More acute perception of risk would better serve the interests of all economic players according to Louis Vachon
Montreal, 18 April 2007 -
In a speech to members of the Association des MBA du Québec (AMBAQ), Louis Vachon, the future President and CEO and current COO of National Bank of Canada, explained that although our economy and the financial markets are relatively robust, all economic players would do well to rethink their perception of risk.
“At present, we believe that inflation is under control, interest rates will stay low and the North American economy will continue to expand. However, while the economy as a whole appears more stable, economic cycles and structural shocks are very present at the sector level,” stated Mr. Vachon.
For example, the textile and clothing, automobile and furniture sectors have been hard hit over the past few years. In fact, no company is immune to downturns that could affect its immediate environment. “What’s more, with globalization, if Chinese, Indian or Brazilian companies become interested in your industry, you will be forced to react very quickly to a new reality.”
Addressing the risks related to operations and business development, Mr. Vachon stressed the need to re-examine how we manage revenues, costs and liquidities, and expectations. He believes that revenue management is all too often reduced to a mere quest for growth as opposed to an approach that weighs returns against risks. In addition, more attention should be paid to the management of costs, liquidities and expectations because of their potential importance in a less favourable economic environment.
Mr. Vachon, who will succeed Réal Raymond in June 2007, also noted that many of today’s young business managers could be faced with their first prolonged downturn in GDP in the coming years. But he did have some encouraging words. “By reviewing our perception of risk and by including risk in the various aspects of a company’s development, we will create an economy and companies that are financially stronger,” concluded Mr. Vachon.
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