Canadian Underwriter

Global risks must be corporate focus: Aon

July 28, 2003   by Canadian Underwriter

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Releasing its annual “report card for the world”, broker Aon Corp. says there are new threats to corporations dealing in the global business world.
Among these is the risk of war in the Korean Peninsula, a more serious threat than may be generally understood due to South Korea’s importance as a supplier of high-tech components, such as computer memory chips. The report card also cites hostilities between India and Pakistan, with India having become an offshore center for back-office functions such as call centers.
All of this is further complicated for U.S. companies by new corporate governance legislation. The Sarbanes-Oxley Act of 2003 requires companies to manage and disclose threats to their balancesheets, which could include such international political and trade credit risks.
Among the risks facing corporations in the international arena are war, terrorism, expropriation, inability to transfer currency across broders, and trade credit defaults by foreign or domestic customers.
Aon Trade Credit notes that its 2001 study of Fortune 1000 companies found only 26% had a consistent system for assessing political risks.

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