Risk Velocity Is an Important Consideration

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Risk Velocity Is an Important Consideration

There are top risks, but attention must also be paid to risk velocity, or how fast a risk can impact a company.
 
Say you’re on the bridge of the USS Enterprise (and hopefully not wearing a red shirt). To starboard is a giant, ship-obliterating meteor closing fast, while to port, a Klingon warbird is hovering, weapons locked and powering up. A very risky situation indeed. Which risk to address first? Whatever decision you make is likely based partly on calculating the velocity of each risk and the impact it will have.  
 
That’s why it’s important to consider risk velocity, which Gartner recently pointed out in a list of the top 10 emerging risks of the second quarter of this year. The list included all the usual culprits, but two risks, numbers 3 and 10, stood out for their “risk velocity,” which was measured as the speed at which these issues could escalate and damage a firm were they to occur.
 
At number 3 was GDPR regulatory risk. As most know, the General Data Protection Regulation was introduced by the European Commission and went into effect in May of this year. GDPR is a set of rules created to give European Union citizens control over their personal data. The rule has been well received by regulators worldwide, many of whom have adopted it for their own jurisdictions. Gartner describes the risk as “a specific breach of compliance with GDPR” that leads to “a significant fine to the organization.” And it is very clear that a breach could sting. For a GDPR violation, companies can be fined over $20 million, or, more significantly, 4% of total revenue. Shoot the meteor first then read more here.
 
Also this week, making the most of a company’s channels for cross-border transactions with China. At a spring meeting of NeuGroup’s Tech20 Treasurers’ Peer Group, one China-based member updated peers on the best way to communicate with state regulators at the People’s Bank of China (PBOC) and China’s State Administration of Foreign Exchange (SAFE).
 
For one, this member said, be able to determine which regulator is which. The two major regulators are PBOC for cross-border fund flows in CNY and SAFE for USD. The ability to generate flows in both currencies will help companies work the branches and sub-branches along with the Beijing offices of these regulators. It therefore pays to understand which questions must go to Beijing and which don’t. And consider the interests of the local regulator and the impact on that city, both now and if your business needs change. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
 
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