Cambridge Global Partners

Pasty Tax: The Great VAT Dilemma

2012-05-29T20:25:00.003+01:00

British government decided to levi 20 percent VAT on cornish 'pasty' - the popular british oven baked snack. The pasty tax, as it was popularly called invited sharp criticism. The Sun newspaper ran a campaign against the government "Who VAT all the pies?".

source: The Sun

UK entered into recession in second quater of 2012. To increase the tax inputs, UK Lord chancellor George Obsborne suggest mechanisms to bring various products and services under VAT regime in budget proposed in March. The campaigners against the change claimed the VAT system is completely in mess and shadow minister Chris Leslie said, "What a chaotic way to run a country. How on earth can you have a budget process that unravels in a day when you've got this kind of shambolic business?"

Picture Source: USA today

Out of all the taxes, the pasty tax was probably most interesting from policy perspective. The tax was scrapped for hot pasties fresh from the oven. The new tax plan will only tax those pasties which were required to be reheated during the day. Let me explain the tax through a case study:

- Roger buys a pasty from 'Greggs - a high street baker' in the morning when the pasty is fresh out of oven - No Tax (GBP 2.50)

- Katrina buys a pasty from Greggs after some time when it comes out of oven and now it is in the process of natural cooling down or lukewarm - No Tax (GBP 2.50)

- I was not in such a hurry to eat the pasty. I buy a pasty from Greggs during the day when pasty is sitting on a hot plate or it required to be re-heated in the microwave - TAX TAX TAX (GBP 3.0)

According to the new law, the pasty which require additional effort of reheating or microwave will attract 20% VAT. The food stall owners and bakeries have welcomed the move. On the other hand, food stall which sells fried fish (they were levied VAT long time back), said system is not fair.

With the policy reversal, Gregg share rose by 9% on May 29th, 2012 (Their share took GBP 30 million beating on March 21st, 2012 when pasty tax was announced).

Nikhil Agarwal

New Spice Trade Route: What Spain can learn from India?

2012-04-20T09:57:00.002+01:00

In the 14^th century, Christopher Columbus commenced his voyages for India and discovered America. Perhaps is the time for Spain to rediscover a new spice trade route and learn from India.

I was recently in Valencia on a big day of street protests against spending cuts and changes to labor rights. News agencies claimed that over half a million people demonstrated across the country during the weekend. The government says that austerity measures are helping to meet deficit target as directed by the EU. On the ground zero, the realities are quite different.

In last two decades, a “Spanish fairytale” had been inspired by the American growth fueled by the vibrant housing market. From 1995 to 2011, Spanish economy on average grew by 0.65 percent per annum, reaching a historical high of 1.53 percent in 1997 and low of minus 1.60 percent in 2009. The Spanish housing market grew steadily from 1995 till 2007 before crashing down in 2008 in the midst of American crisis. The housing market shutdown created rippling effects on other Spanish industries, resulting in an unprecedentedly deep economic crunch

Dr Kiron Ravindran, Assistant Professor at the IE Business School in Madrid shared with me his experience of witnessing Spanish crisis in the past year. According to him, current unemployment rate is around 23%; shockingly, among the youth, it is over 48%. Practically every second Spanish youth is jobless with the little hope in a short term. He shared how one of his friends is filing for bankruptcy and another one has already closed his business and looking for a job.

In contrast, India’s growth story started in 1991 when then government relaxed its policies for foreign investment in support of businesses and industry. Subsequently, in 2000–2011, Indian economy grew on average by 7.45 percent annually, reaching an historical high of 11.8 percent in 2003 (with 1.6 percent low in 2002). Though India was somewhat affected by the global financial crisis of 2008, it was far from being critical. The growth slowed down to 4.98 percent in 2008, and picked up again to 9.1% in 2009.

