Which one of these risks doesn’t belong with the others?

A) Regulatory risk

B) Supply chain risk

C) Privacy and information security risk

D) Commodity price risk

E) Geopolitical risk

F) Customer loyalty risk

If you guessed “F,” you get an “A.” You also might be surprised – as I was – to learn that one of the world’s leading authorities on risk identifies customer loyalty as the very top business challenges that will influence the board of directors’ agenda in 2012.

Risk consulting firm Protiviti just identified the top business challenges and audit committee items for 2012; interestingly, the list is based on experience with and insights from a broad range of global organizations and their boards. more

If your firm recently has been visited by an IRS or state tax auditor, you’re not alone. More than three-fifths of corporate tax execs surveyed in October by KPMG LLP indicated that activities stemming from federal tax disputes had increased over the past year. In addition, 37 percent indicated that the number of state tax audits had jumped.

The IRS’ own numbers, as presented in its Fiscal Year 2012 Budget Request, confirm the increase. The Service increased the number of large corporation audits by 8.1 percent, and the number of foreign corporation audits by nearly 48 percent, between fiscal year 2009 and 2010. (Individuals didn’t get off any easier, as the number of individual returns examined rose 11 percent, to 1.58 million, between fiscal 2009 and 2010.)

From the IRS’ perspective, the heightened enforcement activity is working. In fiscal year 2010, revenue from enforcement sources topped $57 billion, up 18 percent from fiscal 2009. more

Companies would pay even less attention to disaster recovery than they do now if auditors and other compliance police didn’t get on their cases or threaten them with fines or liability of various sorts. Disaster recovery (DR) alone, however, may not be sufficient.

Based on its 2011 Global Business Resilience and Risk Study IBM is suggesting a more proactive and forward thinking approach to DR, one that encompasses opportunities as well as risks. The study is available here.

Among the findings of the study: organizations are diversifying their strategies to build business resilience, while keeping continuity, IT, and compliance risks in the forefront. And increasingly in business resilience strategies cloud computing is quickly emerging as a key risk and opportunity management tool. more

Loophole:

1 a: a small opening through which small arms may be fired

b: a similar opening to admit light and air or to permit observation

2: a means of escape; especially: an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

Example: She took advantage of a loophole in the tax law.

—Merriam Webster Dictionary

A recent study released by the left-leaning Citizens for Tax Justice and the Institute on Taxation and Economic Policy has created extensive public comment. The study found that many of the most profitable companies in the United States—General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc.—paid little or no corporate income tax over the three-year period 2008-10. In fact, 78 of the 280 companies studied paid zero tax or less in at least one of the three years. The average effective tax rate for all 280 companies studied for the period was 18.5%—slightly over half of the 35% statutory tax rate, and 6.1% less than the effective tax rate that companies with overseas operations paid on their foreign profits. The study blamed “corporate tax subsidies” or “loopholes” such as accelerated depreciation, stock options, industry-specific tax breaks, and deferral of foreign income for this result. more

Given the ongoing upheaval in the banking sector – indeed, 87 have closed so far this year, compared to 24 in 2008, the FDIC reports – it shouldn’t be surprising that corporate treasurers are keeping an eye on their banks’ health. According to the recently released AFP Treasury Benchmarking Program 2011 Survey, more than two-thirds of corporate treasurers consider a bank’s health to be a significant factor in initiating or maintaining a business relationship. What’s more, nearly one in five changed banks last year due to concerns about a bank’s health.

Other survey findings: on average, the typical treasury department manages five banking relationships, although this varies by organization size and industry. Organizations with annual revenues of $500 million of $999 million typically work with five banks, while those with annual revenues of between $5 billion and $10 billion have relationships with 15. The majority of bank relationships last an average of ten years. more