Risk Rap

Rapping About a World at Risk

Sum2 to Exhibit at Everything Jersey Conference

Sum2 will be exhibiting at the Everything Jersey Conference & Expo.

Sum2 will showcase the Profit|Optimizer product series. Current economic conditions are creating an unprecedented demand for this timely small business risk management tool. The Profit|Optimizer can be ordered and downloaded through our e-commerce site.

Sum2 will also demonstrate its award winning AML product PACO™. PACO and related AML compliance products can be ordered through our e-commerce site.

We hope to see you at the show.

Visit www.sum2.com today.Music Video:  Jerry Lewis  The Typewriter Song

Risk: missing the show.



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October 25, 2008 Posted by | commerce, soundtrack, Sum2 | , , , , , , | Leave a comment

SME Development Bank

Over the Labor Day Weekend Sum2 announced The Hamilton Plan. The Hamilton Plan is a ten point program to foster the development of manufacturing in the United States by tapping the entrepreneurial energy of small and mid-size enterprises (SME). The plan’s 10 points address sustainable business models, GRC best practices, capital formation initiatives, SME banking, labor union stakeholder empowerment, association syndication, cooperative formation, support for public education and cooperative learning.

This is an introduction to The Hamilton Plan, why it’s needed and the call for the creation of an SME Development Bank (SDB) to facilitate capital formation to achieve the goals of the program.

The Hamilton Plan, named after the first Secretary of the Treasury of the United States, proposes a ten point program to develop small and mid-size enterprise (SME) manufactures. The Hamilton Plan invites business owners and executives, industry associations, chambers of commerce, banks, capital market participants, labor unions, academia, non-profit organizations and governmental institutions to join forces in a concerted effort to support the reestablishment of the manufacturing infrastructure of the United States.

The vital national interest can be served by institutions representing business, labor, local communities and government to join together to foster optimal conditions to incubate and develop SME manufactures. SMEs are a natural strength of the US economy. SME represent largest most vibrant sector of the economy and by combining the entrepreneurial drive and creative energy of SME’s with the pressing need for innovative manufactures; America can reestablish its ascendancy as a preeminent power in the global economy. The Hamilton Plan is designed to provide incentives and encourage the formation of support clusters to develop SME manufacturing.

The Hamilton Plan:

1. Adoption of World Business Council Standards for Sustainable Business

2. Establish Incubators for Targeted Growth Industries

3. Adopt Sound Governance, Risk, Compliance Practices (GRC)

4. Formation of SME Development Bank / Capital Formation Initiatives

5. Partnership Lyceums for Government / Business / Academic Institutions

6. Labor Unions as Preferred Stakeholder / Association Syndication Unions

7. Establish Cooperatives for Technology / Licensing / Commodities / Energy

8. Superfund for Progressive Tax Code / Universal Health & Benefits

Infrastructure Investment / Brownfield Remediation and Reclamation

9. Expand Public Education Funding & SME COOP Program

10. Support Millennium Development Goals

Capital Formation Key to Success

The Hamilton Plan in its entirety is designed to respond to the compounding economic and political crisis that is confronting the United States. The credit crisis, energy dependence, industrial stasis, trade deficits, geo-political instabilities, aging infrastructure and climate change are the result of long term systemic problems that government and industry has failed to address effectively. The Hamilton Plan advocates the adoption of the program to squarely address these pressing issues with the full understanding that it will require the concerted cooperation of all stakeholders to assure the continued development, security and prosperity of America.

The Hamilton Plan requires concerted focus of investment capital to fund development and to make sure that assets are allocated to channels that will assure optimal returns and that equity participation of stakeholders is protected and rewarded. The establishment of an SME Development Bank (SDB) is a structured investment vehicle and corporate institution that will focus, manage and administer capital formation initiatives to incubate and develop SME manufactures.

At its core, The Hamilton Plan seeks to preserve the free flow of investment capital to finance national economic development and empower SME manufactures. The Hamilton Plan is not a substitution nor in any way seeks to supplant the American free market system. The Plan is designed to unleash, pool and focus investment capital. The Plan leverages regulatory capital, compliance and governance. The Plan seeks to achieve strategic economic goals, build wealth and prosperity in US and realize broader goals and objectives to assure sustainable economic growth, nurture innovation,  ecological balance and global competitiveness.

