advocare international , l.p. is an american multi-level marketing company that sells dietary supplements .

the company , headquartered in plano , texas , was founded in 1993 by charles ragus and employed roughly 250 people in 2013 .

advocare distributes its products in the united states through a network of approximately 60,000 independent distributors ,

advocare

advocare sports on twitter :
. @ advocare distributors are pumped and ready for # fitwithfroning workout ! # successschool2017 @ advocare…
basic rundown of history of advocare , and how i can help you build your advocare business from scratch . urltoken
advocare incorporated ( advocare ) is an independent , community based , not for profit organisation that supports and protects the rights of older people and people with disabilities .
by the way , i don’t sell advocare . i am just a customer .
find an advocare distributor you like , order some product , then talk business .
in may 2007 , richard h . wright joined advocare as president and ceo .
most pro sports and olympic athletes use advocare and only 1 tried to blame advocare for for such an issue and the tests were negative and a false claim .
advocare international is disputing an arbitration panel ' s finding that a contaminated advocare dietary supplement caused swimmer jessica hardy to test positive for a banned performance enhancing substance .
advocare also sponsors the advocare texas kickoff game played during labor day weekend at reliant stadium , and rootes said adding the december bowl game provides additional value for the company .
advocare international , l . p . , v . badgett , bruce and teresa badgett
copyright © 2018 advocare incorporated . all rights reserved . privacy policy | terms of use
advocare says it’s only safe to do a 24 day challenge once every 90 days .
i agree that giving people some samples of your advocare products is really a great move .
federal trade commission : the direct sales company advocare international should be investigated by the ftc .
i used advocare for a month and ended up with a bad kidney infection from it .
i recently became a advocare distributor , but i didn’t read your blog and listen to your webinar first to read that you chose sisel . i probably would have chosen advocare anyway , i’ve been using the products for some time . will your mlsp course help for advocare as well ?
after this story published , advocare issued a statement in response , which can be accessed here .
is advocare a scam ? the company advocare uses athletes like drew brees to promote products . npr ' s rachel martin speaks with mina kimes of espn the magazine about allegations against the organization .
every advocare distributor can make up to 40 percent of profits on every product that they sell .
advocare is not foreign to lawsuits and other forms of controversy . here are a few instances :
i liken that to those that say advocare fooled them , or took their money . there ' s more to the story . . . . . and it has nothing to do with advocare .
certified for sport - eas and redbull have been tested , accepted and listed . advocare is not .
race at texas motor speedway , ” says allison levy , advocare’s executive vice president and chief legal officer .
i’d like to share a few things that have helped me immensely in the industry , that i know can help you grow your advocare business as well . these advocare success tips are listed in no particular order .
dudrick , just like an advocare advisor or distributor , has a vested interest in the company . what he has created still does not change the fact that advocare preys upon the out of shape and overweight person .
last weekend , we interviewed mina kimes of espn the magazine about her article on advocare , a multilevel marketing company . in her piece kimes quotes dozens of former advocare salespeople who were unhappy with their experience with the company . advocare says the characterization of the company drawn in the piece is incorrect and requested a chance to respond .
trevor bayne and advocare are locked into the no . 6 roush fenway racing ford for the next three seasons .
giving away a free premium when someone becomes a customer or distributor in your advocare business is a smart move .
petition · federal trade commission : the direct sales company advocare international should be investigated by the ftc . · urltoken
advocare is a direct sales company . besides selling the 70 + products offered by advocare , distributors can earn additional
overrides
( more compensation ) from newer distributors in the sales network . advocare ' s distributors , according to their financial disclosure statements , stated that distributors could make up to 40 % commissions on every product they sell .
why are all these people involved in advocare ?
he continues .
because it ' s a viable business , and they believe in the products , what they are selling and in advocare . and so do i .
an earlier web version of this story inaccurately used the phrase
pyramid scheme
to describe advocare ' s activities .
advocare reviews are all over the internet . the complaints , the love , the scam accusations . i’m not affiliated with advocare at all , but i am a network marketing professional who has seen people rise and fall in mlm companies .
advocare distributors love the advocare weight lost products – the cleanse in particular , it seems . the one thing it seems distributors have the biggest issue with – like many network marketing companies – is finding people to talk to about their business .
dr . hackman lives and works in california . he has been with advocare since its inception and partnered with rangis ( the founder of advocare ) . he can be seen here stressing the benefit of healthy eating with whole , fresh foods .
