Jeffrey Greene - The Stress Test Every Business Needs: A Capital Agenda for Confidently Facing Digital Disruption, Difficult Investors, Recessions and Geopolitical Threats

Jeffrey R. Greene

with

Steve Krouskos

Julie Hood

Harsha Basnayake

William Casey

Cover design: Art Director Santiago Eli Lastra, Hogarth Worldwide

Copyright 2018 by EYGM Limited. All rights reserved.

EYG no. 010118-18Gbl
ED None

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data

Names: Greene, Jeffrey R., author. | Krouskos, Steve, author. | Hood,

Julie, author.| Basnayake, Harsha, author. | Casey, William, author.

Title: The stress test every business needs : a capital agenda for

confidently facing digital disruption, difficult investors, recessions and

geopolitical threats / Jeffrey R. Greene, Steve Krouskos, Julie Hood, Harsha Basnayake, William Casey.

Description: First Edition. | Hoboken : Wiley, 2018. | Includes index. |

Identifiers: LCCN 2018020487 (print) | LCCN 2018033008 (ebook) | ISBN

9781119417965 (Adobe PDF) | ISBN 9781119418139 (ePub) | ISBN 9781119417941

(hardback)

Subjects: LCSH: Management. | Strategic planning. | Leadership. | BISAC:

BUSINESS & ECONOMICS / Management. | BUSINESS & ECONOMICS / General. |

BUSINESS & ECONOMICS / Leadership.

Classification: LCC HD31 (ebook) | LCC HD31 .G746 2018 (print) | DDC

658.4/0352dc23

LC record available at https://lccn.loc.gov/2018020487

This book represents many decades of creative work by thousands of our EY Transaction Advisory Services colleagues around the world. We are particularly grateful to all the contributors who invested the time, energy, and insight to craft their chapters.

The opportunities and challenges our clients provide us every day are essential to our thinking. Regular discussions with members of EY's Corporate Development Leadership Networks in the United States, Europe, and Asia-Pacific region have inspired many of the themes we share in the following pages.

The project team deserves special thanks, beginning with Jonathan Rozek, who brought invaluable writing and editorial guidance. In addition to being the author of his own chapters, Daniel Burkly played the roles of muse and devil's advocate throughout. Linda Cunningham's project management helped get the manuscript over the finish line. Gaeron McClure led EY's rigorous internal review process, and the book is materially better because of him. Scott Chapski, Mateusz Kowalik, Abin Tijo, and Aparna Mitra supplied their much-needed copyediting, legal, and graphic knowledge. The global Brand, Marketing, and Communications team of Antony Jones, Nicola Gates, and Brielle Roldan sustained this effort from inception.

Intellectual challenges from John Celentano and Anne Board elevated our thinking. Dawn Quinn was present at the creation; it's unlikely we would have begun the book without her enthusiasm. We very much appreciate Richard Narramore, Senior Editor for Business Publications at John Wiley & Sons, for his substantial advice and patience throughout the writing process.

Finally, and most importantly, we thank our familiesTeri Greene, Kamela Krouskos, the Hoods, Shanil and Shamin Lee Basnayake, and Amy Caseyfor encouraging us, supporting our work, and helping us grow.

Jeffrey R. Greene, New York City
Steve Krouskos, London
Julie Hood, London
Harsha Basnayake, Singapore
William Casey, New York City

Jeffrey R. Greene

The Capital Agenda is a comprehensive approach companies should use to manage capital, execute transactions, and apply practical corporate finance tools to strategic and operational decisions. This book synthesizes what weve learned over literally thousands of engagements helping clients as they navigated out of crises to confront technological disruption, unrelenting investor scrutiny, slow gross domestic product (GDP) growth, and geopolitical volatility. EYs Capital Agenda framework has been such a valuable tool that weve built Transaction Advisory Services around it, using it to set priorities for recruiting and talent management, innovation, and thought leadership.

Having a static Capital Agenda, however appropriate for your current environment, is not enough in todays uncertain world. Long-term success comes from building resilience into each element of the Capital Agenda and in the way those elements interact. Banking regulators have mandated well-defined parameters for stress tests of our most important global financial institutions. We believe every nonfinancial company should adopt an analogous approach to future-proofing its Capital Agenda.

We use a broader, more strategic definition of stress that encompasses not only traditional macroeconomic, sovereign-risk, and commodity- related shockssuch as interest rates, recessions, oil prices, and expropriationbut also forces such as technological disruption, hostile takeovers, and activist shareholders. In this expanded view, companies that make poor strategic decisions or underperform operationallyeven in a benign economic and geopolitical climatecan still find themselves facing great stresses. We believe that stress is symmetric; the threat can come from downside risks as well as from missed opportunities.