Enterprise Risk Management at GTL

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Case Details:

Case Code : ERMT-008
Case Length : 10 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Global Television Limited
Industry : Information Technology
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Legal and Statutory Risks

If GTL did not meet specified performance requirements, customers might terminate its service agreements. GTL had clearly charted out a review and documentation process that evaluated the legal risks involved, ascertained the legal responsibilities and restricted its contracted liabilities under the contract...

Regulatory Risks

IT and Telecom industries being relatively newer industries, the regulatory framework was in an evolutionary phase. Regulations were changed by the authorities regularly as and when needed. While GTL had systems in place for ensuring compliance with all the existing rules and regulations, it was possible that it might overlook certain aspects or interpret these in a wrong way. This could result in penal and other actions against GTL by the concerned authorities...

Catastrophe Risks

Natural disasters might result in a significant slow down in the demand for the services by corporates in that region...

Human Resources Risks

GTL believed that employees were vital to its success, Competition for good manpower was intense. Attracting and retaining talented people was a major challenge. This was especially so at a time when stock options were looking unattractive. In order to offset the fall in the value of the ESOPs and to fight the dangers of employees being poached by GTL's competitors, GTL might need to increase its staff and administrative expenses and training costs...

Systems, Processes and Controls

GTL's business had grown rapidly in recent times. Future success depended on GTL's ability to manage growth. To manage this growth, GTL would need to:

Expand and enhance operating and financial procedures and controls;
Replace or upgrade operational and financial management information systems;
Attract, train, manage and retain key employees...

Financial Risks

Exchange Rate Fluctuations
37% of GTL's total revenues in 2001 were dollar-denominated. But a large portion of costs was incurred in Indian rupees. If the rupee became stronger vis-a-vis other currencies, GTL would incur losses...

Exhibits

Exhibit I: GTL: Business Structure
Exhibit II: GTL: Business Profile (FY-2001)
Exhibit III: GTL: Sales by Customer Segment
Exhibit IV: GTL: International Sales Analysis
Exhibit V: GTL: Liquidity Position Analysis