India’s growth story is linked to several factors:

Rise in the industrial and agricultural productivity
Growth of the middle class – from 8% the total population in 1980 to 22% of in 2010
Investments to education are paying big dividends. From a meager 17% literacy levels in 1950, India has achieved 75% literacy in 2012!
Investments to high-tech and capital intensive industries
Market led economic model where entrepreneur is in the center
Vibrant market space for private and public companies. India boasts over 100 private companies with the market capitalization of at least USD 100 billion
One of the largest R & D hub for multinationals in Asia
Largest English speaking workforce in the world

In our opinion, Spain could learn from India on the two key factors – Education and Service industry:

1. Capacity building and skill development: Continuing education and skill building is one of the key drivers for economic growth. Indian education system is the world’s second largest after the United States. India produces annually almost a million engineering graduates. The government announced a 24% hike for education in its 2011budget. According to some reports, there are significant challenges about the employability potential of the graduates due to the lack of new-age business and technical skills. To overcome these challenges, private education providers are helping to prepare graduates to be ‘industry ready’. Indian national government has had ‘let-go’ the education from the individual states, allowing private education providers to compete in the free market. In contrast, although Spain spends a decent amount on education (approximately 4.5% of GDP), over 80% of the Spanish education system is under the government control, providing little scope for the innovation. Spanish education system could involve more private initiative, thus creating new opportunities that ensure competitive advantage for their graduates when it comes to the industry‑ready skills and employability.

2. Development of the near-shore capabilities: Cost of operations and wages in Spain are somewhat lower than for its EU counterparts. Spain can take advantage of such cost arbitrage by developing near-shore service capabilities, for example by collaborating with the Indian outsourcing companies. Indian ITC companies are always on the look up for suitable partners, especially as it relates to the hosting of their near shore centers. Indian companies that tried to setup their operations in Hungary, Ireland and Poland have had little success due to the lack of local support and, especially, well trained and dedicated labor. Spain’s economy can leap forward by providing skilled resources to setup near shore centers of industrial and service excellence.

A road to the economic prosperity is tough, long and sometimes bumpy. The Indians have learnt the hard way what the Europeans might have forgotten, that the prosperity mainly comes from encouraging the private initiative, rather than by raising regulatory barriers. Perhaps now it is the time for Spain to re‑discover the “spice trade route” to the intellectual riches of the South Asia.

About the Author:

Nikhil Agarwal is President and senior partner of Cambridge Global Partners (CGP), an international consulting firm.

Their profile is available at: http://www.cgpworldwide.com/team/nikhil-agarwal

Sustainable Transparency using ICT

2012-03-21T14:42:00.002+00:00

As an international issue, transparency came to prominence after World War I in the post-war negotiations. It took considerable time for many nations to pursue transparency. In the mid-1980s, only 11 nations had freedom of information laws, but by the end of 2004, 59 nations. Transparency and the right to access government information are now internationally regarded as essential to democratic participation, trust in government, prevention of corruption, informed decision-making, accuracy of government information, and provision of information to the public, companies, and journalists, among other essential functions in society.

Government transparency generally occurs through one of four primary channels (Piotrowski, 2007):

proactive dissemination by the government;
release of requested materials by the government;
public meetings; and
leaks from whistleblowers.

Traditionally, there are three types of anti-corruption approaches (Shim & Eom, 2009):

1) Administrative reform. Administrative reforms are the most commonly used approaches, primarily through the enhancement of the quality of government bureaucracies to ensure that a watchdog agency or structure exists to officially monitor government behavior. Another common element of administrative reform is the creation of merit based hiring and promotion for government positions, which feature formalized rules of conduct, accountability, and responsibility, sometimes learned from corporate approaches.

2) Law enforcement. Law enforcement approaches often compliment administrative reforms to ensure that an appropriate system for punishing corruption is in place. While administrative reform lowers opportunities to take bribes, law enforcement greatly increases the potential costs and punishments for taking bribes.

3) Social change. The social change approach is based in the idea of reform through social empowerment of citizens by allowing them to participate in institutional reform movements and by cultivating a civil, law-based society as a long-term deterrent to corruption. By changing cultural attitudes that have been accepting of corruption, citizens can ultimately protect themselves from corruption.

ICTs offer countries a new approach to creating transparency and promoting anti-corruption. ICTs can reduce corruption by promoting good governance, strengthening reform-oriented initiatives, reducing potential for corrupt behaviors, enhancing relationships between government employees and citizens, allowing for citizen tracking of activities, and by monitoring and controlling behaviors of government employees.

To successfully reduce corruption, however, ICT-enabled initiatives generally must move from increasing information access to ensuring rules are transparent and applied to building abilities to track the decisions and actions of government employees. Taxes and government contracts are areas where e-government has been seen as a clear and successful solution to corruption problems in many nations, including such examples as:

• India: putting rural property records online has greatly increased the speed at which the records are accessed and updated, while simultaneously removing opportunities for local officials to accept bribes as had previously been rampant. The Bhoomi electronic land record system in Karnataka, India, was estimated to have saved 7 million farmers 1.32 million working days in waiting time and Rs. 806 million in bribes to local officials in its first several years. Before the system, the average land transfer required Rs. 100 in bribes, while the electronic system requires a fee of Rs. 2.

