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Industry Challenges


- Industry Challenges
- CFO Challenges
- Corporate Governance
- Risk and Compliance

Banking

An avalanche of regulation is sweeping the banking industry and impacting all players regardless of size, geography or line of business. The evolving regulatory demands and resources required to manage its complexity are staggering. Global institutions operate across multiple markets and jurisdictions and, as a result, are required to meet the demands of numerous (up to 500) authorities at notable costs – some estimate the costs at greater than $500 million per year. In addition, the implementation of Sarbanes-Oxley in the U.S. has spurred the growth of listings in non-covered exchange geographies such as London and Hong Kong, forcing regulators and policy markets to examine the resultant competitiveness of their markets.

 

Energy and Utilities

The industry is expected to move ahead on two fronts with investments in new capacity additions and introduction of more demand-side management programs. However, programs which, by design, curtail demand may also put additional pressure on earnings. Thus, last year's trend of applications to regulators for some form of rate "de-coupling" will continue and may even accelerate.

 

Financial Services

The ability to estimate, manage and control risk by product line, geography, customer class and so on, is vital to success, and is a key responsibility of boards and senior management. It is also, of course, the prime focus of regulators. Paradoxically though, this very ubiquity of risk in financial services means that risk management can often be poorly executed. Where all have responsibility, none has. Many departments and functions have some locus in risk management, for different and often overlapping purposes; there are many demands for information from business units, again often overlapping and sometimes inconsistent.

 

Government and Education

Financial management in government is in transition. Reporting, accounting and auditing are changing in several fundamental ways. In reporting, the focus is shifting from budgets – how much can we spend? - To accomplishments – what have we achieved? Additionally, government accounting standards have become tighter as countries adopt accrual budgeting and accounting. Although International Public Sector Accounting Standards (IPSAS) go a long way to harmonize financial reporting, each country presently decides which rules to follow. And in many countries, only parts of the government are obliged to use accrual accounting.

 

Healthcare

Healthcare organizations confront risks that threaten their reputation and their financial security. They need to navigate complex accounting rules and changing regulations, with growing pressure on revenues, costs and access to capital. These challenging times require superior skills and broad perspective from advisers who understand the business of healthcare.

 

Insurance

The Insurance industry is competitive, cyclical and (by definition) exposed to every possible risk. These risks can often be long-term and hard to define, leading to challenges around pricing and reserving. The industry needs capital to ensure it can meet its obligations but exactly how much capital is dependent on changing regulatory and reporting requirements. In a competitive environment the industry must continue to reduce cost and improve operational efficiency, but at the same time the market is expecting growth. The industry is always looking for new opportunities in different products and geographies.

 

Manufacturing

The globalization of manufacturing continues, and as a result manufacturers, wherever they are located, share many fundamental concerns. Differences emerge mainly in differing attitudes to overall growth prospects (with companies in mature economies more concerned with the potential impact of economic slowdown) and to the risks of rapid expansion (with companies in emerging economies more concerned over the need to grow rapidly to meet customer demands). Companies in ‘low-cost’ economies are also somewhat more concerned with cutting operational costs than are businesses in mature economies.

 

Retail

The scene on retail front is changing rapidly. The average consumer today is richer, younger and more aspired in his or her needs than ever before. Consumers now value convenience and choice on a par with getting value for their hard earned money. A range of modern retailers is attempting to serve the needs of the ‘new’ global consumer. The last few years have witnessed an explosion of organized retail formats like supermarkets and hypermarkets in an otherwise fragmented retail market. To tap this growth opportunity, retail organizations need to be prepared for a quick scale up across dimensions of people, processes and technology in addition to identifying the right formats and value propositions for the global consumer.

 

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