6 posts categorized "Enterprise Risk Services"

February 09, 2011

Deloitte joins GRI at the launch of Focal Point USA

Dttl_greenfootOn 31 January members of Deloitte’s* Sustainability Services team joined in the launch of Focal Point USA, the new U.S. office of the Global Reporting Initiative (GRI), at the New York Stock Exchange. Focal Point USA aims to boost the number of U.S. companies reporting on sustainability performance in a consistent manner, to improve the quality of those reports, and to increase U.S. organizations’ input into developing new guidelines for sustainability reporting.

It’s clear that U.S. companies are putting an increased emphasis on their approach to sustainability reporting as evidenced by the sold out crowd and representation from large companies, NGOs and academics from across the country. Our clients are interested in bringing their reporting on non-financial performance to the same level of maturity as financial reporting in order to provide their stakeholders with a more comprehensive view of a company’s overall performance, taking environmental and social performance into consideration. The establishment of the GRI Focal Point USA is a key step in driving more frequent, accurate and robust reporting on sustainability performance in the U.S. and will be critical to the eventual move towards integrated financial and non-financial reporting.

Several important themes emerged during the event that further emphasized the importance of integrating sustainability into broader corporate strategy. There was robust discussion on the theme of “sustainability makes business sense” and the need to connect sustainability metrics with both individual and corporate goals and objectives. Another major theme was the role of the CFO in sustainability management and reporting. This is clearly an important focus for Deloitte as we work with thousands of CFOs on their companies’ financial reporting, compliance requirements, and stakeholder expectations. 

As with reliable financial reporting, there are many possible benefits for a company that implements assurance processes and reporting on sustainability activities. In addition, through a reliable sustainability reporting and assurance process, management demonstrates its desire to deliver accurate and useful information to its various stakeholders. Therefore, it is important that companies’ reporting on their ESG efforts become more uniform and reliable. 

As the move towards integrated reporting further materializes, it will be critical for us to help CFOs understand the financially material impact of their organizations’ environmental and social performance, and how to report on that performance in a consistent and meaningful way—supported by a roadmap for further integration into corporate strategy and continuous improvement. 

We look forward to the challenge and the opportunity!

Eric Hespenheide is the Global Audit and Enterprise Risk Services Leader for Deloitte’s Sustainability & Climate Change Services Group.

*As used in this article, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

September 15, 2010

Further insights on Summer Davos CEO roundtable

Dttl_summer_davos_sculptures_240x216_091410 As the China Managing Partner of Business Development and Public Affairs, I found the Deloitte and Talents magazine breakfast roundtable extremely insightful.  The following are my strongest impressions from listening to the open sharing of experiences by business leaders of many of Tianjin's top enterprises.

Although there is common acknowledgement that regulatory risk is the biggest current and medium term challenge, different industries face different specific risks.  That is why it is so important that our national industry practices and our enterprise risk management advisory specialists continue to work closely together to assist clients.

As we have seen in recent times, even the most established businesses are exposed to many risks that they have not been able to anticipate nor have solutions for. Executives with whom I chatted during the Roundtable expressed concern about there being so many unknown risks.  I shared with them the approach that Deloitte advises which is to control what you can and have a structured approach to do that. The top enterprises of Tianjin attending the Roundtable have strong growth potential to become major national enterprises in the near future, and to realize this potential they must prepare to operate in increasingly complex markets within and beyond China. This is a major step and calls on them to develop capabilities and obtain experience that they may not currently have. 

Also, in chatting with the executives, I learned that even though we had open and intense sharing during the one hour Roundtable, there were many more experiences and questions they wanted to discuss had there been more time to do so. This being the case, we will be following up with a number of participants to see how we can provide further information or ideas in response to these. 

Jennifer Xie is a Managing Partner of Business Development & Public Affairs for Deloitte China.Jennifer leads initiatives related to key government relationships business development, brand and communications. Jennifer is also an executive member of the Marketplace Council at Deloitte China.

