Value Killers in the Current Risk Environment

A recent study by Deloitte LLP examined root cause issues for companies experiencing significant one-month drops in stock valuations to see if they could identify common themes related to reasons driving the loss. What they found was that, while the losses were unique, there were similar underlying risks that drove the loss. They found that most value killers are caused by high-impact, low-frequency risks, which often expose the companys biggest strategic, operational, or financial deficiencies. They also observed that a number of the risks were linked to other risks, and those correlations and interdependencies had a massive negative impact on valuations. In addition to outlining a number of other root cause concerns for these value killers, the study also includes thoughts about how to manage some of these risk drivers.