SME Lending: Get Redi to Get Funded

The tough conditions in the credit markets require small businesses to communicate and demonstrate their credit worthiness to satisfy exacting credit risk standards of lenders. Credit channels are open and loans are being made but strict federal regulations and heightened risk aversion by lenders places additional burdens on borrowers to demonstrate they are a good credit risk.

“You have to be prepared,” said Robert Seiwert, a senior vice president with the American Bankers Association. “If you have a viable business model and the banker feels that this business model is going to work in this new economy, you have a very good chance of getting financing. But you have to be ready to show that it will work.”

"Small and medium-sized businesses are the lifeblood of the U.S. economy.  Their ability to prosper and grow is key to job creation to help our nation recover from the economic slowdown. But with the number of bad loans mushrooming in recent years because of the economic downturn, federal regulators have put in more stringent guidelines for qualifying for financing.", stated Ken Lewis former CEO of Bank of America.

Communication with Lenders is Key

Maintaining an open line of communication with your credit providers is key.  During times of prosperity the lines of communication are open; but during times when businesses face adversity the phone stops ringing and lenders start to get nervous.  When business conditions get difficult businesses need to communicate with greater frequency and openness with their lenders.  Bankers don't like surprises.

Reason to Communicate: Risk Assessment

The entrepreneurial nature of small business owners make them natural risk takers.  They have an unshakable belief in the fail safe nature of their ideas and have strong ego identification with their business.  This often makes them blind to the risks lingering within the business enterprise.  Their innate optimism may also cloud an ability to objectively analyze business risks and prevent them from seizing opportunities as a result of poor assessment capabilities.

Conducting a disciplined business assessment will uncover the risks and opportunities present in the enterprise and in the markets that the business serves.  This risk assessment is a great opportunity to communicate to lenders and credit providers that business management are capable risk managers and are a worthy credit risk.  Lenders will be impressed by the transparency of your risk governance practice and will be more disposed to provide financing for projects and opportunities that will propel future growth.

Banks are looking for businesses that are prepared with their financial and business plans. Business owners must present a clear purpose for the loan tied to clearly defined business objectives.   The risk assessment exercise is a vital tool that assists in the construction of a business plan that builds  lender's confidence in your business.  The assessment will reveal the largest risk factors confronting your business and outline clearly defined opportunities that promises optimal returns on loan capital.

Its music to a bankers ears that clients are managing risk well and have identified the most promising opportunities  for business investments.  It is usually a recipe for success and that will allow you and your banker to develop a trusted business relationship based on honesty and transparency.

Get Credit|Redi

Sum2 offers a portfolio of risk assessment applications and consultative services to businesses, governments and non-profit organizations. Our leading product Credit Redi offers SMEs tools to manage financial health and improve corporate credit rating to manage enterprise risk and attract capital to fund initiatives to achieve business goals. Credit Redi helps SMEs improve credit standing to demonstrate creditworthiness to bankers and investors. On Google Play: Get Credit|Redi

Get Credit|Redi

Risk: SME, commercial lending, alternative credit channels, credit risk, community banking, small business lending, business plan, capital raise, risk assessment

The Cost of Reputation Risk

I came across a great presentation on Reputation Risk from Martin Davies of Causal Capital. It outlined the many dimensions of this onerous corporate threat. It offered a definition, a list of risk factors, its impact on a company’s financial condition and proposed frameworks to mitigate its effects.

In the pantheon of risk factors, reputational risk is the classic riddle wrapped in a mystery. Its obtuse nature is due in part because it can spring from a multitude of internal and external factors. This makes predicting the occurrence of a reputational risk event difficult to assess and near impossible to quantify making ROI mitigation funding decisions a perplexing task. 

Reputation risk seems to loom as a phantom menace that inhabits the dismal swamp of innumerable asymmetric risk factors. Its appearance is rare but potentially catastrophic in nature because it strikes at the heart of brand value and corporate integrity. 