SME Development Bank (SDB)

The SDB would be chartered to assure that capital is deployed to meet appropriate program projects and assure effective stewardship of shareholders capital. The SDB would be the repository for economic and regulatory capital. It would maintain capital adequacy ratios in conformance with Basel II directives. The SDB would serve as a fiduciary to distribute capital through local community banking channels. SDB governance would assure that program objectives, ownership equity, credit requirements, capital allocations, shareholder rights and income distributions are made to SDB shareholders.

Government funding of the SDB would consist of share purchases financed by capital from a national development Superfund. The Superfund would receive tax receipts from a progressive national tax program, budget allocations, licensing and royalty receipts, dividend reinvestment’s and capital gains proceeds from the sale of assets.

Shareholders in the SDB would be community banks, institutional fund managers, state/local/federal government, private equity firms, business owners, company management, associations, labor unions, employees, academic institutions, non-profits organizations. Different forms of capital would be recognized and used to purchase shares in the SDB. For example, local governments can purchase shares in the SDB with tax credits or land grants or infrastructure improvement projects; labor can purchase shares with sweat equity, academic institutions with intellectual capital etc.

Securitization of SDB shares can be created to trade on public exchanges. Any secondary market listings would occur after underlying assets have been properly seasoned. Shares in the SDB would offer terms of extended time frames for investment lockup and share redemption.

Community Bankers as Risk Managers and Distribution Conduits

Community Banks have a critical role as an SDB equity partner. The community bank is the primary channel by which equity and credit capital is provided to the SME. They are front line risk managers and advisors for portfolio companies. Community banks are astute relationship managers. Community banks understand local market conditions and can link assets and service providers to build support clusters and expanded value chains for SMEs. Community bankers will help SMEs focus on capital allocation strategies and support efforts in encourage growth and profitability.

They will provide help in the following areas:

Corporate Governance
Risk Management
Business Promotion, Acceleration and Development
Corporate Advisory Services
Information Services
Performance Evaluation Services

Community banks will be offered regulatory capital relief through its equity participation in the SDB. Community banks will form a joint back office (JBO) to address regulatory capital requirements for its participation and share ownership in the SDB. Community banks must continue fulfill capital requirements for retail banking and other lines of business in accordance with regulatory requirements of its governing agency. State regulatory agencies relating to SME banking regulation, enforcement and inspection would conform to a unified national banking regulatory agency.

Community banks will share in the equity appreciation of the SME and any distributions, dividends or corporate actions the Board of the SDB effects. The differentiation of credit and equity capital participation will be accounted for at the SDB level. Administrators for hedge funds and other Alternative Investment Vehicles have developed sophisticated partnership and shareholding accounting capabilities that can address questions of share class ownership, tranche construction and attributes, asset valuation, distributions and returns.

The community bank in working in conjunction with the SDB will help SME’s effectively manage risk, improve stakeholder communication, implement effective corporate governance that create sustainable business practices to assure long term profitability and growth.

The Hamilton Plan lays the foundation for SMEs to seize market opportunities. SMEs in partnership with community bankers must assess products and markets, business functions and critical success factors. Sufficiently capitalized by the SDB, the SME and local bankers will execute an action plan to support the corporate mission in line with the larger goals of The Hamilton Plan to build wealth for its shareholders and assure the future prosperity of America.

Song: Average White Band: Work To Do

Risk: manufacturing, small and mid-size business, global competitiveness, middle class, national prosperity

September 3, 2008 Posted by | Hamilton Plan, hedge funds, manufacturing, Millennium Development Goals, pop, recession, SME | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments

The Hamilton Plan: Reindustrialization of America

Photograph By Anthony Augustine



Sum2 Announces

The Hamilton Plan:

A Ten Point Program to Develop

Small and Mid-Size Enterprise (SME) Manufactures

Great Falls Festival

Paterson NJ, Labor Day 2008

Sum2 is proud to be participating again in this year’s historic Great Falls Festival and is pleased to announce The Hamilton Plan, a ten point program to develop small and mid-size enterprise (SME) manufactures. The Paterson Great Falls Festival is the perfect opportunity for Sum2 to invite business owners and executives, industry associations, chambers of commerce, banks, capital market participants, labor unions, academia, non-profit organizations and governmental institutions to join forces in a concerted effort to support the reestablishment of the manufacturing infrastructure of the United States.

