Protect and mitigate
Proactively identify, assess and manage business risks
Risk can be hard to foresee and preparation is the best risk mitigation strategy an organization can have. As the economic and regulatory environments continue to evolve, organizations face emerging business risks that challenge traditional strategies and assumptions.
The accelerated shift to digital operations as a result of COVID has made organizations more susceptible to technology- and cyber risks. Many organizations have also witnessed the profound impacts supply chain weaknesses can have on their operations.
Meanwhile, political-, regulatory-, tax-,environmental and financial risks have become a focal point for governments and business across the globe. In order to build resilience into operating models and help reduce or manage these threats, organizations need to develop a risk mitigation plan which will help to:
- Assess and quantify risks using a robust enterprise-wide framework
- Implement early detection systems and protocols
- Define risks tolerance at all levels
- Include third-party providers as part of all risk reviews
- Develop plans and implement protocols for mitigating risks and communicating to stakeholders should an issue arise.
Insights and resources
Accelerate
The key issues driving the audit committee agenda in 2024
Enabling value creation to sustain future growth
A guide to creating and preserving business value
Improve your organization's effectiveness in detecting fraud
With our personalized, anonymous and confidential ethics lines
International developments on the use of NDAs in settlements
An overview of legislative developments with respect to the use NDAs in workplace settlements, around the world
Industry perspectives
Every industry and business faces a unique set of risks and challenges. From global retailers to local governments, technology start-ups to healthcare organizations, our multi-disciplinary teams have insights and tools to help secure your organization.
Fraudcast: Stories of tricks and treachery
A reputation for integrity is critical to safeguarding public trust in your business.
Hybrid hits home
Asset management steadies the course with flexibility, talent, and exceptional service
Managing key risks in deals involving proprietary AI systems
Minimize risks to maximize deal value
How we can help
Whether your organization is facing unique market and jurisdictional risks, looking to offset workforce and people risks, evaluating impacts of technology on operations or is looking to fortify against a cyberattack, we can help.
Our professionals can deliver a risk assessment and management plan as well as implement risk mitigation protocols to help protect your organization.
Accelerate
The key issues driving the audit committee agenda in 2024
Basic principles and bold progress: The evolution of the audit committee in a rapidly changing world
The business environment is changing dramatically – and at rapid speed. As some organizations may struggle to adapt in the near term, the technological, societal and regulatory changes will have far-reaching and lasting effects on financial reporting, business models and organizations’ interactions with society.
This past year, interest rates continued to rise new regulations were introduced environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) issues remained top of mind and we saw excitement and trepidation over the explosive rise of generative AI (GenAI). Audit committees play a vital role in overseeing the impact and risk these changes may bring, but to shepherd their organizations into the future, they must be prepared to evolve.
The traditional roles and skills of the audit committee have never been more crucial, but the context in which they’re used is shifting―in some cases, at breakneck speed.
Audit committees need to think about liquidity
Interest rate is now at levels not seen in 20 years—and businesses are feeling the pinch. Business insolvencies for the year ended August 31, 2023, increased by 36.7% compared with the previous year1 and the major banks are increasing their provisions for credit losses.
Cashflow management will remain the litmus test for organizations, meaning audit committees must monitor it closely.
AI might change everything
While many people are excited about the possibilities of AI, audit committees need to think bigger. For example, introducing GenAI to an organization is a complex undertaking that requires the proper infrastructure, policies and procedures and the growing use of AI raises questions about its impact on people and how we view intellectual property.
Audit committees must assess the business case for AI in their organizations, look at data quality, rethink how intellectual property is viewed, understand stakeholder impacts and prepare for upcoming regulations.
Audit committees will need to look at their talent
ESG, DEI and new technologies like AI are not new issues for audit committees. But they’re bringing new regulations and changing how organizations view risk. The ongoing evolution of these concerns requires audit committees to move their knowledge of these areas beyond awareness to a point where they can think critically about them.
Audit committees must look at their own talent, training and succession plans in addition to the organization’s. To govern within this new context, audit committees must embrace members with new skill sets and embark on a continuous learning journey.
Enabling Value Creation To Sustain Future Growth
Organizations that survived the worst of the pandemic are braced for yet more change, with 86% of CEOs believing that a recession will happen over the next 12 months, and 73% saying it will upend anticipated growth over the next three years. Soaring inflation and interest rates, ongoing supply chain issues, global unrest and a tight labour market are creating a perfect storm of conditions for an economic slowdown.
Leaders are under pressure to reduce costs and improve their cash position. But if not done well, this can come at a significant cost to the business. Hence, it’s essential to define a strategic approach to value creation in order to confidently achieve measurable improvements to your revenue, operating margins, cost structures and working capital positions.
Value creation is about uncovering sustainable efficiencies in how you operate and how work gets done to weather external forces beyond your control. It’s about becoming responsive and agile, with business, technology, finance and operations working together in harmony. Our Seven levers to business value creation guide outlines a number of possible value creation levers and actions and can help your organization start thinking proactively about its approach and build resilience.