The dissolution of Arthur Andersen due to its failures to detect fraudulent business and accounting practices at Waste Management, Worldcom and Enron destroyed the firms reputation for honesty and integrity. Though some argue the cause of this spectacular corporate collapse was due to the contradictions of an attestation/consultancy business model, AA’s pattern of high profile failures in its attestation business made it impossible to continue in business as a firm with unimpeachable standards for audit and accountancy excellence. 

Though corporate dissolution is the worst case scenario resulting from a catastrophic reputational risk event, larger firms with the financial wherewithal and organizational resource to underwrite corporate resilience strategies are best positioned to overcome the severe shocks of a reputation risk event. Mitigation initiatives must be more than a PR exercise in damage control. Senior management must take ownership of the event and implement a strategy that allocates resources to the problem to assure stakeholders that an optimal return on capital employed will be realized to the benefit of a sustainable enterprise.

Though reputational risk seems to arise from a kismet of asymmetrical factors, which are difficult to foresee and nearly impossible to plan for due to the limitations of linear causation and factor biases of quantitative based risk models; reputational risk is best addressed by striving for GRC (governance, risk compliance) excellence throughout the corporate enterprise.

This is particularly important for SME’s who lack an expansive balance sheet, financial reserves and organizational resources to ride out and overcome the profound impact of a reputational risk event.

Quantification of reputation risk is difficult to measure. The cost of mitigation initiatives and the expected loss realized from a reputational risk event must be funded through the GRC culture of the enterprise. The above slide caught my attention because it graphically displays the impact of a reputational risk event on the equity value of a publically traded company. Though equity exchanges are good barometers to determine monetary impact of a risk event, the managers of privately owned firms are beholden to a different set of expectations of closely held corporate stakeholders. 

Amorphous performance standards of idiosyncratic investors, the close coupling of corporate goodwill, shareholder identification, corporate identity and product branding concentrates and magnifies the intensity of reputation risk. 

SMEs mitigate reputational risk factors by developing a vigilant GRC culture that encourages the engagement of all employees in the mission of the enterprise. In so doing, all company stakeholders are deputized as vigilant risk managers; all wholly invested in the protection of corporate goodwill and the creation of long term sustainable value of an extended enterprise. 

Sum2 believe this to be the case as well. Our clients engage risk as a daily cost of doing business. We design risk management products for small business managers that empower them to lower the odds and consequences of damaging risk events while positioning themselves to be the beneficiaries of opportunities changing market conditions produce. 

Get risk aware and protect your business with the S3 an SME Seismograph, a risk detector and an early warning and opportunity discovery app on Google Play. 

* 

Get Risk Aware

Risk: reputation, Arthur Andersen, sme, macro, catastrophic, Black Swans, facilities, business interruption, transportation, contagion risk, infrastructure risk, S3, GRC, Martin Davies, Causal Capital

ADP Job Report: Recovery Marches On

Private-sector employment increased by 191,000 during the month of March, according to the latest ADP National Employment Report (NER) released yesterday. The NER suggests a steady, albeit uneven growth of nonfarm private employment since net job creation first turned positive during the first quarter of 2010. The pattern of rising employment gains, confirms signs of an accelerated economic recovery reinforced by a March report that is above the 12 month average. 

Though the report is an indicator of continued recovery, job growth forecasts for the month were closer to 205,000. As fears of a jobless recovery recede, the US economy has a long way to go before pre-recession employment levels are achieved. Full employment requires the economy to create over 200,000 jobs per month for 48 consecutive months to achieve pre-recession employment levels. The monthly average is well below that level; even though the unemployment rate has been trimmed to 6.6%. 

The March report is encouraging because it points to an accelerating pace of job creation. The post Christmas season employment surge represents a 70,000 job gain over January's anemic numbers. The service sector accounted for over 164,000 of the job gains. The manufacturing and goods producing sector combined to create 28,000 jobs. Construction offered confirmation of a tepid recovery in the housing market adding 20,000 jobs during the month. The construction industry has lost over 2.1 million jobs since its peak in 2008. 

