Risk Assessment – The World’s Riskiest Companies

Amidst the global recession of the last two years, the news of profit losses, job cutbacks and business closures soon became a daily occurrence. While the meltdown of the global banking sector spearheaded the headlines, the ensuing impact on our daily lives really took effect as the recession hit our retailers hard.

With everyone across the world tightening their belts, it became something of a no-brainer that retailers would suffer. Independent retailers all but ceased to exist, as even some of the world’s most recognized and respected brands fell apart under the pressure of the economy. Among some of the many, many casualties were outdoor outfitter Eddie Bauer and skincare specialists Crabtree & Evelyn, with both of these among those that have either been reorganized or liquidated since 2008.

But, according to Forbes, despite two years having passed and the economy (by and large) showing serious signs of recovery, the retail sector continues to face a rather murky outlook. While the early, hectic post-crash devolution of the sector may have all but dissipated, hundreds of business remain on “high risk alert” and continue to “flash financial danger signs” – and its not just the retail sector who are feeling the brunt.

While retailers such as Zale – the Irving, Texas based jewelry retailer – and drugstore chain Rite Aid ride high on Forbes’ “Risk List”, the top end is populated by companies from all industries – including telecommunications, the energy sector, the financial services industry and shipping and freight services.

The Forbes Risk List, as rated by the Accounting and Governance Ranking system, collates those businesses that are struggling to perform in the current economy. The ranking system is defined as a measure undertaken by Audit Integrity of the transparency and statistical reliability of a corporation’s financial reporting and governance practices. According to its output companies ranked as either Very Aggressive or Aggressive are much more likely to face class action of litigation and financial restatements, and – most crucially – more likely to suffer sever equity loss.

Of course, if the recession of the last two years has taught us anything, it’s that leading in tough times takes its toll of even the toughest CEO; and in the world of business leaders, there have been many a casualty along the way. (Think Fred Goodwin’s epic downfall as CEO of RBS).

But, for all those leaders who fall at the recession-hurdle, there are leaders who are capable of pushing forward and of leading their company to the foreground of business success. In a recent broadcast on executive business channel MeetTheBoss.tv, for instance, Steve Odland, CEO of Office Depot, explained just why the retailer had remained on top – despite an all-together rocky road during the economic crisis.

In fact, at one point during the crisis, Office Depot stock was pushed as low as 60¢ – though it has now returned to the normal levels, and the company is again riding high. “Anybody who operates in a competitive environment has to believe in themselves and has to believe in the team around them else you simply couldn’t be successful,” explains Odland.

Perhaps some of those organizations of Forbes’ list have passed the ‘Last Exit’ sign on the Highway to Meltdown, and while we are not one to suggest that the blame for such dire straits lies with these companies’ respective CEOs, great leadership – at any level – remains critical to business success. Just ask Steve Odland.

End of the road or time to rethink those leadership strategies? Visit MeetTheBoss.tv for many more leadership lessons from those at the top of their game.

Topics:

Retail, Financial Services, Operations