Risk Conference 2020
The Influence of the Unseen
Intangible assets are the world's new capital. Before the 21st century, physical assets such as plants, property and machines made up the bulk of a company's value. In the digital age, there is more emphasis on intangible services. For example. 85% of the S&P 500 consists of companies that provide digital services. Companies like Facebook, Spotify and Airbnb are difficult to value and control, because they mostly exist in the cloud. But 2019 we had the IPO of Uber, which was valued at 35 billion dollars. Why do people invest in these companies? Are decisions purely rational or influenced by emotions? Moreover, there is the comeback of cryptocurrencies, and exponential growth in cyber attacks. With intangibility in the financial world thriving, it is crucial to understand the influence of the unseen.
The Valuation of Platform CompaniesIn the digital age, platform companies like Uber and Temper are getting more users. Traditional markets have to make room for the platform economy as it is dominating the financial market. People progressively start to use platforms to share their cars and houses. Even though these companies are getting bigger, the financial side of it is still vague. Platform companies do not have many tangible assets. For example, Fooddrop does not own any restaurants and Airbnb does not own the houses that are featured on their website. What does a balance sheet of a platform company look like? How are platform companies valued and are they worth their current market capitalization?
Risk Trade-Off in Cyber SecurityCompanies mostly store their private information in the cloud or on in-house servers. To secure this information, companies need to invest in cyber security. When companies are unable or unwilling to protect themselves sufficiently, it creates opportunities for cyber criminals to break into their systems to steal sensitive data and money. Cyber risks are hard to grasp and discover, therefore protecting your company is complicated and expensive. Companies have to deal with the trade-off between protecting their data versus keeping costs low. How do companies deal with this risk management dilemma?
Behavioural Aspects of Portfolio BuildingInvestors consider themselves as mostly rational, who remain objective in all decisions regarding their portfolio. However, even the most talented experts in the field are being tricked by their subconsciousness to make irrational decisions. In addition, online trading creates a belief among investors that they possess the abilities, knowledge and skills to predict market outcomes. In which way does subconsciousness impact decisions in portfolio building and maintenance? How does the internet strengthen these effects? How can self-control and protection be obtained?
Coping with CryptocurrenciesEveryone has heard about the extreme volatility of cryptocurrencies. Over the last couple of months, the price and popularity of these coins are slowly recovering to pre-crash levels. This resulted in the rapid growth of companies accepting them as a payment method, Thuisbezorgd.nl for example. However, very little is specified about owning these currencies as a company. There are four views on where to record cryptocurrencies: cash (equivalent), financial instruments, intangible assets and inventory. It is also possible for companies to directly convert them into regular currency. Right now, there are various rules on the recording of cryptocurrencies in the bookkeeping. Why do companies accept cryptocurrencies and what happens with the cryptocurrencies once they receive them?