The report also indicated that the five selected industry groups all reported positive job growth for the second consecutive month. The professional/business service sector was the strongest performer adding 54,000 jobs, followed by trade/transportation/utilities with 36,000 and financial services and manufacturing each adding 5,000 jobs. Job creation is welcomed for all sectors of the economy but sustainable economic growth can only be achieved by a robust turnaround in the goods producing and manufacturing sectors. Service sector jobs offer lower wages, tend to be highly correlated to retail consumer spending and positions are often transient in nature. Small and Mid-Sized Enterprises (SME) is where the highest concentration of service jobs are created and the employment figures bear that out with SMEs accounting for over 124,00 jobs created in March. 

Large businesses added 67,000 jobs during the month. The balance sheets of large corporations are strong. The great recession provided large corporates an opportunity to rationalize their business franchise with layoffs, consolidations and prudent cost management. Benign inflation, global market presence, favorable tax codes, outsourcing, low cost of capital and strong equity markets created ideal conditions for profitability and an improved capital structure. The balance sheets of large corporations continue to exceed $1 trillion in cash and it appears that large businesses are beginning to deploy this capital into job creating initiatives. 

The restructuring of the economy continues. The Federal Reserve Quantitative Easing program is ratcheting down. The capitalization of banks has grown considerably stronger with fewer bank failures and only Citibank failing the last round of FDIC stress testing. Most believe this will free more capital for loans to SMEs. This coupled with the emergence and development of nascent alternative credit channels bodes well for future job creation. 

Macroeconomic Factors: 

The principal macroeconomic factors confronting the economy are the continued widening of the wealth gap and the creation of low paying jobs. The unemployment rate continues to decline and signs of a recovering housing market are encouraging. Tax policy, fiscal stability of state and local governments and the underfunding of deteriorating civic infrastructure continue to vex economic recovery strategies. 

In the United States, as the 2014 election cycle proceeds, acute partisanship will undermine the political will to address recovery initiatives with legislative action. The Affordable Health Care Act (AHCA) is being implemented against a backdrop of continued partisan strife. The AHCA should drive long term economies in public health care. The goal of seven million program enrollments was achieved by the March 31 deadline. Enrollment levels confirms the pent up market demand for affordable health care. Going forward a nagging concern of the AHCA is the quality of the experience pool of enrollees and the consistent payment of monthly insurance premiums to fund the program. The complex rules for business participation in the program creates a level of uncertainty of how the AHCA will affect SMEs. 

Globally, political uncertainty in Eurasia is an emerging risk particularly for the European Community which is just beginning to emerge from its recession. The cooling of the BRICS as global economic drivers seems to have run its course as is the case with all commodity sensitive business cycles. China's GDP growth is expected to be 7%. This predicted modest growth will tamp down China's role as a principal driver of global growth. 

The volatility of global energy markets remain susceptible to the political stability of OPEC. Political instability in Venezuela and the disintermediation of Russian oil and natural gas supply to the EC may encourage the acceleration of NG , shale oil extraction and refining in North America. 

The Intergovernmental Panel on Climate Change (IPCC) has recently issued a report. The panel indicated that evidence is pointing to accelerated rates of climate change. Though climate change poses significant risk to political stability and economic growth, it also offers opportunities for governments, businesses and communities to engage in mitigation and adaptation initiatives with positive economic benefits. 

Political uncertainty tends to heighten risk aversion in credit markets. The emergence of the US and EC from the distress of the Great Recession and Global Credit Crisis has improved the conditions of global credit markets. Bank stabilization has grown opportunities for increase commercial lending to SMEs. The development of alternative credit channels like crowd funding, micro lending, asset financing is developing to the benefit of the global SME sector. 