• United States: has creating sites that allow access to the data of government expenditures, for stimulus dollars (www.recovery.gov), general funds (www.usaspending.gov), and information
technology funds (www.IT.usaspending.gov) sites, which are intended to promote public monitoring of government spending for faster identification and elimination of wasteful projects.

• Chile: the ChileCompra e-procurement system has been used to allow government officials and citizens to compare the costs of bids to and services purchased by the government. The system saves approximately $150 million US annually by preventing price fixing or inflation by corrupt officials and contractors. In addition to reducing corruption, this system expanded the number of small businesses that could participate in the government bidding process.

• Greece: Beginning October 1st 2010, all Ministries are obliged to upload their decisions on the Internet, through the «Cl@rity» program. Cl@rity is one of the major transparency initiatives of the Ministry of the Interior, Decentralization and e-Government. Henceforth, the decisions of the public entities can not be implemented if they are not uploaded on the Clarity websites, each document is digitally singed and assigned a transaction unique number automatically by the system.

The question is to create sustainable practices for transparency. Key factors that may influence the extent to which ICTs can create a permanent culture of transparency include:

• ICT access. The wider access to ICTs in a society, the greater connections between different parts of a society. More social interconnectedness means greater ability of members of the society to work together to promote social benefits like transparency.

• Trust. Research has shown that the provision of greater access to government information and increased transparency through the use of ICTs increases trust among citizens.

• Empowerment. As detailed above, using ICTs to increase citizen engagement makes the citizens empowered to participate in openness initiatives and to promote cultural support for transparency.

• Social capital. The social networks and affiliations within a society that can collaborate to promote social good – known as social capital - benefit from increased access to information through ICTs.

• Bureaucratic acceptance of transparency. Any ICT-enabled transparency initiatives will be far more likely to have a broad cultural impact if they are embraced and actively used within the government bureaucracy. Further, this acceptance must be demonstrated to citizens.

Comments welcome.

Nikhil Agarwal
nikhil.agarwal at cgpworldwide.com

acknowledgement: Thanks to Michalis Tolkas at University of Edinburgh for his inputs.

Risk Pooling

2012-01-13T19:56:00.001+00:00

Risk Pooling is linking the uncertainty of individuals into a calculable risk for large groups.

Let us try to understand it with an example: There could be chances of widespread dengue fever in Pune during monsoons. As per the health department estimates, out of every 1,00,000 people in the Hinjewadi area of Pune, only 1,000 may contact dengue.

The health department has following information:

An event but which might occur in future – Dengue
Population size which can get affected – 1,00,000
Calculable risk – 1000 (1% of population)
Legal risk

This information can help us in making a risk pool. Assume the cost to be Rs 500 per illness, then insurance company can insure 1,00,000 members of the group against the Dengue fever, (500* 1000 = Rs 500,000/total population) or you can say Rs 5 per person. By agreeing to pay the cost of each sick person in exchange of the Rs 5 payment (Premium), the insurance company has effectively pooled the risk of the group.

In other words, a risk pool is one of the forms of risk management mostly practiced by insurance companies. Under this system, insurance companies also come together to form a pool, which can provide protection to insurance companies against catastrophic risks such as floods, earthquakes etc. The term is also used to describe the pooling of similar risks that underlies the concept of insurance. While risk pooling is necessary for insurance to work, not all risks can be effectively pooled. In particular, it is difficult to pool dissimilar risks in a voluntary insurance market, unless there is a subsidy available to encourage participation.

In US, health insurance risk pools are special programs created by state legislatures to provide a safety net for the "medically uninsurable" population. These are people who have been denied health insurance coverage because of a pre-existing health condition, or who can only access private coverage that is restricted or has extremely high rates.

Do write to me if you wish to discuss other cases of Risk Pooling.

Ruchi Agarwal
ruchi.agarwal (at) cpgworldwide.com

Who is the Carrier of Risk - Insurance Companies or Common Man?

2011-12-09T16:51:00.001+00:00

From last 10 years, I am witness of motor third party liability insurance pity condition in India.