Insights from Summer Davos: CEO roundtable on emerging growth opportunities, and new operational risks

World Economic Forum Summer DavosOn Monday 13 September, during the World Economic Forum Summer Davos in Tianjin, China, Deloitte China and an influential business magazine, Talents, cooperatively organized a CEO workshop focusing on sustainability and operational and regulatory risk.

Some thirty CEOs, largely from Chinese enterprises, representing large and medium, state-owned and private companies attended the workshop. It was moderated by Ken, Fion Song, President of Talents magazine.
Deloitte framed the discussion with the following four broad issues:

  •   The new government-business relationship
  •   The dynamics of globalization
  •   Innovation and new business models
  •   Closing the loop on value networks

Within this context, the discussion focused on operational and regulatory risk driven by the new role of government in business and the dynamics of globalization.  Nearly all CEOs at the workshoprelated these matters to their domestic market and the changing role of the Chinese government. Less was said about globalization and the challenges related to expanding abroad and working with foreign governments. This was a little surprising given the ongoing encouragement by the Government for Chinese enterprises to increase their foreign investment. Clearly, the local yet fast growing and intensely competitive market remains a priority.

Highlights of the discussion are summarized below:

  •  State-owned enterprise executives highlighted that top executives and boards of directors still must accommodate both commercial and policy goals and expressed the need for completion soonof the long-standing program to separate business from regulation. 
  •  Central planning has both a positive and negative impact on business. If an enterprise enjoys consumer support in the marketplace and government support in the regulatory sphere, its business can grow explosively.  However, even very innovative business initiatives by entrepreneurs in sectors like telecommunications can be frustrated by either uncertainty or resistance in regulation, and that can make regulatory risk the biggest struggle for the CEO.
  •  Due to the fast moving dynamics of the Chinese economy, Chinese enterprises are inclined to diversify as a way of managing operational risk. Typically, a municipally-focused investment enterprise might bridge property development, finance, and infrastructure in order to limit the risk of excessive exposure to one sector.
  •  For many industries in China, e.g. the pharmaceutical industry, their current fragmented and regional nature creates an operational risk. It generates structural problems that make scaling and competing difficult, underscoring the need for accelerated consolidation and structural reform in supply chains and transactions.
  •  The dynamics of globalization both enable and require more complex value networks and interdependencies, offering greater revenue growth opportunities than ever before.   Along with this, however, come greater and more complex risks. For example, with more participants in the value network, operational spills may occur anywhere and their impact on brand owners and retailers is unavoidable, in particular where consumers come in contact with an industry's products and services.

Discussants also consistently stressed the difference between "uncertain factors" and "certain factors" in enterprise risk management, and the escalation of operational risks whenever the direction of government policy and investment itself is considered to be an uncertain factor.

What the discussion demonstrated was the complexity of issues impacting Chinese businesses and the related operational risks they present. Globalization and the interconnectivity of markets compound this. There is a lot for business to consider.

Dr. Ken DeWoskin is Director of the Research and Insight Centre, Deloitte China, and serves as a senior advisor to Deloitte China. Dr. DeWoskin has been involved with China for over 46 years and has lived and worked extensively in both China and in Japan.

July 29, 2010

Integrating your financial and non-financial performance into a single report

Rubberbandball_200x200 Integrated reporting is no doubt the wave of the future for sustainability reporting. The recent Global Reporting Initiative (GRI) Conference on Sustainability & Transparency in Amsterdam, only further reiterated this point.

Also termed "One Report" (One Report: Integrated Reporting for a Sustainable Strategy by Robert G. Eccles and Michael P. Krzus), integrated reporting is defined in the simplest terms, as the combining of a company's financial and non-financial information (environmental and social) into a single report.

