Are C-Level Executives Taking Too Much Risk for 2011? Asks Enterprise Risk Management Expert Gary Patterson

WELLESLEY, Mass., Dec. 17, 2010 /PRNewswire/ -- As corporate officers look to 2011, they must factor in four business landmines to their business plan and create a risk management plan to protect their profits, says Enterprise Risk Management Expert Gary Patterson.  

"These volatile economic times are not for the faint of heart. There will be winners and losers. Those management teams and companies that take direct control of their financial destinies in an effort to fund high-return opportunities will be the victors; those that let the external economic forces derail them will be the victims.  Basically, what we have here is the difference between accidental and intentional results," says Patterson, the author of "Stick Out Your Balance Sheet and Cough."  

He points to four key factors that business leaders should review if they are to reach their fiscal goals.

• Capital will remain on strike. Thousands of new rules and regulations are in the process of being written by governmental employees with limited or no real world business experience under almost impossible-to-meet timeframes. For your target industry, how can your business understand its costs? And how can you know your profits if you do not know your costs?

• Bankrupt state and local governments seem unable to kick the can down the road any further. With transparency coming on the true magnitude of unrecorded pension and healthcare liabilities, governments will be forced to cut back hundreds of thousands of bureaucrats and to dramatically reduce purchases. What are the unrecorded liabilities at your state?

• The unspoken insider secret is that almost any U.S.-based company would better serve its shareholders by moving overseas for headquarters and reinvestment opportunities. Taxes, regulations and costs would decrease almost immediately. Should you move your legal corporate headquarters?

• With ongoing high unemployment and limited U.S. consumer growth, why hire people? Where are you incented to look for productivity gains instead?

"In summary, corporate boards will be looking at a U.S. economy with continuing mammoth unemployment and drag on U.S. consumer spending. The time period before U.S. business sees the rules, gets time to analyze the rules, and belated transparency gets some of the worst rules improved will maintain cash on strike for U.S. investment opportunities, versus overseas opportunities," said Patterson, who has helped over 200 companies in manufacturing, technology, service, construction and distribution in companies from start-ups to Inc. 500 to Fortune 500.

"Tough medicine is crucial," says Patterson, who gives speeches, seminars and in-company reviews as "The Fiscal Doctor." "While no one likes to get a bad diagnosis, once you know what's ailing you, it's much easier to tackle the problem and come up with a course of treatment to cure or manage the situation. So too, it is with your business. Acknowledging these few steps will help you take control of your financial destiny."

• Most boards have not truly embraced enterprise risk management to understand their existing risks. Until you understand strengths and weaknesses of your existing business, how can you prudently take advantage of future opportunities? If you have not gotten an outside independent enterprise risk management second opinion or a fiscal management review yet, you should.

• If cash is king, the king is not powerful if he is locked in the dungeon. Get back to the basics and control cash flow projections for the next 6 and preferably 12 months, on a rolling basis.

• If you don't think you need a contingency plan, think again. Every company needs a contingency plan. It could be as simple as creating a crisis communication plan or as complex as preventing possible worst-case scenarios from becoming a reality. Would you rather be a Tylenol success story or a BP disaster?

• Get back to the basics. Understand your real risks and 5 to 7 key performance metrics to get a better view of the risk and opportunities for next year. Then you will be the winner who exploits opportunities to take away the losers' best people, best customer and market share.

Patterson offers a risk strategy plan to help C-level executives.

The keys to conservatively taking aggressive actions are:

(1) Know how much risk you are taking

(2) Be able to survive if the worst downside occurs

(3) Be sure of your financial foundation (balance sheet and ability to project next 6 months cash)

About Gary W. Patterson

Gary W. Patterson, FiscalDoctor(R), is an internationally well-known expert and speaker on ORM, ERM, strategic planning, due diligence, business leadership, and risk analysis. For more information on the FiscalDoctor, visit his website at http://www.fiscaldoctor.com. Patterson also offers a "free" fiscal fitness test at http://www.fiscaldoctor.com/fiscaltest.html. He can be reached at 781-237-3637.

SOURCE Gary W. Patterson