Motor third party liability insurance is mandatory under section 166 of the Motor Vehicle Act 1988 in India. Since the act was passed, every insurance company has to compulsorily accept the third party liability insurance. Very soon, it becomes the biggest roadblocks in the progress of Indian insurance companies’ profits. The reasons were huge claims especially in case commercial vehicles motor liability, long tailed in nature – generally takes 7- 8 years to settle, unpredictable awards made by the courts, no limits placed by Motor vehicle act on the awards and as a whole the motor third party liability became riskier and capital intensive for the insurers day by day.

The issues were exaggerated in the year 2005 when regulatory bodies started receiving denial from the insurance companies to insure commercial vehicle for third party insurance. In April, 2007, regulators came up with the solution to the problem and introduce Indian Motor Third Party Insurance Pool (IMTPIP) for the commercial vehicle. Afterwards, the pool member insurers have started accepted commercial motor liability Insurance but it did not end their problems. In the next 3 years, the pool generated Rs 673 crore losses especially in commercial liability claims which were showing the losses of 470 crore in the year 2008-09 increased almost 4 times from last year claims. It was clear evident from past data and with the current premium; the pool will become unsustainable in near future.

The recent committee report by IRDA on third liability pool gave solution to the critical issues of insurers. The insurance companies will now be able to decline the risk under the commercial motor liability in case it does not fit under their underwriting criteria or they are not capable of underwrite the risk. The denial of the risk will not end the insurance company responsibility, the same insurance company will act as policy servicing underwriter for GIC who will accept the risk in such cases. GIC (General Insurance Corporation), who is the only reinsurance company in India, will directly underwrite such risk through its separate website. A nodal officer will be invited from each insurance company to handle and give proposal number in each such case. In all the cases whether insurance company accept the risk or decline the risk, the dream to cover 100% motor vehicle insurance can become true. Now the white elephant of the Indian insurance industry has got some other way to fund the expenses.

Are you really convinced that it is the solution of the problem? Atleast I am not !!

The major lapse here is in the root cause analysis, whether the problem lies -

· In settlement of claims

· Non-issuance of the policy

· High claim ratio of motor industry

· Bad emergency management services in the country

· Long claim settlement time taken by judiciary body

As per the WHO, India has the highest road accidents in the world.

Image credits: (http://www.dw-world.de/dw/article/0,,5519345,00.html).

There are 24 life and non-life insurance companies in India (as per IRDA data 2011). If all insurance companies in India join hands together and make a common pool or NGO for Emergency Medical Services (EMS) rather than motor third party claims, I think the country, common man as well motor third party insurance industry all will be better served.

Comments are invited.

Ruchi Agarwal,

MBA, FIII, ACII

Borderless World: Vision 2100

2011-12-02T13:33:00.001+00:00

We are now 7 billion people on earth and counting ......

Do you know which is the third largest country in the world with over half a billion people only next to China (1.4 B people) and India (1.3 B people)? Tricky question …… ah ha ….. It is Facebook, a social networking portal having more than 800 million users. Mark Zuckerberg can easily be elected as the President of ‘Facebook Country’ having 800 million citizens …… Mr. Obama are you listening !!

Picture credit: Tom Cruise Movie Minority Report

Internet is fast changing our world for last 20 years. There are around 2.5 billion active users on Internet (30% of world population), with top 20 countries making to 75% of the of the total usage. In most of the developed world Internet penetration is reaching 50% (USA, Japan, Germany) whereas in developing world including countries like India (5%) and China (30%) the Internet penetration is low. Internet penetration is practically on fringe in most of the African nations and other least developed countries (LDCs).

There is quite significant technical research is going on the of future of Internet. Associations like ISOC, IEFT are continuously working on the reformed, acceptable & stable internet infrastructure which can sustain for thousands of years. There are few writers who have predicted the social structure of Internet in the future. It would be imperative to see the evolution of this social structure Internet over next 100 years and its impact on our world politically & socially. The question is how Internet will change our world in next 100 years? I will try to predict the ‘optimistic’ scenario:

Countries will fight over supremacy of cyber world before coming to a common consensus in next 50 years.

The world will become closer and compact with information sharing & collaborations. A new community Internet Global Community (IGC) will emerge which would be independent of geographies.

IGC will have members who are considered to be citizen of the world and they have their own new common charter. The community would be educated, urbane and influential.

Internet becomes the United Nations administered domain. Administration will be done by empowered group of stakeholders including representative of civil society members, governments, businesses and academic. Citizen of the community are govern by universal laws applicable to all geographies, drafted by the UN.