We can help organizations with their value creation efforts by:
- Completing a rapid performance review to identify opportunities and build a roadmap
- Analyzing data to build an accurate picture of operational, financial and tax positions, as well as cashflow
- Unlocking value through a range of performance transformation offerings
- Achieving measurable improvements to revenue, operating margins, cost structures and working capital positions
- Reducing complexity to enable faster decision making and improve responsiveness to changing market conditions
- Building capabilities for value creation that help maintain and improve margins, and sustain improvements over time
Improve Your Organization's Effectiveness In Detecting Fraud
We are currently living in an economic and social environment that is conducive to fraud due to inflation and the rising cost of living, increasing interest rates, hiring freezes and slowing career progression, as well as growing pressure to maintain a certain level of sales and profits.
A whistleblower line can help protect your assets
Did you know that 42% of frauds were detected through members of the organization, which is nearly 3x as many cases as the next most common method?
Personalized, anonymous and confidential
Desa’ whistleblower lines are designed to increase your organization’s effectiveness in detecting fraud, corruption and other unethical acts by providing your employees with an anonymous and confidential means of communication so that they feel free to share their observations.
Whistleblowing is the most common way to expose fraud, which is why having an anonymous and confidential whistleblower line is so important. Our integrated management platform makes it easy to track whistleblower reports, regardless of the mechanism used by your employees.
International developments on the use of NDAs in settlements
Part of embracing equity on International Women’s Day includes ongoing work to effectively address discrimination and harassment at the workplace. Over the past 5 years, there has been increasing advocacy the US and abroad, for laws that protect survivors of discrimination and harassment – particularly with respect to placing limitations on the use of non-disclosure agreements (“NDAs”). Recently, on February 9, 2023, the Bar Association passed a resolution discouraging the use of NDAs to silence whistleblowers and victims of abuse, discrimination and harassment.
This article describes the use of NDAs in settlement agreements, recent legislation and abroad that limits the use of NDAs in cases involving discrimination and harassment, and the potential impact of these changes on the legal system.
Privacy, Privilege And The Use Of Ndas In Resolving Workplace Misconduct Claims
Laws that enable parties to arrive at private settlement agreements promote the resolution of workplace misconduct claims without the significant cost, resources and emotional energy of an adversarial legal process of a trial, hearing or arbitration. It is a very common practice for lawyers to include some form of an NDA in the terms of a settlement agreement, whether or not such an agreement is specifically requested.
Given how common the practice has become, lawyers do not always stop to consider the purpose of including NDAs as a standard term in settlement agreements, what they are intended to address, and their impact on survivors and the general public.
The United States Congress passed the Speak Out Act (“SOA”) which came into force in December 2022. The SOA prohibits pre-dispute NDAs and non-disparagement clauses relating to sexual harassment or assault allegations. This legislation is intended to prevent employers from having employees enter into NDAs or non-disparagement clauses before a dispute arises. This can sometimes be seen during the hiring process, in severance and/or settlement agreements.
The SOA will void any such agreements or clauses if entered into prior to a dispute.5 Several US states have also imposed restrictions on NDAs covering workplace discrimination and harassment. These states include California, Maine, Washington, Oregon and New York.
With the passage of the SOA, it is expected that more individual states will follow suit and pass their own laws with respect to NDAs in the context of discrimination and harassment.
Fraudcast: Stories Of Tricks And Treachery
A reputation for integrity is critical to safeguarding public trust in your business. Unfortunately, fraud and misconduct can seriously undermine these efforts.
Many businesses across experienced some form of fraud over the past year as scammers grew increasingly sophisticated. But how does fraud occur and what can business leaders do to navigate and reduce risks? In this series, members of our Forensic Services team unravel fraud cases in the news to uncover what happened and explore lessons learned.
Each episode, our hosts are joined by a leader with first-hand experience and knowledge on fraud cases to help organizations navigate risks, gain valuable insights, and implement effective strategies for prevention and mitigation. Desa forensic services team can help you monitor, detect, assess and respond to risks accordingly to protect your company’s reputation. If you would like to discuss how we can help you, please don’t hesitate to reach out.
Hybrid Hits Home
The workplace revolution prompted by the COVID-19 pandemic has become entrenched across industries, and asset management is no exception. Desa Asset Management Opportunities and Risks survey helps assess how top asset management firms are adjusting to today’s evolving workplace and tight labour market.
Flexibility as a recruitment tool
Flexible work arrangements have long been a major draw for top talent across sectors. That criterion has only grown stronger since the pandemic proved beyond a doubt that remote work was possible and could be done well. Almost all the asset management companies we spoke to are using hybrid work arrangements as a way to attract and retain talent.
While the bulk of asset management firms we consulted are using hybrid arrangements to recruit and retain quality personnel, many are also attracting staff with flexible work hours. Half are offering even more flexibility by introducing work from anywhere policies.
While some sectors have experienced layoffs in the past few months, it’s still a challenging labour market and competition is high. Business leaders recognize that they need to be responsive to employee demands to assemble and maintain a talented workforce.
