Executives need guidance about managing their organizations' engagement with societal issues-including hot-button topics such as gender, climate, and racial discrimination. Success in this realm does not mean avoiding public controversy or achieving unanimous support among key stakeholders, the authors write. Rather, it results from adhering to certain processes and strategies, which they have derived from recent global survey research along with examples from managerial best practice. They offer an approach that is anchored in data but sensitive to values and context. It can be helpful in figuring out which issues to address and how; in ameliorating disappointment among stakeholders; and in managing any potential blowback. Data can tell you what your various stakeholders care about, they write, but judgment is necessary to act in careful consideration of conflicting preferences while being consistent with your company's values.
The board of Aviva Plc, one of the world's largest insurers, must review its climate risk exposures and evaluate next steps. Risk experts at the firm have conducted a robust set of analyses prepared for its regulator, the Bank of England, simulating how various climate scenarios could impact the business. Against this uncertain future-and given their history of leadership in sustainability, the board and CEO Amanda Blanc will review options for Aviva Plc to address this business and societal challenge, ranging from dealing with flood risk to working to effect large scale systems change.
In late 2021, Ben Carr, Director of Analytics and Capital Modeling at Aviva Plc (Aviva)-a leading insurer with core operations in the UK, Ireland and Canada,-was preparing for an upcoming presentation before the company's board which included its CEO, Amanda Blanc, featuring the results of Aviva's performance in the Climate Biennial Exploratory Scenario (CBES) exercise mandated by the Bank of England. The CBES required all major banks and insurers in the country to formally assess the financial risks arising from both the physical impacts of climate change and the transition to a net zero economy. As Carr was in the final stages of refining and updating the CBES findings, he and his team were tasked with discerning how potential climate change consequences might influence each element on Aviva's balance sheet. Additionally, the team was charged with not only evaluating the existing assets and liabilities on Aviva's balance sheet, but also pondering the future operations of the business. Carr was aware that assessing climate risk was a complex task, fraught with its unique set of challenges and limitations. He was prepared to further discuss these issues, as he knew the board would be keen to delve deeper into their intricacies.
BASIX, an Indian microfinance corporation, must decide whether to continue to sell weather insurance to its clients. A brand-new financial product, weather insurance pays if measured rainfall during the growing season falls below a pre-specified limit. Mr. Sattaiah, managing director of the BASIX's bank, considers a revised insurance policy for the coming season, weighing the costs and potential risks of expanding the product against the potential benefits.
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act created a new federal agency, the Consumer Financial Protection Bureau, to improve the functioning of consumer financial services markets. The Bureau is scheduled to open its doors in July 2011. Its first director will be responsible not only for setting the policy direction of the agency but also for establishing its organizational structure and management climate. In this open letter to the director, four professors-Campbell, of Harvard University; Jackson, of Harvard Law School; Madrian, of Harvard's Kennedy School of Government; and Tufano, formerly of Harvard Business School-offer advice on how to set priorities and craft policy responses. They suggest seven simple ways in which the new director can identify problems that deserve early attention: (1) Look for high stakes: Prioritize problems that put large numbers of households at material financial risk, (2) Look for confusion: Be concerned when consumers routinely misunderstand the terms of a financial product, (3) Look for regret: Big financial decisions are often made so infrequently that consumers do not become adept at them, (4) Look for folly: Some groups of people, for instance, routinely miss the opportunity to refinance their mortgages when interest rates drop significantly, (5) Look for suckers: Some financial products generate a large chunk of their profits from a small fraction of customers, (6) Look for rip-offs: If an expensive product survives in a very competitive market, it could mean that some consumers don't understand what they're buying, (7) Look for opportunities: Don't limit the focus to only problems-actively seek innovative products that will benefit consumers.
Students must determine whether or not Visa, which had an IPO one month prior, is a good investment. The case provides an overview of multisided platform businesses and the payments industry in general. Visa's business model and economics are reviewed.
A new entrant in the nascent online peer lending space, Lending Club must decide whether or not to register with the SEC. Lending Club provided a platform through which individual borrowers could receive loans funded by individuals who chose to invest in them. The management team wanted to grow the business and also hoped to establish a secondary market to give lender members liquidity. The SEC had raised questions about whether or not the promissory notes issued to lender members were in fact securities, but there were legal arguments on both sides. While the legal situation was unclear, Lending Club considered the benefits of applying to the SEC, but had to decide whether it would be worth the significant investment of time and money, both up front and going forward.
Most consumers don't understand how interest rates work and can't make sound decisions about borrowing. So wouldn't employees be better served by company programs that ventured beyond retirement planning and helped them stop pouring money into credit card fees and payments?
Five experts gathered recently to discuss the future of enterprise risk management: Kaplan, the Baker Foundation Professor at Harvard Business School, who with his colleague David Norton developed the balanced scorecard; Mikes, an assistant professor at HBS who studies the evolution of risk management and the role of the chief risk officer; Simons, the Charles M. Williams Professor of Business Administration at HBS; Tufano, the Sylvan C . Coleman Professor of Financial Management at HBS; and Hofmann, the chief risk officer at Koch Industries. The panel was moderated by HBR senior editor David Champion. Among the questions they addressed were: How predictable was the financial meltdown of 2008-2009? Did new tools for assessing risk give a false sense of security? How do the challenges facing industrial companies differ from those facing the financial sector? Is outsourcing an effective risk-management tool? Have capital structures become a bit too efficient in many companies? What makes a good chief risk officer?
Kinecta Federal Credit Union has the opportunity to purchase Nix Check Cashing as part of their "blue ocean" strategy to reach the financially underserved and increase credit union membership and deposits. But they face financial as well as reputational risk. Check cashing, payday lending and other alternative financial services are maligned in mainstream financial circles. This case asks students to evaluate both organizations, their respective industries, and the proposed $45 million deal and determine whether or not it makes sense for Kinecta to purchase Nix.
These spreadsheets will allow students to analyze financials for Kinecta Federal Credit Union and Nix Check Cashing. They also provide insight into the banking and AFS markets in which both organizations operate.
This note reviews a variety of shorter-term consumer credit products in the U.S. with an emphasis on the types of products that low and moderate-income consumers use. Included here are the following: credit cards, bank overdraft products, payday lending, personal loans and peer-to-peer lending, home-equity lending, rent-to-own contracts, auto-title lending, pawnbroking, refund-anticipation loans, informal lending.
Rising food prices threatened an unprecedented number of people around the world with malnutrition or starvation in 2008. The new Executive Director of the United Nations' World Food Programme (WFP)--the world's largest food relief agency-- must not only address this challenge but also must rethink the WFP's strategy in the rapidly-changing world of humanitarian assistance.
In 2002, two homeowners in Massachusetts are deciding whether to refinance their home less than two years after taking out an initial mortgage and a subsequent home equity line of credit.