Paper currency will be abolished; replaced by common world e-currency. Most of the trade will be done through electronic medium. Trade & economy will be free among geographies. There may be free movement for citizens across geographies, however, right to live in certain geography may be determined by national governments.

National governments will be responsible for the law & order in their own countries. They have to follow common minimum program (CMP) as chartered by the United Nations empowered group.

The Global President of IGC will preside over a parliament which is elected every 5 years. IGC citizens through Internet do the elections. IGC parliament will be supreme body having democratic control over internet, electronic trade. IGC parliament will be responsible for framing regulations, laws for the cyber world.

Many world leaders in the past have tried to unite the world through religion, wars, fear & love. Some of them have succeeded (like colonial British) and some of them failed (like Hitler). We don’t find many evidences where such a common force like Internet has bought the people together in such a short duration of few decades.

I think human society & world is about to see a substantial change. We may not have to wait for thousands years to see these changes; I think, we will be able to witness the newly transformed, united, networked world in our lifetime (afterall life expectancy is increasing :) ).

Till that time, let us vote for free & fair Internet for everyone in the world.

Comments welcome.

Nikhil Agarwal

nikhil.agarwal at cgpworldwide.com

ps: In my next blog, I will propose structure of World IGC Parliament in 2100.

Dilemma of Indian insurance policy holders

2011-11-29T15:42:00.001+00:00

Do you have an insurance policy which you don’t want now? Several people approaches me and tell me that how badly they are ‘stuck up' with their policies which they have purchased in past. Now they are obliged to service the premium payment even though they don’t want it anymore.

Buying a ‘suitable’ insurance policy is not a cake walk. Even though it is extremely important for every working individual for his/her long term future. There could be various reason why people don’t take policy; sometimes it happens policy holder is unaware about the benefits, sometimes insurance agents miss-sell.

Majority of individuals encounter problems in three phases:

At the time of purchase of the policy.

At the time of matching the need and what they bought

At the time when policy is wrongly sold

The major problem they are facing is not in the selection of the features of the policies available in the market but on whom to ‘Trust’ regarding the policy explanation. Will this life insurance agent provide me right kind of the policy? Which policy has less commission? What about initial administrative charges? or will the insurance company provide me same maturity amount which is assured to me at the time of taking the policy?

In the search of right agent and insurance company, he/she sometimes forgets about the suitability of the policy for oneself and get distracted by the agent.

When he/she purchased the plan, the next series of problems arise – do the policy holder knows about his own plan – till how much time he/she needs to make payment/ what are the benefits under the plan according to his needs/ If he stops payment of the premium before the stipulated period what can be repercussions…so and so on ……………………. His problems do not end here. There are many instances where insurance policies are wrongly sold and now policyholder has been left in lurch by the agent - his biggest tension is where to go? How he/she can further proceed? What to write in the application according to regulation of IRDA which will be acceptable by insurance companies.

Under different set of policies and problems, there are different forums, courts which provide solutions but now the easiest way is through Integrated Grievance Management System (IGMS), a platform provided by Insurance regulatory and development Authority (IRDA). It is a comprehensive solution which provides online and centralized access to policyholders. The data capturing mechanism works in such a way that it can record all complaints received via email form, physical form or voice calls. The Important point should be noted that policy complaint first should be registered with insurance companies then complaint it can be escalated with IRDA.

If you have queries or questions regarding your policy or you need advise, please feel free to write to me at ruchi.agarwal (at) cgpworldwide.com

Ruchi Agarwal

Social Engineering: A Road to Financial Frauds

2011-09-30T06:18:00.000+01:00

Social engineering is an old fashioned manipulation to pursue or convince the user to divulge the required information, which can lead to security lapse. All social engineering techniques are based on specific attributes of human decision-making known as cognitive biases*. These biases, sometimes called "bugs in the human hardware," are exploited in various combinations to create attack techniques. Though not new, Social engineering has become more complex and global problem then ever.

Fraudsters around the world share the common goals a) Fraud b) Network Intrusion c) Industrial Surveillance/espionage d) Identity theft. The aim of a security experts is to protect the computer system from unwanted attacks from the fraudsters and hackers. Through employing different security mechanisms one can protect these unauthorized entries. Most of the organization solely rely highflying millions of dollar worth technologies, but they fail to notice that every computer system on earth is somehow related to human, who are most venerable to attacks. While new technology may reduce the risk of hacker attacks, it’s not a silver bullet. If the goal is to protect the network, one just cannot rely on technology alone.

