Discuss about the Analysis of SPMS and Competitive Advantage.
The organizations functioning in the current competitive economy try to implement innovative strategies like the strategic performance measurement systems to critically analyse their business process. These methods of evaluation provides significant knowledge to the stakeholders about the performance and sustainability of the organization.
The most common Strategic Performance Management System variant also known as Balance Score Card was introduced in the business to upgrade the business model of an organization. This system enhances the paraphrasing of the strategies, missions and objectives of the firm (Elijido-Ten 2013). These measures are created from the set of objectives derived from the customer, financial, learning and internal process of business perspective.
The current paper tries to analyze the SPMS process of two Australian companies namely QBE Insurance Group and Santos Ltd. A comparison of the annual reports for two years of each organization will be undertaken to evaluate the SPMS process and a comparison of two years. The paper even tries to find out whether this process is in line with the annual reports and any compensations and rewards paid for it.
QBE Insurance Group
QBE Insurance Group is one of the most renowned general insurance and reinsurance organization functioning in all the significant insurance market. QBE is enlisted in the Australian Securities Exchange (ASX). The organization has its headquartered located in Sydney and is currently employing around fourteen thousand people over different countries. The strategy of the firm concentrates on transporting the prospective that arises with being one of world’s true insurers. The firm was established in the year 1886 and currently has a market capitalization of $ 18 billion and has around 2.3% share of the ASX index ("QBE.COM" 2017).
In the current scenario, it is seen that the sustainability reporting and environmental market-driven forces analysis is undertaken by the organization. The risk section of the annual report of the organization addresses the climate change risks of the business organization. It is seen that after analyzing the annual reports and sustainability report of two years, a general idea about the Strategic Performance and Measurement System process for the organization can be determined.
The analysis of the annual report for the year 2015 for QBE Insurance show that there are no precise explanation of the effect of climate change on the business have been discussed but only a indication to an increased number appalling claims in the earlier years and Superstorm in 2012, which had an adverse effect on the monetary condition of a wholly acclaimed captive reinsurer of QBE (Equator Re). It was inclusive of the deductibles and savings made divisionally on various divisional tragedies and unit risk increase of the loss program, which raised further in the next year leading to a decrease in the excess income loss (Calace, 2014).
The annual report of the previous year show that the section of environmental management of risk is in alignment to the Corporate Governance Council principles of ASX (Rodrigue, Magnan and Boulianne 2013). It includes the managing and supervising of the current risks and the opportunities in relation to the climate change in order to diminish any unfavourable impacts on the business of QBE and even secure the funds of the shareholders.
There are no definite reference to the risks involved with climate change in the section of risk in the annual report. The indication towards man-made and natural calamities are the drivers of Insurance risk and the improvement process comprising of recording the historical pricing and claim evaluation and setting a patience to focus risk, reinsurance among the others.
QBE even responses to the Carbon Disclosure Project to easily recognise the risks in the operations of the business, expenditure or revenue due to transformation in the physical climate parameters, the drivers of risk being unsure of the physical risks with an unknown timeframe, magnitude of the effect being low likelihood evaluated about the likeliness or not.
The evaluation of the insinuation of the climate change belongs to a larger part of a risk management network. The problem of climate change is incorporated into the business strategy of QBE. The organization has a Group Committee, which supervises, monitors and provides report on sustainability problems on the basis of the data from the individual divisions. There are employees of QBE in the division that concentrates on evaluating and managing the operational costs and recognizing opportunities to raise the efficiencies (Carraro, Kolstad and Stavins 2015). Contemplation of the financial insinuation of climate change challenges and opportunities is created into our reassessment of the business process management. In every six months, every division undertakes a list related to climate change and takes initiatives within the specified zones and an appointed senior manager provides a report to the Group Chief Officer in a paper, which is forwarded to the QBE Group board. It is even seen that the one of the most vital risks is the prospect under the prediction of the effect of destructive events which are related to transform in the pattern of weather on the organization and on the insurance industry in general (Klovien? and Speziale 2015). There even exist operational risk of claim cost rise due to the effect of the climate change scenarios.
The performance of the company links with the compensation plans and rewards so that the employees are motivated to give out their best. The SPMS evaluation is done by studying the financial performance and the financial measures of the targeted year.
The report on sustainability and climate change risks has been increasing in the ASX listed organizations. Though, it is seen that the data published in the annual report and in an annual sustainability report is only significant to the stakeholders if it is combined with the firm’s results and strategies. It is seen that the two companies QBE Insurance Group and Santos Ltd fail to make a decisive link the SPMS measures, targets with executive rewards and compensation plans.
It is seen that there have been minimum changes in the financial performance of both the companies and both the firms have been able to succeed to tighten their competitive advantage over the two years that have been analyzed.
"QBE.COM". in , , 2017, <https://www.group.qbe.com> [accessed 19 January 2017].
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