Highlights of the ADP Report for March include: 

Private sector employment increased by 191,000 

Employment in the service-providing sector rose 164 ,000 

Employment in the goods-producing sector increased 28,000 

Employment in the manufacturing sector increased 5,000 

Construction employment increase 5,000 

Large businesses with 500 or more workers increased 67,000 

Medium-size businesses, between 50 and 499 workers increased 52,000 

Employment among small businesses less than 50 workers, increased 72,000 

Overview of Numbers: 

The 72,000 jobs created by the SME sectors represents over 65% of new job creation. Large businesses comprise approximately 20% of private sector employment and continues to underperform SMEs in post recession job creation. The strong growth of service sector though welcomed continues to mask the underperformance of the manufacturing sector. The 11 million manufacturing jobs comprise approximately 10% of the private sector US workforce. The 5 thousand jobs created during March accounted for 2.5% of new jobs. Considering the severely distressed condition and capacity utilization of the sector and the favorable conditions for export markets and cost of capital, the job growth of the sector appears extremely weak. The US economy is still in search of a driver. 

The stock market continues to perform well. The Fed taper of QE2 initiative seems to signal a change in fiscal policy principally focused on the troubling dynamics of inflation/deflationary pressures. The IMF forecasts a 2.8% GDP growth rate for the US. 

Interest rates have been at historic lows for four years and despite the QE2 taper adverse conditions in the credit market appear to be benign. The political crisis in the EU has settled down but the long term stability of the currency and European Federation are under severe attack by growing nationalist movements across the continent. 

As the price of agricultural commodities, water rights and food staples continue to trend upward The balance sheets of large corporate entities remain strong. The availability of distressed assets and market volatility has eased. Venture capital and private equity capital formation continues to drive premium asset valuations in numerous tech sectors encouraging business start ups and global entrepreneurship. 

Solutions from Sum2 

Sum2 offers a portfolio of risk assessment applications and consultative services to businesses, governments and non-profit organizations. Our leading product Credit Redi offers SMEs tools to manage financial health and improve corporate credit rating to manage enterprise risk and attract capital to fund initiatives to achieve business goals. Credit Redi helps SMEs improve credit standing to demonstrate creditworthiness to bankers and investors. On Google Play: Get Credit|Redi

Get Credit|Redi

Risk: unemployment, SME, China, EU, small business, QE, Federal Reserve, Citibank, stress testing, manufacturing, BRICS, fracking, inflation, service sector, micro lending, AHCA, Obamacare

For information on the construction and use of the ADP Report, please visit the methodology section of the ADP National Employment Report website.

PwC's Risk in Review 2014

Pricewaterhouse Coopers (PwC) has published its annual Risk in Review survey. Nearly two thousand global corporate professionals representing a broad cross section of industries responded to provide insights into how their organizations meet the challenges of enterprise risk management.

The study was published against the backdrop of an emerging Eurozone recovery, US Sequester driven GDP decline, BRICS vacating the leadership role of global market drivers, the factory collapse in Bangladesh, the political turmoil of the implementation of the Affordable Care Act and Eric Snowden’s revelations of NSA privacy violations. 

The previous year survey reflected the perspective of corporate managers still smarting from the economic effects of the Great Recession and global credit crisis; by anointing financial distress and market uncertainty as the principal driver of corporate threats. This years survey cited technological change, IT risks, regulatory complexity and rapidly changing customer needs as the primary focus of corporate risk management programs.

The survey examined the intimate relation of external risk factors and how the organization has aligned its internal GRC processes to address both external and internal risk. The survey identified the ten most common risk management capability gaps. It also offered an evaluative framework to distinguish corporate risk leaders, early stage adopters and organizations beginning to develop a more formalized risk aware culture. 

The survey is an excellent examination of the components of a risk aware enterprise and a proposed framework to develop a risk aware culture within a commercial enterprise. The survey can be downloaded from the PwC website. 

In future posts we will examine some of the major points the survey raises to promote a more risk aware corporate culture.