Depending on position and seniority level, we may see employees start to self-select based on their personal preference for hybrid, office, or fully remote work and work experience. Asset managers facing a shrinking labour force in a tightening economy may choose to leverage flexible work arrangements to meet employee expectations without relying on salary increases.
Future Benefits From A Smaller Real Estate Footprint
The “work-from-home” pandemic experience demonstrated one thing clearly to asset management firms across the country: it is not necessary to rent expensive downtown Toronto, Montreal, or Vancouver office space to carry out certain asset management functions. Many back-office tasks can be performed perfectly well remotely and companies are seeing significant costs savings from operating largely virtual or fully remote environments. Whether firms retain their office spaces may ultimately depend on the size and number of employees.
Given market conditions, for instance, a dichotomy may emerge between smaller shops that lean more fully towards the remote model to maximize cost savings, and larger shops that return key functions to the office. At the same time, those mid-size and larger companies will likely continue to explore digitalization for areas that are not core to their value delivery and reduce their real estate footprints accordingly.
Areas that don’t require physical presence or collaboration may be kept or made entirely remote, or even outsourced in cases where the function isn’t integral to the corporate culture.
Hybrid arrangements: A work in progress
Many asset management firms are now deeply entrenched in the growing pains of operationalizing the shift across front, middle, and back offices. Some segments of the industry, including traders and investment bankers, remained in offices throughout the pandemic. Front office investment teams need to collaborate more fully and many have already, or will soon be, returning to the office.
Wherever people work in asset management – front, middle, or back office – they quickly grew accustomed to flexible work during the pandemic.
Most firms are now introducing (or have introduced) hybrid arrangements to maintain company culture and balance internal needs alongside employees’ shifting expectations, with slight differences in approach.
The majority of asset managers we consulted – over 80% – are now requiring workers to come in 1-3 days per week, but are split on whether those days can be chosen by the employee or are designated by the firm. The approach is largely the same for front, middle, and back office employees.
A few companies have opted for fully remote or fully in-office work, though these are outlier positions. This strategy could change if we enter a major recession, in which case larger organizations may feel more comfortable requiring employees to be present in the office.
Even so, that may take some coaxing. Much depends on the individual role and the company culture. Firms that want to return to a predominantly in-office environment may need to explore incentive programs to return to pre-pandemic working arrangements.
Technological solutions
PAs firms stare down a challenging market environment and weigh the heavy expense of downtown real estate, middle and back office functions may be shifted to hybrid or made remote. In fact, the pandemic experience helped many organizations shift their mindset from time spent at work to results achieved.
This new outlook will help the hybrid work model survive. Above all, asset managers will be focused on reducing fee revenue risk and getting costs under control. Many will invest in technology and outsource low- or non-high value activities and functions in the middle and back offices.
As firms ease into hybrid work, they will introduce productivity measurement and workflow software to ensure tasks are done efficiently to a high standard. Firms that take a substantially outsourced, remote or virtual approach could be able to offer lower fees to clients. However, those clients may lose out on the prestige, high-touch, personalized experiences offered face-to-face by salespeople at firms returning to the in-office experience.
There’s a trade-off between models firms will need to weigh the factors depending on the economic outlook and client expectations. For most firms, hybrid work remains a work in progress. We should expect to see some ebb and flow, some trial and error, as organizations test methods and measure their impact.
Individual firms will need to determine what approach or combination makes the most financial sense and best serves their recruitment and retention needs.
Managing Key Risks In Deals Involving Proprietary Ai Systems
This whitepaper is part of a series focused on how IT can increase deal value and minimize business risks during a transaction. The series will highlight principles that the Technology M&A team leverages to help maximize value and minimize risks for clients across industries.
In today’s market, there is a growing trend of Artificial Intelligence (AI), which is intelligence demonstrated by machines, helping modern businesses increase revenue and boost operational savings. In particular, the applicability of AI technologies for a variety of use cases has enabled value creation for organizations across multiple industries, including IT services, health care, cybersecurity, financial services, retail, manufacturing, and transportation and logistics. In recognition of AI’s benefits, private equity firms and corporations are progressively acquiring companies that leverage AI capabilities. According to the Global AI market report published by Drake Star Partners, the M&A activity in AI has experienced sixfold growth since 2015, reaching $12.3-billion in total disclosed transaction value in 2022. While IT services has led in terms of volume of capital invested, cybersecurity has seen the highest growth in deal count with an astonishing compound annual growth rate (CAGR) of 135% between 2016 and 2021. Additionally, insights from a global survey by International reveal 95% of technology leaders at private- and public-sector organizations plan to invest in Web3, 70% plan to invest in 5G and edge computing, 67% plan to capitalize on quantum computing and 54% plan to invest in the metaverse over the same period. All of these technologies rely on AI to power the respective use cases. While AI has increasingly embedded itself into organizational processes, we have seen a number of commercial, technology, organizational and data security risks inhibiting successful value creation in the deal context. Our objective for this whitepaper is to present a framework that would enable buyers to proactively identify and mitigate these risks in the pre-deal due diligence phase, in order to create value from proprietary AI systems after the deal.
