Michael D. Moberly February 3, 2010
It’s prudent today to assume there are – will be risks embedded in every business operation or transaction. And, since 65+% of most company’s value, sources of revenue, building blocks for future wealth creation and sustainability lie in intangible assets (IA’s) and intellectual property (IP), it’s also prudent to assume that IA’s and IP will be in play, that is, either or both will be integral and negotiated elements and/or features to those business operations and transactions.
In other words, intangible and IP assets can be sold, licensed, and/or transferred to other parties or ‘shared’ with other companies in strategic alliances or partnerships. In the latter (in enterprise risk management – ERM contexts) the assets’ holder/owner should expect the assets’ will be returned intact to the rightul owner/holder upon conclusion of the alliance/partnership.
By intact I mean, (1.) the assets’ value, revenue producing capability, and ability to contribute to future wealth creation and sustainability has been sustained, (2.) no costly, time consuming, and momentum stifling disputes or legal challenges have been lodged or are on the horizon, and (3.) no circumstances have arisen in which the asset(s) have been infringed, stolen, misappropriated, counterfeited, and/or pirated (during the course of the alliance/partnership) that will undermine the assets’ contributory value, competitive advantages, and jeopardize the company’s continued (future) use of the asset!
Simply stated then, the key objectives with respect to intangible asset enterprise risk management, lie with…
1. company management teams executing relevant processes, procedures, policies, and practices to position their company (internally and externally) to identify, unravel, assess, and effectively utilize and exploit their IA’s through,
2. consistent and effective stewardship, oversight, and management of the assets so as to enable the company to,
3. sustain indeterminate control, use, ownership, and retrieval capabilities of the assets, and monitor their value and materiality and associated risks, in both pre and post operation and/or transaction contexts.
Embedded within ERM IA objectives, as conveyed above, are even more specific management and leadership ‘skill sets’ which encompass the absolute need to acquire a genuinely holistic and ‘big picture’ understanding and appreciation for the company’s business, its direction, and the globally interconnected business operations and transactions environment in which it operates.
(This post was adapted by Michael D. Moberly from a document produced by ASIS Internationals’ CSO Roundtable titled ‘Enterprise Security Risk Management: How Great Risks Lead To Great Deeds’.)
Great Blog. Despite the importance of intellectual assets in overall company’s valuation, most companies lack tools to identify and exploit their IP assets. For them to understand and implement ERM, I think they need to first create a repository of IP assets which can be shared with the right internal/external teams. As you pointed out, continous monitoring of their “value” is essential as well.