Sum2 publishes a series of risk management apps for SME’s. Our leading product Credit|Redi provides a full complement of risk assessment tools to implement a risk aware corporate culture. Credit|Redi generates in-depth financial analysis reports that spot strengths and weaknesses in a company's financial condition. Credit|Redi also provides a series of enterprise assessment applications to monitor risk and determine opportunities for business growth to build a risk aware enterprise that wins the confidence of lenders and stakeholders.

Get Risk Aware on Google Play here. Get Credit|Redi

Get Risk Aware

Risk: GRC, PwC Risk in Review, SME, risk culture, ERM, IT, customer risk, capability gap, risk appetite, change management, stakeholder communication, regulatory risk 

A Taxing Problem: Digital Assets and Global E-Commerce

The Independent reports that Ireland's Chartered Accountants are warning that "new OECD proposals on taxing hi-tech multinational companies will fundamentally change business landscape." 

The OECD has published a draft discussion on companies operating in the digital economy.  The question of determining tax liability for companies with a business model spanning multiple countries is a growing concern for national tax agencies. Outsourcing, offshoring, the use of tax havens and global e-commerce are perplexing tax authorities seeking to enforce outdated national tax codes written before the explosion of the global digital economy. 

The report proposed redefining when and where a company is liable for tax; suggesting a company would have a tax liability in a country where it had a "significant digital presence".

Ireland is particularly sensitive to this issue in wake of it's recent tax dispute with Apple and other multinationals with operations in the tax friendly EU nation.

Revenue recognition in a rapidly changing global economy with a growing preponderance of digital assets, intellectual capital and digital specie like Bitcoin raise important questions for corporate managers, tax authorities and regulators. Defining revenue, asset types and national jurisdictions of taxing authorities pose great challenges for tax professionals, corporate management, legislators and revenue agencies. Leveraging global disparities in national tax laws to arbitrage local tax codes is the mark of shrewd treasury management. It can also raise questions with tax agencies.

SME's involved in global digital e-commerce must become aware how the evolving tax code opens the door to tax controversy that rises audit risk factors from national revenue agencies.

Sum2 developed the IRS Audit Risk Program (IARP) to provide SME’s an audit risk assessment tool to keep the taxman away from the door. IARP outlines tax code focus areas where caution should be exercised when filing tax returns. Business owners can rest a bit more easy that audit risk is being effectively managed. Get Tax Audit Aware with IARP.

Get Tax Aware

Risk Bitcoin, CPA, digital assets, e-commerce, EU, global economy, IARP, income repatriation, Irish Independent, IRS, multinational, OECD, off-shoring, outsourcing, revenue recognition, risk: tax, sme

Anatomy of a Tax Audit

Its that time of year again.  April 15th looms ever larger as small businesses scramble to meet the IRS  tax filing deadline.  For many small businesses, tax filing is handled by a trusted accountant or business adviser. That tends to take the trauma out of this annual exercise in pain.  But even with the help of a tax professional the angst of the season is always a pressing concern.   

The enclosed infographic published by oBizMedia, displays some startling data about audit risk and its cost to small businesses.  For example in 2011 over 50,000 small businesses were audited by the IRS.   The IRS recovered over $30 billion in taxes as a result of auditing business returns.  A considerable sum of money that small businesses once counted as profits now paid to the tax man.  That can turn a good year of business into a not so good year.  

Its only natural that during times of economic adversity all business owners want to keep as much as they can.  During these times some business owners may be a bit more aggressive in its tax strategy to minimize tax liability.  It's a risk that unfortunately can come back to haunt SME's with additional tax liabilities, fines, penalties and costly litigation.

As the tax filing deadline approaches it is important to keep in mind the various audit risk factors certain deductions raise with the IRS. In the past the agency has published guidelines agents utilize to risk profile tax returns. Claiming these deductions heightens the risk of an audit by the IRS. It is a critical that SMEs are aware of these audit risk factors and incorporate this intelligence into its tax filing strategies. 

