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Mergers, management changes and unfriendly work-family practices were the main reasons behind women leaving the workforce today a new Melbourne Business School survey has found.

The issue of risk management was a vital topic missed by G20 representatives during their analysis of the Global Financial Crisis (GFC) according to Senior Lecturer in Finance at the Faculty of Economics and Commerce Dr Les Coleman.

“The G20 has done a lot of work looking at ways of avoiding another financial crisis, but they are tackling things like capping executive salaries and not addressing what caused the GFC – and that was risk,” he says.

“Risk in business is exactly the same as it is in our personal lives; it’s a decision that you take that may have bad consequences. We need to understand the risks companies are taking across all industrial sectors.”

Dr Coleman says the main problem with risks in business is that many are hidden from shareholders.

 “Risks are like cockroaches, they thrive in the dark and if we turn more light on them and provide more information for shareholders and investors we would understand the risks and force management to address them adequately,” he says.

Dr Coleman says what’s needed is a list of risk indicators, covering everything from legislative breeches to trips and spills, which are then reported to investors on a regular basis.

 

 

The University of Melbourne has expressed disappointment the merger of the Faculty of Economics and Commerce and the Melbourne Business School (MBS) will not go ahead at this time.

Commodity prices are set to push the Australian dollar higher in the not so distant future, according to Dr Les Coleman.  "The indicators are quite good for the global economy and it looks like there will be recovery in place next year.  That means growing demand for commodities, higher prices for commodities and in turn these prices will probably significantly support the Australian dollar, and will also  get some support in the rise in interest rates that the central bank seems keen on."

"But will we see a continuing increase?  Not so long ago the mining companies were talking about a once in a generation boom in commodity prices.  Now that was killed by the GFC, but if it comes back next year we may well see a long term uptrend in commodity prices."

Dr Coleman is a Senior Lecturer in Finance in the Faculty of Economics and Commerce.  A full staff profile can be found at http://www.finance.unimelb.edu.au/who/staffweb.cfm?StaffNo=113

The National Director of World Vision Uganda, Rudo Kwaramba, will speak at the University of Melbourne next week.

Despite better than expected profit reporting by Australia's major companies, the direction of the Australian sharemarket is still cloudy, says Dr Les Coleman.  "In the last few months the stockmarket reached a low in March but has rebounded almost 50% since then.  In fact its gone back about 40% of the way to its previous high in 2007."

"Generally coming out of a bear market it takes two years or so to get that kind of recovery, so the market has gone a long way very quickly - up 25% for the year already - so while it's been a very very strong recovery, that rate of increase is simply unsustainable."

"Theres an old saying in financial markets: buy the rumour, sell the facts.  And I think we're going to see a re-evaluation of the market, and that it won't really go ahead so strongly in the next few months."

"Typically coming out of these mini bull periods the market falls back about 10% and that would bring back the rate of increase to 15% this year, to about 20% for the year as a whole.  That's a fairly normal rate of increase coming out of a deep bear market like we’ve seen, so a 10% correction now and a bit of recovery later in the year is what you’d expect."

Improvements in risk management processes can and should be made to avert the next bushfire catastrophe, says Dr Les Coleman, in the wake of the release of the bushfires Royal Commission interim report.  "It comes back to looking at the risks, putting in place mechanisms to try and reduce those risks ahead of time, and recognising that when these extreme events start to unfold, its really beyond anyone's physical resources to handle every part of it."

"It's hard to be critical of people under these circumstances. The Royal Commission has spent a lot of time looking at risk - and will spend more time looking at it - as risk is a major part of this issue: how do we understand it, quantify it, and work out what to do." 

However Dr Coleman, a senior lecturer in finance and a risk and crisis management expert from the Department of Finance, says criticism of the CFA is harsh.

"The CFA certainly came in for criticism, but if you look at the resources deployed on the day, they were huge: around 15 000 firefighters, 1000 vehicles, 50 aircraft and so on.  It's actually quite hard to work out what more they could have done.  So I think a lot of the criticism of the CFA is ‘Monday Morning Quarterbacking’ if you like, looking back on how to handle something that, at the time, they really couldn’t get more information about and didn’t have any additional resources."

"It would have been very very difficult to improve their management on the day.

Sir Howard Davies, the Director of the London School of Economics will ask whether central banks around the world could have helped head off the GFC in this years David Finch Lecture on Thursday August 13.

The rise of China in the new global economic order has made for a more prosperous and stable world, according to Associate Professor Mark Crosby from the Melbourne Business School.

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