Risk managers' roles get riskier

The globalization of business sourcing and outsourcing has raised the bar when it comes to supply chain risks. Nearly 75% of 110 risk managers surveyed by Marsh Inc. reported higher supply chain risk levels since 2005, while 71% reported increased costs as a result of unexpected disruptions during those years. Worse yet, not a single survey respondent judged their company “highly effective” at supply chain risk management, and just 35% said they were “moderately effective.”

Within a few short years, the survey indicates, risk managers’ jobs have been redefined. Greater threats resulting from increased foreign sourcing, for example, is forcing them to take on business and operational risk, such as compliance in far-away countries where there is little local oversight. “They used to focus on insurable risks, but now they must measure uninsurable operational risks as well,” says Beth Enslow, senior vice president of Marsh’s supply chain risk management practice and author of Marsh’s new report: Stemming the Rising Tide of Supply Chain Risks.

And it’s not just risk managers’ whose jobs are being redefined; financial executives report they are donning yet another hat—taking on responsibility for establishing corporate-wide supply chain policies and practices. In conversations with financial vice presidents, CFOs and treasurers, Enslow says she has found many routinely placing supply chain concerns under the umbrella of enterprise risk management. “They recognize that if there is a supply chain disruption, it won’t just delay deliveries and hurt income; they could wind up on the front page of the Wall Street Journal,” she says.

Executive influence gives risk managers the clout they need to form cross-functional teams of leaders from finance, legal, risk and operations (including procurement and logistics, as well as manufacturing when appropriate.) One survey participant, representing a data services company, said his firm has benefited from the team it set up more than two years ago. “This shared structure has created consistency and let us resolve issues quicker than in the past,” he said, asking to remain anonymous. “For instance, understanding how others on the team have solved supplier issues has helped a lot.”

Despite the proven value of such cross-functional teams, says Enslow, just 19% of participants at companies with more than $1 billion in revenues report having one in place. Yet, without them, risk managers have the difficult, if not impossible, job of navigating the organization to insure consistency in supply chain practices at the operational level, and to make sure the right questions are asked upfront,” says Enslow. “The winners will be those risk managers and their financial executives that get conversations going at the beginning of the planning, rather than as an afterthought.”

Article found in Risk Management, Globalization, Supply Chain Management/Trade

When is an auditor independent? Ask the PCAOB

The Public Company Accounting Oversight Board (PCAOB) has approved two proposals designed to clarify possible conflicts of interest between a public auditing firm and a potential client by increasing transparency of existing relationships.

First, it approved Rule 3526, which, if endorsed by the Securities and Exchange Commission (SEC), would require auditing firms to inform audit committees in writing of any relationships that could impair the auditor's impartiality. The disclosure would reveal all ties between the firm, or its affiliates, and the potential client, or those that have a financial reporting oversight role there, that could challenge its independence.

The new rule requires accounting firms to provide this information before an audit begins—and, then, annually for continuing audits. It supersedes Independence Standards Board (ISB) Standard No. 1, an interim rule that only required that the information be made available after an audit. The PCAOB regulation comes almost seven years after the Securities and Exchange Commission (SEC) abandoned the ISB as a source of new and improved independence standards for auditors of U.S. public companies.

At the same time, the PCAOB amended Rule 3523 to allow an auditing firm to provide tax services to a corporate executive during the audit period prior to the professional commitment. It narrows the scope of the existing standard, which declared that an auditing firm was not independent if it provided tax services to an executive at a client firm who held a financial reporting oversight role (or an immediate member of their family) during the audit and professional engagement period.

The PCAOB says it determined that providing tax services to such individuals during that time does not necessarily impair a firm's independence. The amendment to Rule 3523 would become effective immediately if approved by the SEC.

Careers

Alliance One International Inc., the $2 billion leaf tobacco merchant with headquarters in Morrisville, N.C., has appointed Robert A. Sheets as executive vice president and CFO. Sheets, 53, replaces James A. Cooley, who resigned. Previously Sheets served as the executive vice president of finance and CFO of Standard Commercial Corp., a predecessor of the company, from April 1998 to May 2005 when Standard merged with DIMON Inc. to form Alliance One, and served on its board of directors. Before that, he held various finance positions with R J Reynolds International.

