused and most will think that the prices are to fall precipitously. They may, but that is not what the report expects.
Thursday, 15 May 2008
Growler
Nigel Lucas, the Chairman of Risk Publishing Online, was an officer in the merchant marine years ago and tells me that , contrary to landlubbers' belief that all icebergs are 10% above the waterline there is another type which is totally submerged. This is called by sailors a " growler" presumably from the noise the hull makes on contact.
In risk management terms you either need sophisticated sonic detectors to pick it up or a look out on the prow of the ship.
Whatever the detection method "growler" is a great name for risks which you cannot identify until almost on top of them, but which lurk just under the radar! The people best able to detect them are at the sharp end of the business.
In risk management terms you either need sophisticated sonic detectors to pick it up or a look out on the prow of the ship.
Whatever the detection method "growler" is a great name for risks which you cannot identify until almost on top of them, but which lurk just under the radar! The people best able to detect them are at the sharp end of the business.
Wednesday, 7 May 2008
Brown on uncertainty
In our blog of September 11th 2007 we reckoned that Gordon Brown would not call an election at that time and that he might live to regret it.
What has become clearer with every mini crisis is that Brown is very risk averse and that his instinct is always to try to reduce uncertainty to the minimum. This approach worked as Chancellor because he was able to focus on a narrow set of criteria and he had Blair to force through decisions when he did not have enough data for his comfort. As Prime Minister he has to make decisions without enough certainty and he has to accept that sometimes the decisions will go awry.
He is a good example of a manager playing to his strengths even when they are not appropriate for the situation. It is unlikely that he will be able to change and the electorate is starting to see the mismatch.
What has become clearer with every mini crisis is that Brown is very risk averse and that his instinct is always to try to reduce uncertainty to the minimum. This approach worked as Chancellor because he was able to focus on a narrow set of criteria and he had Blair to force through decisions when he did not have enough data for his comfort. As Prime Minister he has to make decisions without enough certainty and he has to accept that sometimes the decisions will go awry.
He is a good example of a manager playing to his strengths even when they are not appropriate for the situation. It is unlikely that he will be able to change and the electorate is starting to see the mismatch.
Sunday, 4 May 2008
Off the record
The National Archive at Kew , guardian amongst other things of the Domesday Book, has a deserved reputation for protecting the national records. It has tight control on all access to its material as theft is one of the major risks it faces.
What has recently come to light, aired on a BBC radio show, is that someone has been adding material to the archive without permission, creating false records which have then been used, it is thought, to support sensationalist claims in books relating to World War 2 events. Over 20 false records have been identified and new controls are now in place to stop this happening again.
Once there is doubt about the records then the damage to the reputation of the National Archive is very signficant because researchers do not know whether the document they are quoting is authentic or not.
What has recently come to light, aired on a BBC radio show, is that someone has been adding material to the archive without permission, creating false records which have then been used, it is thought, to support sensationalist claims in books relating to World War 2 events. Over 20 false records have been identified and new controls are now in place to stop this happening again.
Once there is doubt about the records then the damage to the reputation of the National Archive is very signficant because researchers do not know whether the document they are quoting is authentic or not.
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