“Many of the economic, political and cultural challenges confronting the United States can be traced back to the dismantling of our industrial and manufacturing base” stated James McCallum President of Sum2. “Since the 1980’s America’s economic infrastructure has dramatically changed. The evolution of our economy to service oriented businesses has seriously eroded the manufacturing capabilities and industrial capacity of our country. This has produced a decline of higher wage paying jobs, the disincentive to develop innovative manufacturing methods and practices, deteriorating support infrastructure and the impairment of ancillary support businesses.

It’s in the vital national interest for institutions representing business, labor, communities and government cooperate to foster optimal conditions to incubate and develop SME manufactures. The SME segment is the largest most vibrant sector of our economy and by combining the entrepreneurial drive and creative energy of SME’s with our pressing need for innovative manufactures; America can reestablish its ascendancy as a preeminent power in the global economy. Sum2’s Hamilton Plan is designed to encourage the formation of support clusters to develop SME manufacturing.

The Hamilton Plan

1. WBC Standards for Sustainable Business Model
2. Establish Incubators for Targeted Growth Industries
3. Adopt Sound Governance, Risk, Compliance Practices (GRC)
4. Form SME Development Bank / Private Equity Capital Formation Initiatives
5. Partnership Lyceums for Government / Business / Academic Institutions
6. Labor Unions as Preferred Stakeholder / Association Syndication Unions
7. Establish Cooperatives for Technology / Licensing / Commodity / Energy
8. Superfund for Progressive Tax Code / Universal Health & Benefits /
Infrastructure / Brownfield Remediation and Reclamation
9. Expand Public Education Funding & SME COOP Program
10. Support Millennium Development Goals

Historical Significance of Paterson’s Great Falls

Paterson’s Great Falls Festival is an ideal venue to announce the Hamilton Plan. The Friends of the Great Falls website writes that in 1791, Alexander Hamilton and a group of investors created the S.U.M., the Society for Establishing Useful Manufactures, to harness the tremendous power of the Passaic Great Falls. It was the boldest private enterprise ever conceived in the early days of the United States. Hamilton envisioned an industrialized America and the creation of this raceway system was his ambitious example of how corporations could be organized to develop manufacturing on a large scale. With this enterprise, along with the law, finance and incentives he put in place as the nation’s first Secretary of the Treasurer, Hamilton forged the basis of American capitalism. The planned industrialization of this historic place is the realization of the Hamiltonian vision of an industrialized America. This is truly a founding father’s site.

Sum2 Sound Practice Thought Leader

Sum2’s announcement of the Hamilton Plan is in response to the compounding economic and political crisis that is confronting the United States. The credit and energy crisis, inflation pressures, trade deficits, geo-political instabilities, global warming and ecological degradation are the result of long term systemic problems that government and industry has failed to address effectively. Sum2 advocates the adoption of the program to squarely address these pressing issues with the full understanding that it will require the concerted cooperation of all stakeholders to assure the continued development, security and prosperity of America.

Sum2 offers a series of products and services to help SME’s effectively manage risk, improve stakeholder communication, implement effective corporate governance that create sustainable business practices to assure long term profitability and growth.

At last years Great Falls Festival, Sum2 announced its new product series the SMB|360°. Since that announcement the series has expended to include, the Profit|Optimizer and a soon to be announced premium product that that will expand the breath and depth of the SMB|360° product series.

The Profit|Optimizer is a qualitative risk assessment and opportunity discover tool. It assists SME’s to identify and score business vulnerabilities and opportunities. The Profit|Optimizer conducts over 200 assessments encompassing products and markets, business functions and critical success factors. The Profit|Optimizer aggregates assessment scores and presents initiatives on a series of dashboards that allows business managers to decide what action items mitigates the greatest risk and produces the greatest return. Managers can make informed capital allocation decisions to build profitability and maintain business growth.

The Profit|Optimizer demonstrates to shareholders, bankers and other stakeholders that company management are effective risk managers that are committed to practicing corporate governance excellence.

Sum2 also offers the award winning PACO™ (Patriot Act Compliance Officer). PACO™ helps financial services companies comply with the anti-money laundering provision of the Patriot Act.

About Sum2

Sum2 was founded in 2002 to promote the commercial application of sound practice programs. Sum2’s sound practice program addresses risk management, corporate governance, shareholder communications and regulatory compliance. Sum2’s objective is to assist businesses and industries to implement corporate sound practices that add exponential value for stakeholders, employees, customers and to be exemplary citizens within the communities in which they operate and serve.

Sum2 manufactures, aggregates, packages and distributes innovative digital data content products to selected channels and markets.

