Coping With Financial and Ethical risks
American International Group’s headquarters is located in the American International building in New York. It is a company that is primarily engaged in insurance-related activities in the U.S and abroad, and offers services in more than 130 countries with 116,000 employees worldwide. AIG’s four major segments are general insurance, life insurance and retirement services, financial services and asset management. It was ranked as 16th in Fortune 500 in 2010 and was also known as the world’s fourth largest company according to “Global Forbes” in 2000. The company’s leading position in the global financial services market gives it ...view middle of the document...
The government believed it had to bailout AIG because letting AIG going into bankruptcy could have a negative impact on the global financial market due to the involvement of many other financial institutions or counterparties in this scandal.
2. SWOT ANALYSIS
1. Strong brand name and good financial position globally
2. Excellent brand building and visibility
1. The company suffered from the degradation regarding its credit ratings: this caused the stock to drop, causing a run on the company’s cash on hand, that revealed its lack of liquidity.
2. Lack of internal control, ethical standards and good corporate governance, lack of transparency
3. Lack of understanding of the complexity of the financial products it was selling, leading to its failure to take into account real-world market risks.
4. The company is dependent on the U.S economy
1. Easy expansion in other countries through mergers and acquisitions
2. Diversified portfolio
1. Profitability is tied to the health of the economy
Solutions and recommendations
I would recommend more transparency in conducting business at AIG. It seems the Financial Products unit employees operated in...