Whether it is security of a system or something else, it is based on trust. To trust is a human nature, but probably it is the biggest weakness. Social engineers take advantage of this characteristic of human and manipulate their mind to crack the system. Social engineering can happens anywhere. It can happen in chat rooms, it happens when you travel in metro, it happens when you are sitting with your colleague in a restaurant discussing some important business matter, it can happen via email or anytime where user is getting in touch with another person.

Social Engineering methods** broadly can be classified as physical and psychological.

Physical methods are:

Dumpster Diving.
Physical Intrusion or Eavesdropping.

Whereas psychological methods are:

Via phone.
On-line method.
Persuasion.
Reverse social engineering.
Phising
Vishing

Daily more and more social engineering crimes are reported at various locations. The mistake most of the corporations do is to devise strategies only to prevent physical attacks, whereas they ignore more threatening psychological strikes. There is strong need to develop and implement turnkey security policies to combat all types of security breaches.

* Cognitive Bias is a broad term for all distortions in the human mind that are hard to avoid and that lead to a perception, judgment, or reliability that deviates systematically, involuntarily, and rather distinct from the "reality". For eg: Illusion of Control: The tendency for human beings to believe they can control or at least influence outcomes which they clearly cannot.

** Complied from different documents and personal lecture notes.

Submitted By:

Dr Nikhil Agarwal

Journey to the Icelandic ‘saga-steads’

2011-09-29T07:29:00.000+01:00

Cambridge University academic, Dr Emily Lethbridge, is breathing new life and understanding into the centuries-old Sagas of Icelanders (Íslendingasögur) during a unique year-long research trip.

Emily is discovering that the sagas are closely intertwined with the breath-taking landscapes and the people who live there. The sagas were copied in manuscripts in Iceland from the medieval period until the early 20^th century, and the stories were passed down from one generation to another over many hundreds of years.

Full Story on http://www.cam.ac.uk/research/video-and-audio/cambridge-ideas-memories-of-old-awake/

This work is licensed under a Creative Commons Licence.

Development ladder of ERM from banking to insurance industry

2011-09-10T02:43:00.000+01:00

Many people might ponder over the questions arises out of the development of risk management - when risk management was enough to secure the organization asset & people And why this new concept of Enterprise Risk Management emerged. The major reason of emergence of new thought process was the implementation of risk management in organizations. ERM provides holistic view of organizational issues which traditional risk management was not able to highlight. The concept of Enterprise risk management just 4 decades old; it was started 37 years back from banking industry. In year 1974, Basel committee started with banking supervision which was amended after 14 years and focus shifted to minimum risk based capital requirements.

COSO was organized in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private-sector initiative that studied the causal factors that can lead to fraudulent financial reporting. COSO (Committee of Sponsoring Organizations) of the Treadway Commission is the joint initiative 5 private sector companies – American Accounting Association, American Institute of CPA (AICPA), Financial Executive International (FEI), The Association of Accountants and Financial Professionals in business (IMA) and The Institute of Financial Auditors (IFA).

In early 1990’s, a long series of high profile corporate fraud, accounting scandals took place which created the need of revamping the regulations. In year 1992, London market introduced Cadbury Report for new regulations covering various aspects of corporate governance. After London all other market also implemented similar regulations on risk management – National standards on Risk management in Australia and New Zeland (1995), Canada (Dey Report, 1997), Japan and UK (2000). In year 1996, US taken bold steps by development of national standards on Risk Management by establishing NAIC (National Association of Insurance Commissioners in United States) and introduced risk based capital requirement for insurance companies which later developed in year 2002 passage of Sarbanes-Oxley Act (SOX). In year 2004, COSO established Enterprise Risk Management Integrated Framework which is one of the greatest achievements in this area.

Very recently,EU based insurers have to comply with Solvency II regulations by 2012 and they have far reaching implications for those insurers that are unable to accurately assess and prove their liabilities and/or show regulators that they have sufficiently de-risked by transacting across multiple lines of business. This has alerted all other nationals to come up with either their own regulations or follow international regulations to get long term stability.

Comments Please.