Sum2 developed the IRS Audit Risk Program (IARP) to provide SME’s an audit risk assessment tool to keep the taxman away from the door. IARP outlines tax code focus areas where caution should be exercised when filing tax returns. Business owners can rest a bit more easy that audit risk is being effectively managed.  Get Tax Audit Aware with IARP.

Get Tax Aware   

risk: tax code, tax audit, regulatory compliance, accounting, legal,

*Be sure to consult with your tax adviser for guidance on tax strategy and audit sensitivities specific to your business,  

Cultural Revolution at Apple: Steve Jobs Ego

This Marketplace interview is relevant to the tricky issues surrounding the transformation of business culture of SME's. Since the death of Steve Jobs, Apple has been struggling with transitioning its corporate culture into a post Jobs era. 

SME’s whose business brand and culture is often associated with the founders personality and ego creates transition problems when the founder leaves or refuses to alter the business model due to the inability or reluctance to change themselves. 

Apple has been phenomenally successful, and continues to be due in large measure to the culture of product and marketing innovation Jobs created. Apple remains incredibly profitable. It has a portfolio of “insanely great, world changing products”, a loyal client base and a healthy product pipeline. So some may ask, why make changes if it ain’t broken? 

Well in a sense Apple already is broken. Apple’s products and marketing panache has always been identified with Steve Jobs. In the public mind the Apple brand is synonymous with Steve Jobs. Jobs’ demise immediately decoupled Apple from his earthly presence and future managerial control. 

Though his entrepreneurial drive and spirit of innovation continues to be central to the Apple ethos, over time his absence diminishes its influence as market conditions forces changes on the company. 

I see this pattern often repeated in my work with SMEs. Beth Wood, from Mass Mutual put it well when describing family owned businesses "often steeped in tradition and not as flexible to change, tend not to have formal plans in place to respond to crisis. When confronted with challenges they just can't react fast enough.” 

Ms. Wood makes an interesting observation about the importance of business agility. The need to assess the rapidly changing market dynamics is a critical exercise that SMEs must undertake. Business as usual will not get it done. SMEs must begin to transform to better align its business model to rapidly changing markets. 

Family owned businesses or company cultures closely associated with a “cult of the principals personality” have difficulty overcoming the gravity of generational culture that inhibit and resist change.  SMEs will survive and thrive if they can identify and adapt to the emerging opportunities current business cycle create. 

A challenge for older SME's is to encourage cultures of innovation that fortify the will and resourcefulness to promote change. These qualities are key ingredients for sustainability and growth. Business as usual is giving way to a "New Normal," where adaptability to structural market changes drive asset appreciation and wealth creation. 

We honor the contributions and virtues of visionary business leaders like Steve Jobs. But we cannot afford to make them sterile icons that chain us to the nostalgia of the past. 

Get risk aware with our business assessment apps on Google Play. All of our Mobile Office apps run on MS Office and Android. Our apps help SME’s assess risk factors to profit from the opportunities shifting markets present. 

Get business assessment apps here:  

Get Risk Aware

risk: transition, exit strategies, change management, innovation, sustainability, sme

QE Taper Risks Spike in Global Interest Rates

Forbes Reports:

3/17/14

"...The Federal Open Market Committee (FOMC) expects the taper of the Quantitative Easing to continue. Economists expect the Federal Reserve to cut another $10 billion from its monthly asset-purchase program at its two-day monetary-policy meeting, lowering its monthly bond buys to $55 billion.

The FMOC meets Tuesday and Wednesday, and it will be the first one overseen by new Fed Chair Janet Yellen. Bond traders will focus on the commentary that accompanies the decision, which is slated to be released Wednesday afternoon. Additionally, during this meeting, the Fed will release its new economic forecasts..."

