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Friday, 12th April 2024
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The (fully fledged) euro looms larger and larger

The damp squib that was the much touted Y2K hype, and the relatively successful transition to the single currency in the treasury markets on January 1st 2000 may be the cause of the widespread complacency that seems to exist in many companies about the transition to euro pricing and denomination on January1st next.
Unfortunately, for many companies, this complacency will be misplaced, and nowhere is the issue more important than in the cfo’s office. It is hard to believe, but, comments recorded by us in this month’s issue still have some companies defining the euro changeover as merely an ‘IT issue’.

Irish businesses need to get moving in order to meet the euro changeover deadline. Far from being adequately prepared, many have yet to grasp the full extent of the impact of the changeover. Irish businesses in many cases are simply not aware of the issues - or if they are they are not yet acting on them. It is worrying indeed that only some 78 per cent of businesses say they have received information on the euro changeover - and of course the gap between being aware of an issue and actually dealing with it is very wide as any project manager knows.

This month’s contains an examination of what businesses should be doing; whether they are doing them or not is another matter entirely. There is the view from the euro Forfas Business Awareness campaign - where Yvonne Cullen underlines that it is the small to medium sized enterprises that are the least prepared, meanwhile Vince D’Arcy looks at the specific areas which he says companies are overlooking in their preparations.

Interestingly though, the article on IBM’s recent Euro and EMU briefing finds that even large financial services industries are not as well advanced in their preparations and they had previously expected to be. This is particularly true of the banking sector - long touted as being the most well prepared segment of the European economy. The IBM Europe preparedness survey, carried out in May 2001 finds that only 20 per cent of the European banking industry will be fully euro compliant as of July 2001 - and the insurance sector responses see that an alarming number of the industry will not be fully euro compliant by January 2002. There is no more time to delay - focused action must be taken now. (The euro changeover focus starts on page 5.)

Of course Ireland’s position as a heavily paper-reliant country has also been addressed as a potential cause of problems in its euro changeover. This if course remains to be seen - undoubtedly there are problems there. But the good news is for those companies that are euro prepared - you may be able to gain customers if your competitors are not.

But Irish insurance companies do not only have the issue of euro changeover to deal with - they are also in a state of strategic reevaluation. Simon Glancy sees the industry on the cusp of serious change and says that Irish insurance companies are in the process of reinventing themselves for the future. He’s predicting more joint ventures and strategic alliances as many insurance companies transform themselves into broader financial services providers. Glancy sets out a series of scenarios that he believes will influence developments in the insurance industry over the next five years on page 10 and also discusses some strategic options for companies operating in the sector.

Risk management
Meanwhile for those of you looking to hire a risk manager or even those interested in entering the field, Nicola Flavin gives an insight in to the changing role of the risk manager on page 11. It is the ‘hot’ job of the moment and with good reason as it has evolved from being seen somewhat as a sideline of managing market and credit risk to today’s condition of staying in business. The emergence of the risk manager has been driven by changes in the competitive and regulatory environment of the financial services industry, advances in technology, and progress in the mathematical modelling of market and credit risks to its position today as a new discipline with its own set of principles and standards.

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