DANGEROUS Markets: Managing in Financial Crises
As the economy grows more global, the impact of financial crisis in any country has come to affect us all. Corporations fail, the stock market and currency values fall, deposits are at risk, pension plans are lost, and, in some cases, even civil unrest follows. In short, these crises can no longer be ignored. In their new book, DANGEROUS MARKETS: Managing in Financial Crises (Wiley Finance; October 2002; hardcover) Dominic Barton, Roberto Newell, and Gregory Wilson tell how to anticipate, manage, and prosper in financial crises around the globe.
The authors draw on their work with McKinsey & Company in assisting corporate and public officials to overcome the effects of financial crises in more than a dozen countries, including the United States, Thailand, Korea, Indonesia, Jamaica, Mexico, Ecuador, Colombia, and, most recently, Argentina. Their approach, developed on the front lines of managing through financial crises, walks corporate executives and investors through the five crucial steps to survival and success. They demonstrate how to:
• Understand fully the warning signs of crisis and the risks associated with them
• Aggressively execute the tactics demanded to weather the first 100 days of a crisis
• Design a portfolio of strategic initiatives that leverages new freedoms and captures “one-time” opportunities created by crisis conditions
• Manage unique risks for banks through aggressive turnarounds and excellence in recovering nonperforming loans (NPLs)
• Build for the future, by setting new, market-oriented standards and safeguards to avoid subsequent crises and lessen their impact.
The authors believe that financial crises are likely to become more frequent, more costly, and longer-lasting in the future. The reasons are wide ranging – from continuing value destruction in the real economy, to poorly supervised banking systems, to inadequate capital markets, and inefficient linkages to the global system. In particular, the authors examine the current weaknesses in Japan, China, India, and elsewhere that could soon have major geopolitical and economic consequences.
“In short,” say Barton, Newell, and Wilson, “financial crises are simply too important and too costly to shareholders and societies to leave unmanaged.” DANGEROUS MARKETS is both a blueprint for surviving and flourishing in crises as well as a call to action for both corporate and government officials to reform their financial systems before devastating problems hit.