Key-person risk is alive and kicking in global business

FEW CHIEF executives experience as hard a fall as Carlos Ghosn just has. On November 16th he was the long-standing chairman of Renault, Nissan and Mitsubishi Motors, three car firms, and famed for his Napoleonic manner. By November 20th he was in police custody in Japan, having been accused by Nissan of under-reporting his pay to regulators by around $45m over five years. At least Mr Ghosn can console himself with a different set of figures about how much he is worth. After the news broke the three car firms’ combined market value dropped by $5bn, or 7%. Investors fret that he is the only mortal who can manage the complex alliance between the three companies. Mr Ghosn is at once disgraced and probably impossible to replace.

Key-person risk occurs when an individual’s presence, absence or behaviour disproportionately affects a firm’s value. It might seem counter-intuitive amid the spread of artificial intelligence and a tendency...

via Business Feeds

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