The Case against Export Credit Agencies
Export credit agencies are quasi-government agencies. These agencies are usually backed by government institutions. This means that they are under the purview of government authorities and also have access to taxpayer funds. All developed countries in the world have created their own export credit agencies. Collectively these agencies wield a tremendous amount of influence on […]
The Great Deleveraging and the Reason why the Global Economic Recovery would Falter
The Effect of Two Decades of Profligate Spending Everyone expects the global economy to recover in a magical way and for the good times to return. We are constantly fed on a steady barrage of feel good messages from the marketers about the goods and services they make and sell with the intention of making […]
Why Wealth Tax has been Abolished All Over the World?
Taxation is a hotly debated subject all over the world. There are supporters of capitalism who already believe that the rich are being taxed too much. On the other hand, there are supporters of socialism who cite increasing wealth disparity and argue that the rich should be taxed even more. The idea that the rich […]
Should Infrastructure Spending Be Centralized?
Donald Trump has raised the issue of America’s crumbling infrastructure during his election campaign. He has periodically mentioned that American economy needs a bout of infrastructure spending. Estimates state that the infrastructure overhaul will cost the Trump government more than $1 trillion. However, the United States is already deeply in debt. Even though they have […]
Business Intelligence Architecture and Tools
Introduction Business intelligence is an important to ensure the following: Various decision-makers and analyst have a direct and un-interrupted access to data. The data been used across the organization should be non-disputable. Decision makers spend their time analyzing the data rather than collecting and formatting them. Decision makers are able to focus their energy in […]
Business continuity planning and management is an approach that companies adopt to protect themselves from unforeseen and high impact events. In recent years, Black Swan events or low probability high impact events that no one can foresee with accuracy have become common.
For instance, the collapse of the American Investment Bank, Lehmann Brothers in September 2008 was a major event that precipitated a near meltdown of the financial system. Similarly, the Fukushima Nuclear Plant disaster following the Japanese Tsunami of March 2011 was another such event that took everyone by surprise. Hence, the clear implications of these and other similar events is that companies and individuals must be prepared for such events that threaten their very existence.
The key aspect here is that such events used to happen in earlier decades as well. However, given the rapid integration of the global economy, the impact of such events has been magnified several times leading to systemic threats and systemic risks. In this context, it is important more than ever for companies and individuals to be on the lookout for such systemic threats to their existence.
We all know how the relentless 24/7 news cycle and the breaking news phenomenon have amplified the impact of events that happen half a world away but nonetheless cause damage to faraway places.
The point to be noted is that as globalization helped companies and individuals reach out to a global consumer base and global news audience, it has also increased the exposure of companies and individuals to happenings all over the world. This is more the reason why companies and individuals must be prepared to deal with global events that cause local impact and the intersection of a global event and the local impact that it brings has to be planned for and guarded against.
For instance, companies that are publicly listed have to ensure that their exposure to global risks is quantified and accounted for. Otherwise, happenings in one corner of the world would have an impact on their stock prices and the market capitalization of such companies.
Apart from this, companies have to be prepared for tail risks that are the leftover risks from such systemic threats.
For instance, Ranbaxy has been fined for adulteration of medicines in the United States. The cascading effect of such an event has been felt in India and across the world where hospitals and pharmacies are advising against buying their medicines.
Though the fact that its drugs might be adulterated in India as well, the key aspect here is that in a globalized world, happenings in one corner of the world affect global companies elsewhere as well.
Further, companies must be prepared to deal with manmade and natural disasters at the same time.
Astute business continuity planning and management can serve to minimize and mitigate the risk from such events.
For instance, many multinational companies have backup locations or off sites in secondary cities so that employees can be taken there and business restored in the shortest time possible.
There is the other aspect of companies having data centers and software backups in secondary locations so that in the event of a disaster, data can be restored, business up, and running.
Finally, it is the prerogative of companies to mitigate themselves against systemic risks. However, in recent months, even regulators are advising companies to have foolproof backup plans so that in case of systemic risks, they are well prepared and planned for. This is the case with many financial institutions that have been asked by the market regulators to keep the documents and artifacts safe and secure and to protect consumer data and records so that any systemic event does not render the data inaccessible.
In conclusion, in this 24/7 global age, all of us are vulnerable to systemic risks and hence, safe and secure planning for unanticipated events must be done so that the downsides of such risks are mitigated.
Your email address will not be published. Required fields are marked *
Business Continuity Management Planning around the World
February 12, 2025
