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The key to enhancing financial decision making is to minimize losses, minimize risk, and link financial performance to shareholder value, according to the three panelists at the November 11 meeting of the Global Finance Roundtable at Gleacher Center in Chicago.
Attorney David E. Mendelsohn, a partner at Piper Rudnick LLP, pointed to a major investigation of routine insurance industry practices launched recently by New York State Attorney General Eliot Spitzer, who charged major carriers with illegal payoffs and bid-rigging. In the last decade, we had the savings and loan crisis and Whitewater. [Spitzer’s investigation] is part of a movement toward a compliance-oriented business environment, Mendelsohn said. Mr. Spitzer is just scratching the surface in creating a more ethical and compliant business environment. And hes not just about remedies and penalties; hes about structural change.
Robert Curtis, senior vice president at Zurich Corporate Solutions, described ways to minimize risk through enterprise risk management. An ideal scenario would be [a firm] that has a large portfolio of intellectual property, where the company doesn’t know of any specific infringement claims that currently exist, but knows the likelihood is high that one of them will be subject to a claim at some point, he said. Thats the perfect situation for this type of approach.
Dennis Aust, AB ’79, MBA 80, managing director at Chartermast Partners, LLC, recommended linking financial performance to shareholder value by using simplified intrinsic equity value versus DCF. You dont need to be an automotive engineer to drive a car, he said. You only need to know a few things about the car to operate it.
Mark J. Kosminskas, AB ’81, MBA 89