Ruchi Agarwal
MBA, FIII, ACII
Principal Consultant
Cambridge Global Partners

From Traditional risk management to new generation of Enterprise risk management (ERM)

2011-08-30T04:41:00.000+01:00

In the traditional risk management, corporate houses and institutions manage their risk exposed to each department/ unit for example: lack of capital financing by finance department, but it was limited to operational risk and financial risk. Risk manager role was to arrange insurance at nominal rates and interact with various committees and top management. The problem occurred in recent financial crisis which lead to closure and insolvency of many firms like Enron.

The major problem was lack of co-ordination among the various departments of corporate to manage such risk which increased cost of managing risk. Situation becomes worse when some risk are neither eliminated nor reduced even no insurance is taken which are disastrous in nature.

Now as per the guidelines of EURO Solvency II and SOX, in Europe and US, insurance companies need to follow Governance, Risk and compliance (GRC) which has three components. Top management can control the overall risk by having corporate governance, establishing the Enterprise risk management (ERM) concept in the organisation which gives holistic picture of the risk and in the last, by establishing compliance framework.

Ruchi Agarwal
MBA, FIII, ACII
Principal Consultant
Cambridge Global Partners

Next Edition of World Enterpreneurship Forum, Nov 2-5 2011, Singapore

2011-05-29T17:08:00.000+01:00

Singapore will host the 4th edition of World Entrepreneurship Forum (Nov 2th-5th, 2011)

The worldwide think tank devoted to the entrepreneur, creator of wealth and social justice.
The World Entrepreneurship Forum is a global community of entrepreneurs who aims at shaping the world of 2050 with an entrepreneurial vision, creating wealth and social justice.

The World Entrepreneurship Forum is an international community of entrepreneurs: business entrepreneurs, social entrepreneurs, politicians, experts, scientists and academics, chosen for their entrepreneurial achievements and their commitment to society.

Founded in 2008 by EMLYON Business School and KPMG, joined in 2011 by ACE (Action Community for Entrepreneurship, Singapore) and NTU (Nanyang Technological University, Singapore), the Forum aims at finding entrepreneurial solutions to our world’s problems. It promotes the entrepreneurial spirit in all fields of society and encourages all forms of entrepreneurship, integrating economic and social objectives.

The World Entrepreneurship Forum acts as:

A global Think-tank proposing recommendations and developing global actions to tackle our world’s problems in an entrepreneurial way ;
An international network of entrepreneurs supporting the development of entrepreneurial spirit in society;
A centre of expertise on entrepreneurship identifying and proposing the next practices in the field of entrepreneurship.

The Think-tank focuses on 4 main issues, challenges to shape the world of tomorrow:

Creating Innovative and High-Growth Companies, to create millions of jobs around the planet;
Developing Entrepreneurship at the Bottom of the Pyramid, to alleviate poverty and create new markets;
Shaping Entrepreneurial Cities, being tomorrow’s centers for innovation;
Implementing Entrepreneurial Education, to disseminate entrepreneurial mindset, skills and competencies throughout society, on a lifelong basis.

As a result of its works, the World Entrepreneurship Forum publishes an Annual White Paper, organises conferences aimed at influencing the global agenda of entrepreneurship. The World Entrepreneurship Forum is active in 55 countries, through Regional Chapters, its members, and Junior World Entrepreneurship Forums.

This year 2011, for the Singapore edition the fourum will have Four Main Themes:

Entrepreneurial Cities
Entrepenruship at Base of Pyramid
Innovation and High Growth Companies
Entrepreneurial Education

Cambridge Global Partners through their Partner Dr Nikhil Agarwal are proud to be associated with WEF.

We are alive and kicking

2011-05-22T17:36:00.000+01:00

Yesterday for the whole day I was receiving messages on my Facebook about the Harold Camping prophecy of world to be end on 21st May 2011. My mother told me to wake up early and pray to God before the first wave of earthquake/volcano hits the earth. I told her not to wake me up at 5 am on Sunday (6 pm NYC time is 5 am next day IST). Ahh !! I would have missed my internet, chatting and pizzas……

In last 15 years of my adult memory, I have survived every single dooms-day. Probably due to population explosion in heaven, there is no vacancy and may be God still contemplating the idea of accomodating so many souls. This is an great opportunity for management counsultants like us to create solutions (Capacity Creation) for heaven............ humm!!

Though, God is kind enough to save both me and Mr. Camping to witness another apocalypse. Amen !!

Submitted by:

Nikhil Agarwal
St Edmunds (2006)