Financial Services (FinServ) organizations – banks, insurance companies, wealth management firm, wirehouses – are constantly trying to find a balance between regulatory mandates and expectations, and operational efficiency. Massive supplier data breaches seem like they have become an almost regular occurrence (when they’re reported), customer privacy and data laws are becoming more stringent (GDPR), and predatory behavior by suppliers and vendors is an ongoing issue. Certainly, the porous nature of globalization isn’t making things any easier. With all that to contend with, it’s critical to remember that you can pin the blame for risk on third parties, not the responsibility for it.
I recently shared my initial thoughts about the news that Carillion, the 2nd largest construction company in the UK, had gone into liquidation because it could not secure the funding required to stay in operation.
As a reminder, Carillion is a private sector firm that provided a wide array of public services across Britain. They served lunches in public schools and provided maintenance to prisons; They provided cleaning and foodservice in hospitals, and they maintained roads. Perhaps most importantly, they did all of this through a huge network of subcontractors and partners, many of whom are now facing financial difficulties in the wake of the Carillion collapse. By some estimates, up to 30,000 companies could be affected.
Today, executives in all functions and lines of business are driven to create shareholder value. Nothing can destroy the perceived value of an investment faster than negative press, which can do irreparable damage to a brand. In some cases, the cause of the criticism may not even be due to a company’s own actions, but rather those of their suppliers (or suppliers’ suppliers).
A lot has already changed within the first few weeks of the year. The China asset bubble finally burst, oil prices are near $25 a barrel and indicators predict especially uncertain times. Could 2016 be the year that we see the predictions of 2008 come home to roost? Whatever the year holds, David Bowie was right, the future will not be boring.
During my annual pilgrimage to Ireland on the ferry from NW Wales to Dublin I was struck by the unnerving thought that all it would take for a ship like this to be unrecoverable is for it to list by 11 degrees or more. Thankfully, it was early in the day and the captain didn’t seem sauced as was Captain Schettino on the Costa Concordia.