BEIJING, Nov. 19 /PRNewswire/ -- Marsh, the world's leading insurance broker and risk advisor, today outlined the changing risk landscape for finance managers in China at an event in Beijing.
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Marsh was a participating sponsor for The Economist Group's 'CFO Rising China' conference, which brought together more than 100 CFOs from both domestic and foreign companies to discuss the risks and opportunities in the current uncertain environment.
"The conference highlighted many of the very real issues facing CFOs in China, especially regarding risk and risk management," said Mr Tony Lau, CEO of China for Marsh.
"In the current volatile economic environment, a company's approach to corporate governance, risk management and insurance protection becomes absolutely critical. Good risk management can mean the difference between success and failure during an economic downturn by minimising the negative impact and finding opportunities to create a competitive advantage."
Companies in China are beginning to feel the effects from the global economic downturn, including raw material price fluctuation, softening demand, supply chain disruption, customer payment default (especially for exporters), claims against company directors and employee turnover.
There are five key risk management techniques that CFOs should consider as part of a strategy to mitigate the effects of the global economic downturn, including:
Enterprise risk management: Developing and implementing an ERM program brings many benefits, including a 360-degree view of a company's risk factors, operational and cost efficiencies, early warning systems and regulatory compliance.
Update your risk profile: The most critical aspect to a successful risk management and insurance program is understanding your company's basic risk profile. Marsh can help with the Marsh Risk Explorer, an innovative online tool that provides businesses with an easy-to-understand risk assessment at no cost.
Boost your access to capital: For the construction sector, switching to surety bonds with an insurer from a bank guarantee can provide the same level of protection without using up your banking facility.
Manage supply chain risk: Understanding your entire supply chain, from raw materials to the end consumer is the first step in managing supply chain risk. Know your suppliers and make sure you have mitigation strategies in place such as business interruption insurance, product recall protocols and back-up suppliers.
Directors' and professional liability: During a downturn, shareholder and customer litigation tends to increase. Be sure your senior management has the appropriate level of protection for any claims that may arise. This is also true for professions such as engineers or lawyers, where professional liability insurance enables practitioners to deliver advice with confidence.
"Heading into 2009, it is clear the risk landscape is changing rapidly for CFOs in China with insurance premiums likely to rise in some classes due to capital and capacity issues," said Mr Lau.
"However, by tapping the expertise of an international insurance broker coupled with a sharp focus on risk management, companies can reduce the impact and gain a competitive edge during the difficult year ahead."
As the world's leading risk advisor and insurance broker, Marsh delivers risk management and insurance solutions to both domestic and foreign companies in China across all industries, helping companies turn risk in to a competitive advantage.
About Marsh
Marsh, the world's leading insurance broker and risk advisor, has 26,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with more than 55,000 employees and annual revenue exceeding $11 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC's stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC's Web Site is http://www.mmc.com . Marsh's Web site is http://www.marsh.com .
