Always Right: Risk Management Leads to ‘Best in Class'
Risks that threaten your business’ viability lurk around every corner. While pursuing opportunities, it is vital for business owners to protect themselves from unforeseen damages and liabilities.
People are quick to sue these days. Lawyers are quick to capitalize. Litigation is the preferred method of conflict resolution. If your business should find itself on the losing end of a lawsuit, chances are your business will be completely wiped out.
Don’t let that happen. Follow these steps for effective risk management, and NEVER admit wrongdoing.
Directors' and Officers' Liability- Directors—who legally have three basic duties: diligence, loyalty and obedience—may be liable for failure to act in accordance with a statute or non-compliance, such as mismanagement, financial losses, wrongful dismissal, employee discrimination or failure to remediate environmental damage.
Ignorance and resignation are not valid defenses and, subsequently, directors may be held liable for nonperformance and board indemnity may not suffice. Providing awareness training in negligence and liability, preventing conflict of interest, establishing formal reporting systems, documentation and legal representative are all essential precautions.
Fleet Risk Management-Most all businesses have transportation operations in some form. Vehicle accidents are the greatest source of loss for many organizations and taking the time to implement fleet loss prevention methods can save time and money. Generally, an employer is liable for the negligence of its employees while they are operating vehicles or equipment on the job.
In addition to purchasing coverage, business must also comply with The Motor Vehicle Safety Act and The National Safety Code. To further protect the company, practice preventative maintenance, create fleet policies and safety manuals, require regular training and publicize safe driving.
Liquor Liability-Deserving particular attention as the holiday season is now upon us, liquor risk management is paramount. Liquor liability covers a range of functions, including liability as server, liability as an occupier, liability as an employer and liability as a sponsor.
To safeguard a business from liquor-related accidents or damages companies should strictly enforce alcohol policies, comply with legislation, obtain permits, publicize policies, regulate consumption and even purchase insurance with higher limits.
Premises Risks: Liability Loss Prevention- Liability loss prevention is any measure taken to prevent or minimize property damage or injury of a third party. While generally common to begin with, liability losses include property that you are being paid to work on, property belonging to people other than clients/customers, injury to clients/customers either on your premises or off premises at a job site and injury to people other than clients/customers who may be in the vicinity of your premises or job site.
By strategically considering all of the potential liabilities faced by your organization, resources can be allocated to operations more susceptible to liabilities. As always, draw up policies and procedures, perform frequent inspections, provide adequate warnings and implement security measures.
Premises Risks: Physical Loss Prevention-Related to liability loss, physical loss prevention can lead to direct premium savings, but a thorough evaluation and cost/benefit analysis should be done before installing physical protections. That said, every business is vulnerable to fire, crime and weather damages. Physical loss prevention starts with compliance in regards to government regulations, codes and standards.
Furthermore, fire detection is mandatory as is education and evacuation procedures in the event of an emergency. On top of commonsense initiatives like emergency codes, reducing everyday risks and designating smoking areas, purchasing sufficient insurance to guard against the unknown is highly advised.
Special Events-At some point, your company will either manage or sponsor an event, and with that responsibility comes liability. The unknown is especially present at events where control is more fleeting than the everyday office environment. Injury risks to employees, volunteers and event attendees are very possible. A company’s reputation may be irrevocably damaged if the event is handled poorly. On the more benign scale, financial loss is a real risk for any number of reasons.
To safeguard the company from such risks, a comprehensive planning phase should outline all potential risks, appropriate accommodations should be made, insurance representatives should be included in the planning and allow for open communication channels between event planners and attendees.
“Best in Class”
Many companies may know that insurance companies do rate individual business, which is used to gauge premiums. However, many companies fail to realize that insurance companies rank companies side by side. To get the best rates and coverage, you can highlight your company’s risk management measures. Insurance insiders call this ‘best in class.’
To reach this class, create a relationship with an insurance representative, carefully prepare the application, included all requested information and document the company’s activities.
Effective risk management will protect not only your company’s assets, but your company as a whole.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.