Taking & Managing Risk - Mahony Partners

Feb

2012

Liam McGee needs a communication strategy – fast

Financial Services, Taking & Managing Risk

Insurance company earnings calls are normally staid affairs. But Hartford Financial Group had a sudden burst of excitement yesterday as its largest shareholder, hedge fund titan John Paulson, joined the call. He hammered CEO Liam McGee for not being more specific about his plans for increasing shareholder value at the company, which saw its shares sink by 39% last year. Paulson said: "I know you’re doing a strategic review but there’s no slide talking what about what the potential would be, just that there’s challenges. Goldman Sachs came out with, I think, a very goo... Read More

Feb

2012

Love, Leadership and the New York Giants

Taking & Managing Risk

In an interview after the Super Bowl, New York Giants Head Coach Tom Coughlin reflected on his team’s remarkable success. Coughlin’s secret for brining out the best in his players was simple: he told them he loved them. According to the New York Post, Coughlin recalled his speech to his players the night before the game, saying: “This is a very special team, and it was appropriate at this point in time to let them know how I felt about them…. So they didn’t have any question in their mind that I deeply appreciated what they accomplished, where they’ve co... Read More

Jan

2012

Just do it, Mitt

Taking & Managing Risk

Here’s some free advice for Mitt Romney: Release your income tax returns now. Right now. Don’t wait “until April” as you’ve said in the past, or give a vague estimate of your effective tax rate, as you did earlier today. Do it now so you can address facts, instead of conjecture and speculation. According to a New York Times report, you rather awkwardly said your tax rate is “probably closer to the 15 percent rate than anything. Because my last 10 years, I’ve — my income comes overwhelmingly from investments made in the past, rather than ordinary income... Read More

Jan

2012

The problem with private equity

Financial Services, Taking & Managing Risk

Andrew Ross Sorkin’s DealBook column profiles Paul Levy, a PE manager who makes a good defense of private equity: “We want to build businesses,” Mr. Levy said earnestly. “Nobody wants to fire people. We want to retain all of the value-added, high-quality people that work at these companies. But it’s like any other endeavor. If there are more people there to make the shoes than needed, you can’t keep the people. It’s not about wanting to get rid of people. It’s about wanting to make the company operate on a size and scale that’s commensurate with its opp... Read More

Jan

2012

Does culture matter?

Crisis, Financial Services, Taking & Managing Risk

There’s long been a debate about whether a company’s culture makes any difference in how it performs. Culture often is derided as the “soft stuff” that is nice to have but not really essential to a company’s success. Indeed, Sandy Weill once famously quipped that culture was “something they put in yogurt.” (Of course, we know how things turned out at Citigroup.) Research by Professor Jim Heskett of the Harvard Business School has demonstrated the value of a strong corporate culture. He estimates that companies with effective cultures outperform their peers by as much as 30%. But there’s now evide... Read More

Jan

2012

Friday Risk Reading: Shackleton

Crisis, Friday Risk Reading, Taking & Managing Risk

I was catching up on holiday reading and came across this excellent New York Times piece on Ernest Shackleton written by Harvard Business School professor Nancy Koehn. Shackleton's ambitious journey to reach the South Pole ended in failure but became a triumph of leadership, courage and determination as he brought his entire crew safely home after a nearly two-year ordeal in the most difficult conditions on the planet. (It's an astonishing story, and for a complete account of the saga, Read More

Jan

2012

Communicating European debt risk

Financial Services, Taking & Managing Risk

As reported today, the US Securities and Exchange Commission has introduced guidance for financial firms related to reporting of their European debt exposure. The SEC issued its recommendations to address the inconsistent approach firms have used to disclose their risk to sovereign and private borrowers: "In response to our comments on their disclosure documents, registrants have provided incremental improvements in disclosures of exposures to so... Read More

Jan

2012

The 2011 Risk List: The year’s 5 best risk-takers

Crisis, Financial Services, Friday Risk Reading, Taking & Managing Risk

As 2011 disappears in the rear-view mirror, here’s my list of noteworthy risk-takers over the past year. These are the people and institutions that took risks intelligently and won. The list of risk-bumblers - those who mishandled critical situations - is certainly longer (UBS, Olympus, Yahoo, MF Global, I could go on) but their woes already have been well cataloged, and who wants to start the New Year revisiting disasters? So here are the top risk-takers: 1. Jefferies. Before this year, mid-size investment bank Jefferies happily stayed below the radar, built its business and made a tidy profit. All that changed when MF Global collapsed and investo... Read More

Dec

2011

The Irony of MF Global: The System Worked

Crisis, Financial Services, Taking & Managing Risk

Were it not for the missing customer funds, the collapse of MF Global would be hailed as an example of how well the financial system worked. That’s a very big “if,” of course, and the loss of customer funds is a scandal all its own. But the market worked - and that's an important lesson. The accountants, the regulators and the board of directors did their part - not perfectly and perhaps not quickly – but they asked the right questions, demanded disclosure of the firm’s trades and forced management to defend its strategy. Customers, shareholders and counterparties then concluded MF Global had too much risk and abandoned the firm – exactly the sort of rough justice that’s at the core c... Read More

Oct

2011

MF Global’s Fatal Mistake

Financial Services, Taking & Managing Risk

At this hour, executives and MF Global are huddling with bankers and lawyers, trying to come up with a deal to sell the firm. It must seem like a surreal exercise, since just days earlier the firm held a solid investment-grade credit rating and a market cap of $620 million. Now, as its clients turn away and its cash evaporates, CEO Jon Corzine is running out of time and options.Selling a financial firm isn’t an easy process, particularly in an edgy market. Doing it in a couple of days is only for the foolhardy or the desperate. For MF Global,... Read More