Music: Billy Joels Allentown

Risk: unemployment, urban decay, global competitiveness, national security, protection of middle class

August 30, 2008 Posted by | Hamilton Plan, manufacturing, pop, recession, SME, Sum2 | , , , , , , , , , , , | 4 Comments

Hamilton Mortally Wounded in Weehawken Duel

We would be greatly remiss if we failed to mark this day, the 204th anniversary of the famous duel that mortally wounded Alexander Hamilton – our inspiration and the founder of the original SUM. Alexander Hamilton was an important visionary whose actions and ideas played a pivotal role in creating America. Alexander Hamilton was a forward looking progressive force, considered the father of industrial capitalism and an author of Federalism in the United States.

Hamilton along with James Madison and John Jay wrote the Federalist Papers to outline the form, function and philosophy of a strong central government and the necessity of Federalism to assure the survival of our yet to be born republic. Arguing against Federalism was Thomas Jefferson who advocated a more decentralized government that favored state sovereignty.

Sum2 takes its name from the Society for Establishing Useful Manufactures (S.U.M.), S.U.M. was founded by Alexander Hamilton in 1793. The purpose of S.U.M was to promote useful manufacturing by using the water power generated by the Great Falls. S.U.M was the first planned industrial city in North America and should rightly be considered the cradle of industrial capitalism in North America. The area of S.U.M.’s founding was later incorporated as the City of Paterson New Jersey, which would grow to become a major industrial center from the 1800’s through World War 2. Paterson was a key munitions, textile and locomotive manufacturing center during the Civil War and thus played a pivotal role in helping preserve Alexander Hamilton’s conception of a Federalist Union of States.

Though the landscape of industrial capitalism has changed, Sum2 was founded to continue the useful and visionary work of the original S.U.M. Sum2 recognizes the strategic importance of manufacturing and will seek to build our business by creating proprietary content, innovative delivery capabilities and mission critical products to implement corporate sound practices for our clients.

How about some dueling banjos.

Risk: Federalism

July 11, 2008 Posted by | Federalism, folk, history, Sum2 | , , , , | Leave a comment

National Small Business Summit and the Credit Crisis

Sum2 will be participating in this year National Small Business Summit in Washington DC.

The summit sponsored by the National Federation of Independent Businesses, calls together NFIB members and friends to examine and discuss pressing issues and concerns that affect small businesses.

Sum2 will voice a shared concern of many of its clients about the necessity of small businesses to be assured that access to capital during this credit crisis not be threatened. Community banks have an important role to play and government representatives need to be aware of their significance as a primary credit channel for small and mid-size businesses.

Leaders from the world of business and government will be brought together so that a concerted voice that represents the interests of small business can be heard by our elected representatives in the congress and senate.

This years conference will feature key note addresses by, Senator John McCain, Senator John Kerrey, former Press Secretary Tony Snow, former ebay CEO Meg Whitman and Hall of Fame Quarterback and business person Rodger Staubach.

The full summit’s agenda can be viewed here.

Sum2 is a recognized leader in providing risk management innovative solutions to small and mid-size businesses. We are very pleased to be participating in this event and look forward to voicing the concerns of our clients, partners and friends to the elected officials of our representative democracy.

If you have any ideas or suggestions that you would like us to raise please send us a note.

We look forward to hearing from you.

And we’ll keep working for you and our shared interests.

You Tube Video: Vanessa Williams, Work To Do

Risk: small business, political, credit, community banking, representation

June 5, 2008 Posted by | commerce, credit crisis, risk management, SME, Sum2 | , , , , , , | Leave a comment

Macroeconomic Risk Impacts SMEs

Small and mid-size enterprises (SME) are acutely susceptible to the negative impact of macroeconomic risk factors. Macroeconomic risk factors such as inflation, interest rates, market cycles, market regionalism, credit and labor availability, and fuel costs conspire to drain profitability and financial health of small and mid-size businesses.

Though issues of scale are principal culprits that enhance the negative impact of macroeconomic factors on SME’s, other factors such as risk concentration in product markets, clients, and supply chain; silo business functions and lack of specialized treasury functions to hedge risk and maximize capital allocation returns also contribute to enhanced macroeconomic risk profile of SME’s.

To help SME’s to better understand and manage the impact of macroeconomic risk factors on their business; Sum2 is providing the Profit|Optimizer Macroeconomic Test to small business owners and managers at no charge. The test is a module from the Profit|Optimizer product which provides a thorough risk assessment and opportunity discovery review of a small business enterprise.

