Word: enronization
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Dates: during 2000-2009
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...some extent, this public hostility is well deserved. The bankruptcies of Enron in the U.S. and Parmalat in Italy?and last week, the gyrations of Japan's stock market following news of alleged financial wrongdoing by Internet company Livedoor?have focused attention on corporate misdeeds on three continents. Revelations about how the Washington lobbyist Jack Abramoff allegedly bought influence in the U.S. Congress have made a mockery of claims for clean government. The U.N. is struggling to recover from its own high-level corruption scandal relating to the oil-for-food program in prewar Iraq. And, at a time when...
...name Enron may now be synonymous with lost jobs, ruined retirements and galling corporate fraud. But the company--whose former CEOs Kenneth Lay and Jeffrey Skilling go on trial in Houston next week--also left a legacy of bright ideas. Here are three we can (grudgingly) thank...
...LOWER ELECTRICITY BILLS Yes, Enron's market manipulation triggered California's rolling blackouts in 2000, but its unceasing push for deregulation of power markets made an impact. "The trading aspect of their business actually solved a problem," says Brian Hamilton, CEO of Sageworks, a research firm in Raleigh, N.C. Deregulation doesn't work unless traders manage the hour-to-hour gaps between supply and demand and keep those markets efficient. In states like Pennsylvania that have well-designed systems, retail prices have fallen as much as 30% since deregulation took effect...
...SMARTER RISK TAKING Its culture embraced risk--including others'. Enron's Energy Services unit was a pioneer in building a business based on getting other companies to pay to shed risk. It helped concerns like Starwood Hotels handle complex financial instruments that protected them from swings in energy prices. Clients got predictable prices; Enron took on the risk--and potentially huge rewards. One tool Enron had to work with: groundbreaking in-house software for risk management...
...ARMY OF IDEAS With 16 of Enron's execs pleading guilty to various crimes since 2002, it's easy to forget that the company had thousands of employees who moved on without rap sheets and, in many cases, with their novel thinking. Lynda Clemmons, who at Enron pioneered weather derivatives (financial products used to hedge climate-related risk like energy consumption) did the same for XL Weather & Energy. Top Enron trader John Arnold now runs an energy hedge fund, Centaurus, and a group of those pioneering risk specialists started Mobius Risk Group. Enron's top talent might have...