Risks at Christmas Time

It was Christmas yesterday and everybody is in a holiday mood. I don’t think any serious work will be done until New Year. I hope all of you are having a great time and enjoying yourself thoroughly. I am not going to put the regular corporate risks on this weekend post. Holidays and the partying bring different risks altogether. Therefore, here are some interesting posts about it.

The first is from Risk Management Monitor in which Jared Wade is discussing the risk mitigation plans Santa Claus had implemented to deal with the Christmas workload.

Christmas season is celebrated by giving gifts to your loved ones, friends and colleagues. Sometimes the choice is difficult since one doesn’t know the personal tastes. Moreover, you really-really want the receiver to like your gift. So the unique ones are remembered and cherished. Employees of AlixPartners received an unusual gift from their client Cerbus Capital Management’s Remington Arms. AlixPartners employees could buy rifles and shotguns at a 33% discount. The new way of celebrating the spirit of generosity and kindness of Christmas is by gifting arms and ammunition.

The holiday season has one aspect that sometimes has significant repercussions in life. With all the attraction available at parties, it is easy to fall in love, have a fling and find someone oh so irresistible. Some are smitten enough to marry quickly. A few of these married spouses later wonder why they got married in the first place. It is all right for normal folks to make these mistakes. But not the CEO’s. Finally, there is something, which common folks can do wrong and get away with, and CEOs are not so lucky. Here is an article describing the CEO’s divorce as a corporate risk. Why?  The CEOs financials earnings and assets are disclosed in divorce cases. Public and regulators start asking questions on the information available and corporate brand image suffers.

Enjoy the stories below by clicking on the headings.

1.     Managing Risk at the North Pole (via Risk Management Monitor)

It looks like Santa has been busy trying to improve his risk management this year. There are a lot of threats and just like all companies, Santa’s Workshop is not immune to new-age concerns. Given his giant list of who is naughty and who is nice, for example, he fears that a security breach that exposes his billions of person records could bring crippling lawsuits.

Santa Claus has announced the appointment of a Christmas Risk Officer (CRO) as part of a coordinated plan to maintain resilience at Grotto SE, the North Pole based toy manufacturing plant, as well as Claus’ flying sledge-based global distribution facility.

The new CRO, Mrs Santa Claus, is believed to be unhappy about the appointment but accepts that someone has to do it if clients’ confidence in Christmas is to be retained.

Grotto insiders told lloyds.com that the move to appoint a CRO was prompted by the Icelandic ash cloud that caused massive business interruption problems earlier this year, particularly for North European businesses. Sources also say that, in line with other big company CEOs, Santa Claus is also increasingly concerned about linked risks to do with brand and reputation, as well data security.

Hopefully this, as well as other new risk management initiatives from the Clauses, will help ensure you all get your toys, TVs and tubesocks this year.

2.         The Gift of Guns, Courtesy of Cerberus ( via Deal Book New York Times)

For employees of AlixPartners, finding a last-minute holiday gift may have gotten a little easier.

Thanks to some holiday generosity from a client, Cerberus Capital Management’s Remington Arms, staff members at the consultancy can choose from an array of rifles and shotguns — with a 33 percent discount.

In an internal memorandum obtained by DealBook, an AlixPartners director, Ralf Schwarzendahl, informed employees that Remington has opened up its “friends and family” discount program to the firm. (Other companies that work closely with the gun maker have also been extended the offer.)

The attached flier noted that the offer applied to about 91 bolt-action rifles, repeating shotguns and .22 caliber rimfire rifles. Free shipping? Naturally — but, as Mr. Schwarzendahl says, employees still have to pay the federal transfer fee that some dealers charge. The program began on Dec. 8 and runs through Jan. 19.

“AlixPartners takes discretion very seriously and, generally, does not comment on matters of this sort,” said a spokesman for the consulting firm.

3.   Is your divorce a corporate risk? (Via Mail Guardian Online)

There’s only one thing more fascinating than a celebrity marriage, and that’s a celebrity divorce. Particularly when it’s messy, vituperative and, yes, expensive.

But it’s when we think of divorce as a corporate risk that it takes on another whole dimension and provides cautionary tales to give CEOs nightmares. It may be bad enough that the dirty laundry of CEOs is aired in public, but the whole process can cause a chain of complex reactions: damage to company brand; shareholders asking questions, which can ultimately benefit the public but not necessarily the company; and the tricky financial fall-out of some truly convoluted deals.

Not to mention how the hits a company takes may affect the average employee.

Take Elon Musk’s divorce from his wife Justine, for example.

Musk ploughed most of his own money into Tesla, off the back of his sales of Zip2 and PayPal to Compaq and eBay respectively. Tesla has been his ‘baby’ in a certain sense — his electric car venture has consumed him. He netted $48-million in income investments between 2005 and 2008, which were sunk back into Tesla and SpaceX, a space exploration concern. But court filings brought his cash-flow problems to light, revealing he was living off personal loans from friends since October 2009.

Tesla also had cash-flow problems and had borrowed from the United States government (a cool $465-million in low-interest loans) through a Department of Energy loan programme.

At the time, Tesla was looking to go the IPO route — but the Securities and Exchange Commission (SEC) pored over Musk’s personal financial affairs, asking whether Tesla was forthright enough in its filings regarding how his impending divorce would affect the company’s bottom line. Tesla was relying heavily on Musk’s continued financial interest in his entrepreneurial venture, reimbursing him for his private jet flights in return, as well as awarding him 6,7-million stock options in December 2009.
Happy Holidays
I hope you enjoyed the posts this year. I am taking this week off and I will see you all next year.

Wishing all my readers Happy Holidays. I hope all of us get to welcome 2011 with a lot of joy and serenity.

Best Wishes,

Sonia

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3 comments on “Risks at Christmas Time

  1. Hi Sonia,

    I’m very glad we connected. I’ve enjoyed your posts and have learned from them. I also appreciate all your comments on mine.

    I wish you a wonderful New Year and hope it is all you want it to be. May we all flourish even more in 2011.

    All the best,
    Steve

  2. Hi Sonia,

    It is a very nice post.

    2010 was quite good and i too enjoyed reading your posts.

    Wishing you and your family a very Happy New Year 2011

    Regards
    HardeeP

    • Hi Hardeep,

      Thanks and I will try and do better next year with the blog posts. This was agood learning curve.

      And thanks for the wishes and wishing you and your family the same.

      Kind regards,

      Sonia

Comments are closed.