MISSION INTANGIBLE

M:I Products

MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Regulators Leverage Fund Managers to Up Pressure On Boards

C. HUYGENS - Tuesday, September 05, 2017
Increasing pressure from regulators and politicians worldwide to.

“…hold companies to account on excessive executive pay, a lack of gender diversity and inaction on climate change. ”

Read more in Financial Times.

No Country for Old (Insurance) Captives

C. HUYGENS - Friday, August 25, 2017
Attention captives bearing reputation risk, review programs…implement immediate changes. Thus opined the court: Although

“…organized and regulated as an insurance company, paid the claims filed against it, and met the minimal capitalization requirements (but it)… was not operated like an insurance company, it issued policies with unclear and contradictory terms, and it charged wholly unreasonable premiums….(B)ased on the facts the court focused on, it will be vital for all captives to undergo a thorough review of their program, and to implement immediate changes”

Read more in Business Insurance.

Wells Fargo Drops Yet Another Shoe

C. HUYGENS - Friday, August 04, 2017
Reputation risk cost is often high because of losses initially not visible, like the submerged mass of an iceberg.

“Wells Fargo said that the number of fake bank accounts set up by its staff could be significantly higher than previously thought and warned investors that it risks further regulatory investigations into a new scandal over car insurance.”

Strategies to convince stakeholders there isn't an iceberg just below the surface—which will work as long as the assertion is true—include warranties on governance and related transparent financial products.

Read more in the Financial Times.

Wells Fargo Digging Deeper Hole for Board

C. HUYGENS - Sunday, July 30, 2017
Senator Warren calls (again) on Fed to remove Wells Fargo board members, report Reuters, after The New York Times reported Friday that more than 800,000 Wells Fargo customers were charged for auto insurance they did not request. Activists such as Scott Stringer, who oversees public pension funds that hold roughly 11.6 million Wells Fargo shares, wants a new Chairman at least.

In a letter sent Friday to Yellen, Warren, a Democrat, said the recent revelation of more improper charges at the bank indicates "deep risk management problems," and called for the removal of all board members who served from 2011 to 2015, when the activity reportedly occurred.

The question stakeholders must be asking is "exactly how big is that iceberg of unethical behavior that has not yet been disclosed?"

Until Wells Fargo can authentically communicate to stakeholders that all that is being disclosed now comprises "sins of the past," they will continue to be on a downward reputational spiral. And with the battle over regulatory controls looming in Congress, as Kate Berry reports in American Banker, the bank's risk of further reputational damage with regulators is undercutting its objective of eliminating the CFPB.

Read more in the New York Times.

Reputational Impact of Responsible Behavior

C. HUYGENS - Thursday, July 27, 2017
What regulatory reputational resilience looks like according to SEC Chairman Jay Clayton in the context of cyber security:

“If a company is being responsible . . . I don’t think we should then be punishing them for being a victim..."

Read more in the Financial Times.

Wells Fargo: Regulators and Litigators Want Board Member Scalps

C. HUYGENS - Thursday, June 22, 2017
Regulators and litigators want board member scalps--Buffet may be outgunned. The reputation crisis at Wells Fargo now enters the regulatory phase, which by Steel City Re's metrics, is typically a very costly process.

"I urge you to exercise your legal authority to remove the holdover Wells Fargo Board members. Federal Reserve regulations and guidance impose clear risk-management obligations on the Board — obligations that are quite demanding for a bank as large and complex as Wells Fargo," Warren wrote. "The Board did nothing to stop rampant misconduct in the Community Bank that resulted in more than 5000 bank employees creating more than two million fake accounts over four years."

Read more in Business Insider.

Board Allowed Long-lasting Reputational Damage to Wells Fargo

C. HUYGENS - Wednesday, June 21, 2017
Senator Warren, writing to the Fed demanding the removal of all 12 directors of Wells Fargo…

…argues in the letter that the directors failed in their risk-management obligations, resulting in "massive financial losses" and "long-lasting reputational damage to the bank that has eroded the bank's customer base."

Read more in the Business Insider.

Expectations for Quality Accounting

C. HUYGENS - Thursday, May 11, 2017
#risk Alan Greenspan noted in 2008 that in a business based on trust, #reputation has significant value.

The UK’s accounting watchdog has fined professional services firm PwC a record £5m for “misconduct” in relation to the audit of Connaught, a FTSE 250 social housing maintenance group put into administration in 2010.…The latest ruling is another blow to PwC’s reputation following its Oscars envelope mishap and a $3.1bn legal battle with MF Global in the US.

Read more in the Financial Times.

Paying the Ongoing Costs of a Reputation Crisis

C. HUYGENS - Monday, May 08, 2017
#Reputation #Risk “Corporate names are resilient: when their images get damaged, a change of management or strategy will often revive their fortunes. But personal reputations are fragile: mess with them and it can be fatal,” wrote John Gapper for the Financial Times in August, 2016.

Wells Fargo is preparing to unveil new cost-cutting measures as the scandal-hit US bank tries to rebuild Wall Street’s confidence after a bruising annual meeting with shareholders.

Tim Sloan, chief executive, is this week expected to reveal plans for annual savings at Wells, the world’s third-biggest bank by market capitalisation, of as much as $3bn — on top of an existing $2bn expense-reduction plan.


Read more in the Financial Times.

Wells Fargo: Legal Bills Pile Up

C. HUYGENS - Friday, May 05, 2017
#Reputation #risk Entry level losses based on 6000 events average 24% market cap, 13% sales, and 12% net income. Values vary by industry sector, year, and underlying causes.

Wells Fargo has warned its litigation bill could be $200m higher than previously thought as the US bank sheds new light on a series of lawsuits it is facing over the bogus account scandal.

In a quarterly filing on Friday, Wells said “reasonably possible” losses from legal actions against it could exceed its existing provisions by $2bn — up from a $1.8bn figure it disclosed three months ago.

The document shows how lawsuits are piling up against Wells after thousands of its employees, under pressure to hit sales targets, turned to fraud. Workers signed up as many as 2.1m customers for cards and accounts over several years without their authorisation or consent, in some cases faking signatures.


Read more in the Financial Times.

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