Currently the Eurozone risks are estimated to be split roughly into currency risks and interest rate risks. All other effects are mainly derivative from these two risks.
Likelihood of losses
Preparations for interest rate risk are possible when using the project portfolio. With Thinking Portfolio it is possible to determine a project-specific interest rate risk as part of the business case.
At the end of the day the question is about the likelihood of losses and the demands for profit. From the Thinking Portfolio perspective both of these are simple so-called standard criteria.
Demands for profit in relation to risks
Therefore it is possible for an organisation using Thinking Portfolio to produce a simple report which, for example, lists the projects in relation to minimum demands for profit and interest sensitivity. This can be used to estimate at which level the organisation is ready to start new projects or development programmes in current situation.
Re-allocate the project portfolio resources
Respectively we can simply list those projects where the estimated cash flow is sufficient in relation to the profit target, and give them increased priority by transferring resources from the projects with higher risk level or lower profit target. In practice active portfolio management can help us to adapt to the current uncertainty in the Eurozone.
If the required criteria are still missing from the project portfolio it is advisable to contact us so that we can activate the criteria into the project portfolio without delay.
It is time to move from the spreadsheet to the next level
We advise that those organisations where portfolio management is still at the spreadsheet level start thinking about moving on to the next level of tools without delay. Thus they will ensure that the business administration has the tools for managing the scenario for the challenging times ahead.
Preparing for currency risks is more or less ostensible because the possibly larger currency risk in the Eurozone is clearly more illogical than the interest rate risks.