The test can be accessed by clicking this Profit|Optimizer hyper link.

We hope to be of service. Take the test.

You Tube Video: Charley Brown

Risk: SME, Macroeconomic Risk, Inflation, CRG, Risk Management

May 31, 2008 Posted by | risk management, SME, Sum2 | , , , , , , , , | Leave a comment

Rebuilding America’s Manufacturing with Better Process

Sum2 recently participated in a Podcast sponsored by Better Process Podcast. The subject of the podcast was GRC for SMEs.

Better Process Podcast discusses news and market events that address manufacturing issues. The topics range from US manufacturing, China competition, RFID, lean manufacturing, and manufacturing technology.

Better Process podcasts was founded by Ken Rayment. Ken is a Black Belt Six Sigma guy who has a passion for his work and is deeply commited to the development and revitalization of manufacturing in the United States.

Sum2 caught Ken’s attention through a press release we issued offering free access to the Profit|Optimizers macroeconomic risk module. Though Sum2’s market focus is small and midsize businesses we are heartened and honored to participate in the Bettter Process podcast series.

Sum2 takes its name from the Society for Establishing Useful Manufactures (S.U.M.), S.U.M. was founded by Alexander Hamilton in 1793. The purpose of S.U.M was to promote useful manufacturing by using the waterpower generated by the Great Falls. S.U.M was the first planned industrial city in North America and should rightly be considered the cradle of industrial capitalism in North America. The area of S.U.M.’s founding was later incorporated as the City of Paterson New Jersey, which would grow to become a major industrial center from the 1800’s through World War 2. Paterson was a key munitions, textile and locomotive manufacture center during the Civil War and thus played a pivotal role in helping preserve Alexander Hamilton’s conception of a Federalist Union of States.

Though the landscape of industrial capitalism has changed during the Information Age, Sum2 was founded to continue the useful and visionary work of the original S.U.M. Sum2 recognizes the strategic importance of manufacturing and will seek to build our business by creating proprietary content, ASP delivery capabilities and mission critical software to implement corporate sound practices for our clients as they seek to create value in the digital economy.

Podcast: Better Process, Sum2 GRC

Risk: Manufacturing, Capital Formation, Podcasting, Profit|Optimizer, Sum2, Six Sigma, SMB Risk Management

May 13, 2008 Posted by | commerce, manufacturing, SME, Sum2 | , , , , , , , , | Leave a comment

Corporate Credit Markets Redux

This morning I attended a Standard and Poors presentation on Emerging Issues in Fixed Income Market. It was extremely well done. The presenters offered some interesting data and insights concerning the health of the corporate bond markets.

Key Takeaways:

  • Tighter lending conditions spell heightened risk of defaults
  • Two-Thirds (66%) of Non-Financial US Corporate Bonds are Speculative Grade
  • A spike in lower grade new issues from 2004 through 2007 will feed default supply
  • Consumer Discretionary Market Sector is weakest (media/entertainment, consumer products, retail)
  • Corporate defaults will escalate in late 2008 through 2009 and will trough in 2010.
  • This year’s baseline default rate forecast is 4.7%, with a high of 8.5% and a low of 3.7%

What interests me is the degree to which these prognostications may reflect similar default and business distress rates in the small and mid-size business market (SMB). My initial guess is that SMB’s will not experience a similar level of default. I don’t believe that SMB’s are as leveraged as public companies. But credit risk remains a pressing problem for SMB’s and the dramatic curtailment of bank lending heightens default risk.

SMB’s that sell to public companies should take time to study the financial condition of these corporate accounts. Defaults are painful for investors and creditors. Having a large unmet receivable exposure can seriously damage the financial health of an SMB.

I do believe that the forecast for the consumer discretionary sector is very relevant for SMB’s. SMB’s in this sector will not escape the pressures of the economic downturn. High fuel costs, consumer spending capability and inflation will dramatically hurt this sector and may result in increased defaults as the economic slowdown takes hold.

We highly recommend that SMB’s purchase the Profit|Optimizer to mitigate the effects of these risks.

You Tube Video: Louis Jordan, Let the Good Times Roll

Risk: Credit Risk, Corporate Defaults, Consumer Product Market, Small Mid-Size Businesses

May 2, 2008 Posted by | banking, blues, credit crisis, recession, SME, Sum2 | , , , , , , , , | Leave a comment