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It is generally assumed that aversion to risk is one of the biggest obstacles to Canadian innovation, but only 10 per cent of Canadian businesses are truly risk averse. The big issue is apparently an inability to align risk-taking with financial capacity -- rational risk-taking obviously involves being able to survive the potential negative consequences of your actions. And that's a key lesson buried in the aftermath of the hacker attack on the controversial Ashley Madison online affair service.
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No one likes permanent loss of capital and no one seeks to have a drop in the value of his or her assets. What we need to understand is if you can sleep at night when your monthly statement value has dropped by some amount. More importantly, will it impact your ability to enjoy your life and meet your personal financial obligations, if this were to occur?
Every time you sit down with an investment professional, you are asked what your risk tolerance is. Regardless of the method for defining the risk you'll accept in your investment portfolio, you are wise to define the meaning at the outset with the person administering your money. It will save you a lot of sleepless nights.
1. Active owners focused on performance. Expect pressure by activists and institutions for boards to control under-performing management to continue unabated. Boards incapable or unwilling to rein in...
In Canada, we like to play it safe and for the most part, it's paid off. Tight regulations and the centralization of banking powers helped us weather the economic storm of 2008. But we're a different Canada now. Canada's potential is remarkable, we need to believe in that potential and invest in its development before looking elsewhere for inspiration. It's all right here.
There is a strong bias for audit committees to oversee many risks, not just financial. No regulation mandates this however. Audit committees should not oversee risks that they are not qualified to oversee. Here are a dozen broader questions to determine whether your Audit Committee needs a reset.
The management of XL Foods Inc., which has been in the news for causing the biggest beef recall in Canadian history, has not figured out the most important issue is how the company governs food safety. Neither XL foods or its parent company appear to have any independent directors, who are essential to ensuring internal management does not cut corners.
No one likes to be controlled, least of which entrepreneurial employees. However, ask yourself if defective internal controls are worth the price, in terms of reputation and financial loss. It can indeed be a run on the bank if consumers don't have confidence, and it can get worse unless governance checks are put in place.
During a poor economy, it can be a challenge for a business to increase profitability as competition for the "cautious consumer" intensifies and there is increasing pressure on margins. But a recession offers the perfect opportunity to question the way things have always been done -- and drive out waste and inefficiency. One of Jim's favourite slogans is: "a crisis is a terrible thing to waste."
Bill Clinton at the DNC said what white- and blue-collar workers have known for 30 years: you need to invest in people to have an innovative and productive economy. My coach, used to say "you get corn, if you plant corn." Neither in government nor in business have we been planting corn. We quit planting it almost 30 years ago when we got rid of middle management in government and the private sector, and as the economy reveals, we are losing.
Jeopardy! might not be the most exciting game show on television, but when contestants reveal their final responses -- and wagers -- the tension is often palpable. That’s because no matter how foregon...