Although some skeptics see integrated reporting as just the creation of a page intensive and exhaustive document, proponents see it as the opportunity to tie environmental and social sustainability performance to financial performance. In addition, integrated reporting has the opportunity to yield the following benefits:

  • Better exposure of a company's sustainability performance against goals, increasing the company’s reputation amongst a wider group of stakeholders;
  • Greater visibility into the costs and benefits of a company's non-financial performance; and
  • Better information to enable a company make smarter business decisions and develop long term strategy.

For the unconvinced skeptic, perhaps the fact that a growing number of investors are investing in social and environmentally responsible companies further validates the need for integrated reporting. These investors are known as impact investors, investors who seek out investments that will yield both a financial and environment and social responsible return.  Companies that can draw the connection between their environmental and social investments to the financial return are sure to attract more investors of the like and increase their bottom line.

From Southwest Airlines to HSBC, corporations both small and large, across the global and across all industries are taking heed of the benefits and issuing integrated reports. With these companies being the front runners, their competitors will soon be sure to follow this growing trend.

For more information on integrated reporting, visit http://www.globalreporting.org/currentpriorities/futuretrends/futuretrendslinks.htm#IntegratedReporting

Eric Hespenheide serves as the Audit and Enterprise Risk Services Global Leader, Sustainability & Climate Change.

June 08, 2010

IIA International Conference - Day 2

Day two of the IIA International conference and the long lines at Starbucks tell a tale. Walking around the conference, there are many pockets of conversation and they all have one thing in common: everyone is completely engrossed and engaged with one another. In addition to session take aways, peer to peer networking is a huge part of this conference. With so many experiences to share, learning doesn’t end when the track is over.

While Zanny Minton-Beddoes’ key note speech was a tad gloomy, she illustrated, however, that there was much to learn from the failings of the past and those who “weathered the storm” better than most. A significant topic for today is Enterprise Risk Mangement (ERM). With internal audit being pushed to higher levels of competency to meet governance and ERM expectations, internal auditors from around the globe find themselves struggling with the same challenges. Many agree that if you don’t resource adequately, ERM will not happen. The general consensus among chief audit executives appears to be that C-suite support is as crucial as striking the right balance of ERM controls for your organization’s needs and size. The seat at the table every CAE wants and needs must be earned, and sound ERM practices is a means to achieving that goal.

This year’s conference was attended by over 2,700 professionals from every corner of the globe. There were large groups from Korea and Ghana, indicating the relevant and key role that internal audit will be playing in years to come. Tonight, the conference ends with their annual gala party which looks to be a lively affair. I’m sure many will be ready to let loose and enjoy the evening's planned activities.

Eric Hespenheide serves as the Global Leader of the Deloitte Touche Tohmatsu (DTT) member firms' Internal Audit Services Practice and Corporate Responsibility and Sustainability services group.

June 07, 2010

IIA's 2010 International Conference kicks off

Atlanta, Georgia, is a fitting place to host the Institute of Internal Auditor's (IIA) 2010 International Conference. The city has gone through a major transformation and a morphing population that has changed the face of the city. You are just as likely to hear a typical southern drawl, along with accents from Korea, India, or even places as exotic as Chicago or Toronto. Atlanta is truly a melting pot. Our profession too, has gone through significant changes. Internal audit, once a bastion of "wash, rinse, repeat," has grown increasingly complex. By studying the 2010 program, one can readily see by the topics that internal auditing is more than just a compliance function – it is fraud, ERM, GRC, and, most importantly, it’s a strategic player on the front line of risk.

We kicked off the 2010 IIA International Conference early with a pre-conference session, “Government to the Rescue – the Role of the CAE.” Kathie Schwerdtfeger (Partner, Deloitte & Touche LLP), hosted this forum along with 60 other participants from across the globe, several of whom were a bit dubious about actually learning something new about government. It appears they were pleasantly surprised. Participants were provided with an overview of stimulus initiatives in the United States, Australia, and Eastern Europe and then worked together in groups to develop a cumulative listing of leading practices based on their own experiences. These were shared back with the group who developed a listing of leading practices, some of which include:

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