MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Venezuela's Reputation Risk

C. HUYGENS - Thursday, August 03, 2017
“Venezuela’s reputational risk isn’t going to get better. On the contrary, it’s only going to get worse….Western investors, already wary of ploughing money into one of the world’s most volatile countries, will be more reluctant to do so given the government’s increasing illegitimacy.”

Read more in the Financial Times.

Brazil: The cost of a bad reputation

C. HUYGENS - Friday, April 04, 2014
The central bank, which does not enjoy formal independence in Brazil, has increased the interest rate by 375 basis points since April 2013. The most recent increase this past Wednesday, ranks Brazil at the top of the league table for the most rate rises globally over the past year, according to Bloomberg data.

Reputation is a reflection of governance, controls and risk management. Weak governance comes at a cost. The Financial Times reports that "Brazil has been under pressure to regain the trust of the market. In March, Standard & Poor’s downgraded the country’s credit rating to BBB-, one notch above junk status, blaming several factors including the economic team’s lack of credibility."

Sovereign intangibles

Nir Kossovsky - Saturday, January 09, 2010
For the few remaining skeptics who read the phrase 'intangible asset finance' as a joke without a punch line, consider this. In the Friday 8 January issue of the Financial Times, Gillian Tett noted that in recent months,

“some of the brightest minds at Moody’s rating agency have been mulling a fascinating question: should they introduce a formal rating of ‘social cohesion’ in sovereign debt indices, when they judge whether a government is likely to default on its debt—or not?”

In other words, if pressed for cash, does a country have enough political and social ‘cohesion’ to make truly tough choices—cutting services or raising taxes—without fomenting revolution? And how do you characterize that risk in a spreadsheet? Hardly a laughing matter, these intangibles, no? 

Dearest Reader:  If the above is winning you over, consider joining the Society and helping us create a rational framework around these critical intangible asset issues. Learn more about us at www.iafinance.org.

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