HealthExtras Inc., the $1.9 billion provider of pharmacy benefit management services based in Rockville, Md., appointed Hai Tran CFO, effective July 1. Tran, 39, will succeed Michael P. Donovan, who will remain the company’s executive vice president of corporate development. Tran comes to HealthExtras from Hanger Orthopedic Group Inc., an orthotic and prosthetic provider, where most recently he served as vice president and treasurer.

Verisign Corp., the $1.5 billion Internet infrastructure provider based in Mountain View, Calif., has appointed Brian G. Robins, senior vice president, acting CFO. Also, Robynne D. Sisco, senior vice president and chief accounting officer, assumed additional responsibilities as controller. Robins, 38, and Sisco replace Albert E. Clement and Debbie W. Tuck, who resigned on April 4. According to Verisign, neither resignation was the result of any action that, to its knowledge, would adversely impact its financial statements or operations.

Franklin Electric Co. Inc., the $602 million designer, manufacturer and distributor of groundwater and fuel pumping systems based in Bluffton, Ind., named John J. Haines vice president, secretary and CFO. Haines, 44, replaces Thomas J. Strapp, who stepped down as secretary and CFO to focus on his position as president of Franklin’s expanding water transfer systems business. Haines joins Franklin from HSBC Finance Corp., where he headed its auto finance business from August 2004 to February 2008. The previous 15 years were spent in a number of executive and financial positions with General Electric Co.

QLogic Corp., the $586.7 million networking storage company headquartered in Aliso Viejo, Calif., appointed Simon Biddiscombe senior vice president and CFO. Biddiscombe, 40, will take over from vice president of finance Doug Naylor, who became interim CFO after senior vice president and CFO Tony Massetti resigned in January. Biddiscombe became CFO of Mindspeed in 2003, when the Newport Beach, Calif.-based supplier of semiconductors spun off from Conexant Systems Inc.

Westmoreland Coal Co., the $504.2 million coal company based in Colorado Springs, Colo., promoted Kevin Paprzycki to CFO from controller and principle accounting officer. The company also named Douglas P. Kathol treasurer, a position he will hold while continuing as vice president of development. Paprzycki, 37, and Kathol, 54, succeeded David J. Blair and Ronald H. Beck, who both left the company amid an SEC investigation into accounting errors.

Tuesday Morning Corp., the $408.5 million retailer headquartered in Dallas, promoted Stephanie Bowman executive vice president and CFO. Bowman, 45, succeeds Michael Marchetti, the acting CFO since January, who continues to serve as executive vice president and COO. An executive with 20 years of financial experience, Bowman joined Tuesday Morning in 2006 as vice president of finance. Previously she held that position at Summit Global Partners, a privately held insurance brokerage firm acquired by USI Holdings, Inc., a publicly traded insurance brokerage firm, in 2004.

Targa Resources Inc., the $7.2 billion provider of midstream natural gas and natural gas liquid services based in Houston, Tex., named Matt Meloy vice president of finance and treasurer. Meloy will also assume the same positions subsidiary Targa Resources GP. Meloy joined Targa Resources Inc. in 2006, as director of corporate development. Previously he worked in The Royal Bank of Scotland’s structured finance group, focusing on the energy sector.

Article found in Careers

OpenPages 5.5 opens new chapter on GRC

At its core, Version 5.5 provides improved communication across management teams to ensure that qualitative and quantitative risk data is shared effectively, he explains. This enables users to uncover firm-wide exposures while also allowing individuals to oversee risks at business levels. By simply checking off boxes, managers throughout the company can create “activity views” that instantly let them check on the risks that are most relevant to their responsibilities. “Companies are realizing that to really manage, monitor and mitigate risks, the business managers closest to those risks must be able to easily view information,” says Burnes.

Another key 5.5 enhancement, he notes, is an advanced security architecture that lets companies manage large numbers of users with access to GRC data at a granular level, while providing the companies with the ability to easily update access controls after organizational changes.

OpenPages also announced the availability of OpenPages Hosting, which, it says, speeds up deployment without the administrative and internal IT costs associated with installing and managing an in-house system.

Article found in Tools & Technology, Risk Management

Oversight keeps a close eye on audit change

The other significant enhancement is support for platforms based on Microsoft Windows Server 2003, the dominant operating system for business servers; previously Oversight supported only Linux. Other technical upgrades include enhanced password encryption and protection against brute force password attacks. “After so many failed log-on attempts in a definable period of time, we lock out that particular account,” Taylor explains. The new version also includes single sign-on capability, which allows users to sign on to several applications at once.

Article found in Tools & Technology, Financial Information Technology