The Feds reduction in asset purchases, (primarily mortgage backed securities from banks and market makers) reduces market liquidity and cheap source of funding for banks. The goal of the Fed's QE has been to buttress the capital structure of banks to assure liquidity in credit markets. The QE program has been successful in maintaining low interest rates. This has benefited SMEs by keeping the cost of capital low and credit channels open.

Low interest rates have helped SMEs to borrow cheap money. Low interest rates have also benefited consumers by keeping borrowing rates for mortgages, car loans and credit cards low. This has stimulated market demand for SME products and services. QE has been a major market support for SMEs as the post Great Recession global economy continues to restructure. 

SME's must assess how QE tapering will affect their capital structure, business model and client purchasing power. It's critical for SME's to assess how these subtle changes in the market landscape will impact numerous aspects of the business.

Credit|Redi is a critical tool used by SME managers to determine financial health, assess business factors to improve profitability and demonstrate creditworthiness to lenders to fund business growth.

Download Credit|Redi on Google Play here. Get Credit|Redi

Risk: credit risk, sme, FOMC, interest rate, cost of capital, QE, Quantitative Easing, FOMC, Fed, Federal Reserve, Great Recession, Janet Yellen, Forbes

Risk Management Critical for Business Sustainability

Nigeria Business Day Reports:

March 12, 2014

Corporate business institutions have been advised to utilise the services of insurance brokers for effective risk management and business sustainability.

Ayodapo Shoderu, president, Nigerian Council of Registered Insurance Brokers (NCRIB) gave the advice when the Chairman of Geepee Group of companies, Prakash Vaswani paid a courtesy visit to the NCRIB Secretariat in Lagos.

Shoderu said the fortunes of businesses and their sustainability are determined by risk management strategies put in place by management, of which insurance is pivotal.

“The extent of risk exposures by most business concerns, especially in the changing global environment calls for proactive initiatives by business managers and this will determine their continued existence” Shoderu noted.

Risk transfer at times may not be the prefered  method to mitigate risk.  Its possible the risk insurance premium would to too expensive to purchase.  Or perhaps the SME is in an active search for risk factors to monetize risk assumption in search of business gain.   Whatever the appetite for risk assumption by an SME may be, the advise offered by Ayodapo Shoderu is quite correct.   Risk management assessment is critical to business sustainability.  Particularly for SME's whose modest balance sheets may not have the ability to absorb the shock of a large or a series of smaller multiple risk exposures.

Assuring business sustainability through sound risk management practices is the goal of all Sum2 products. Successful managers of risk aware SME's have been using our risk management products since 2002.

Get risk aware with our just released S3: SME Risk Seismograph, an early warning and opportunity discovery app on Google Play.

Get S3 on Google Play

 Risk, sme, sustainability, risk transfer, risk appetite, early warning 

ECB Preparing Deflation Measures

Dow Jones Market Wrap Reports:

The European Central Bank is preparing additional measures should the euro zone slide into deflation, its president said Thursday, making clear that the central bank is concerned that muted price pressures could undermine the currency bloc's fragile recovery.

Mario Draghi also added a powerful voice to increasing concerns among policy makers that the strength of the euro is affecting inflation. That could prompt the ECB to potentially implement measures designed to weaken the common currency.

While the risk of deflation in the euro zone is quite limited, the longer that inflation in the monetary bloc remains low, the higher the probability of such risks emerging, Mr. Draghi in a speech in Vienna.

A deflationary spiral in the EU mirrors the two decade long economic stasis of Japan. The devaluation of euro based assets will be correlated to a devaluation of the euro currently under consideration by the ECB.

SME's with supply chain, market exposures or asset valuations linked to a deflationary trend in the EU need to be wary of this emerging macroeconomic risk factor.

Download Sum2's Macroeconomic Risk and Event App (MERA) on Google Play to assess your company's macro risk factors and what you can do to profit from them.

GET IT HERE: MERA

Risk: currency, economic, political, market, supply chain