Understanding just how bad things can get

CEOs are a pretty optimistic bunch. And I think maybe that’s right. It might be the only way to maintain sanity in the job.

I’ve lost count of the number of conversations I’ve had with CEOs and CFOs about their business prospects and what variability to assume when simulating future possibilities. I’ve had several try to convince me that the worst that can happen is a 100% decline in profit.

100% decline in profit still isn’t a loss.

HP just had its largest loss ever. 73 years ever. This is a real harsh reminder of how bad things can get from a great company.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.