'CIOs must assess impacts of euro crisis'

MUMBAI, INDIA: With extreme uncertainty plaguing all enterprises operating in the eurozone, CIOs must act immediately to protect their enterprises, according to Gartner, Inc.

CIOs need to safeguard their enterprises from the risks of government/bank default, euro break-up, counterparty bankruptcy and employee/customer distress.

“Uniquely positioned within their enterprises, CIOs are at the fulcrum of business and technology, and they are the only executives with sufficient visibility and potential capability to address the challenges posed by today's eurozone crisis,” said David Furlonger, vice president and Gartner Fellow.

“Business leaders are crying out for CIOs to demonstrate more effectively the capability of IT and, specifically, to add value to the business. Therefore, this crisis also presents CIOs with an opportunity to make substantial and bold steps to meet CEO demands, and demonstrate the importance and true value of IT,” he added.

According to Andrea Di Maio, vice president and distinguished analyst at Gartner, “Unlike recent economic difficulties, today's crisis has the potential to totally undermine the eurozone, the whole EU and beyond. Spurred on by the pervasiveness of the Internet, the crisis negatively affects every enterprise or individual doing business in or with the region. The CIO's top responsibility is to guarantee business continuity.”

Gartner analysts said there are four broad challenges that the euro crisis raises, and they examined how the CIO is best positioned to provide enterprise leadership on addressing those challenges. These challenges include Market Volatility, Capital Costs, Human Capital Management, Risk Management

“Prior to the crisis, enterprises were already challenged to identify enterprisewide risks in a holistic fashion to link those risks to the performance of the business and to manage risk in a time-effective manner,” Furlonger said.

“Now, the CIO - and corporate treasurer, head trader, CFO and others - need to ask questions such as, 'Can existing risk models accommodate alternatives to the lack of historical data (in many cases, as much as three years of back data is required) necessary for regression testing/yield curve analysis of hedges, and for stressing asset and liability portfolios in the event of a redenomination in all or part of their asset and liability portfolio?”