Report Discusses Criteria For Assigning Management And Governance Scores To Corporate Entities And Insurers
NEW YORK (Standard & Poor’s) Nov. 13, 2012—Standard & Poor’s Ratings Services today published its criteria for evaluating enterprises’ management and governance credit factors in an article titled “Methodology: Management And Governance Credit Factors For Corporate Entities And Insurers.” (See also “How We Use Management And Governance Credit Factors,” published today.)
In conjunction with these criteria, Standard & Poor’s will be publishing scores on corporate entities’ and insurers’ management and governance.
“The analysis of management and governance is one of the most qualitative aspects of our rating methodology,” said Standard & Poor’s Managing Director Steve Dreyer, one of the authors of the new criteria. “These criteria bring enhanced transparency to our ratings by articulating how we score this category of analysis.”
Management and governance encompasses the broad range of oversight and direction conducted by an enterprise’s owners, board representatives, executives, and functional managers. Their strategic competence, organizational effectiveness, and ability to manage risks shape an enterprise’s competitiveness in the marketplace and credit profile. If an enterprise has the ability to manage important strategic and operating risks, then its management plays a positive role in determining its operational success. Alternatively, weak management with a flawed operating strategy or an inability to execute its business plan effectively is likely to substantially weaken an enterprise’s credit profile.
We do not expect any significant rating changes as a result of the implementation of these criteria because they bring enhanced transparency rather than substantive change to our evaluation of management and governance.
Standard & Poor’s has scheduled a Webcast for Thursday, Nov. 15, 2012, at 11:00 a.m. U.S. Eastern Standard Time to discuss the methodology for management and governance credit factors for corporate entities and insurers. To access the live Webcast and/or the replay, please go to http://ratings-events.standardandpoors.com/content/CriteriaWebcast to register.
Speakers for the Webcast from Standard & Poor’s Ratings Services include Steve Dreyer, Managing Director, Corporate Ratings, Mark Puccia, Managing Director, Global Criteria Officer, Ron Joas, Director, Insurance Ratings, and Laurence Hazell, Director, Governance Specialist.