advocare ' s sports ties run deep , from its high - profile athlete endorsers to its sponsored events , like the advocare cowboys classic at at & t ; stadium in dallas in 2014 . ( the game was broadcast by espn on abc . )
there you have it folks . these are my top advocare success tips so you can make more money with advocare . what are your thoughts ? leave a comment below to let me know what you think . i look forward to hearing from you .
if you’d like to learn more visit the advo - truth facebook page , the advocare facts blog , or the urltoken blog .
advocare’s most popular product seems to be their spark energy drink , which is the product drew brees is most often associated with .
good for you , david . advocare is a great company . keep up the good work and keep moving your business forward .
while advocare may not pay drew brees directly , they supply him and his family with all of the product they want . advocare is also a contributor to the
drew brees foundation . the biggest contradiction to the
unpaid endorser
claim can be found on drew brees personal website . here he lists all of the financial sponsors who support him . advocare is on that list .
olympic swimmer , jessica hardy , was notified on july 23 , 2008 that her blood tests tested positive for clenbuterol . hardy has claimed innocence and said she has never even heard of clenbuterol , attributing her positive drug result to either a tainted nutritional supplement or sabotage . hardy was taking advocare supplements at the time and sued advocare for supplying tainted supplements ; advocare countersued for making false claims . advocare disputed the findings of the arbitration hearing , which found that the supplements were contaminated , and reduced hardy ' s suspension .
advocare , based in plano , texas , first appeared on the nascar scene in 2011 as a sponsor for the sprint cup race at atlanta motor speedway . the following year , advocare expanded its involvement with sponsorship of the no . 3 richard childress racing team in nns as well as an additional cup race at phoenix international raceway . most recently , advocare supported austin dillon’s nationwide series effort .
dr . keen lives and works in california . again , in the listing of his professional accomplishments and affiliations , there is no professional mention of advocare . but dr . keen is listed on the board of pistachio health and also an advocare competitor , herbalife .
20 . • s an advisor , you have the potential to earn income 5 a ways with advocare • he following is an overview of 5 of the ways an t advocare independent distributor can earn income • ach slide has been created to give you a general , but e clear , overview of the earning potential offered through our compensation plan • lease refer to advocare international’s policy and p procedures for complete details and / or technical details concerning the compensation plan personal testimonials reflect individual experiences of advocare independent distributors and are not necessarily typical of the results you may obtain . weight loss varies with individual effort , body composition , eating patterns and exercise . if you have a medical condition or are pregnant or nursing . advocare recommends that you consult your healthcare professional before starting an advocare product regimen .
nfl , nhl , mlb etc - outrageous claims were made about advocare being the only supplements allowed in pro locker rooms . all supplements used by pro athletes are screened and cleared by nsf international . only three companies are allowed and advocare is not one of them .
advocare stopped offering kickstart spark targeted at children ages 4 - 11 due to medical concerns since the product contained 60 mg of caffeine .
the multi - level marketing company advocare responds to last week ' s conversation between npr ' s rachel martin and espn journalist mina kimes .
the lawsuit where advocare was charged $ 1 . 9 million in damages for releasing two sales distributors ( the lawsuit was eventually overturned ) .
you should all be excited ,
he said .
because of you , we ' re gonna make advocare a household name !
martin : the company in question is called advocare . so just describe who they are . what is this company ? what do they do ?
in an ideal world there would be no need for advocare to provide support and advocacy for older people and people with disabilities . but while there is a need , advocare proudly wears the badge of supporter and advocate . it stands ready to meet the challenges of the next 10 years .
coco palms tanning & smoothies is proud to offer the full line of advocare products , a respected and results - driven supplement line for losing weight and increasing your overall health . advocare offers everything from supplements to protein powder , pre - and post - workout formulas , and so much more . if you’re already looking your best with a great tan and fueling your body with our healthy smoothies , keep the momentum going with advocare .
if you do a quick google search , your results will contain page after page of
advocare branded
web pages . many of these web sites are directly set up by advocare while many more are in place through advocare
distributors
; people trying desperately to make a few bucks by selling their products . if you know anything about internet marketing , you know that
flooding
search results is an oft used tactic in an attempt to squeeze out traffic to competitors web sites . advocare seems to have this area covered . so , one needs to dig a little deeper .
advocare international , the plano - based company that markets nutrition , weight - loss , energy and sports performance products , will be announced today as the new title sponsor of the advocare texas bowl , the december college bowl game at reliant stadium owned by espn regional television and operated by the texans .
hurry ! free shipping for advocare one / 80® commit orders is coming to an end july 11 at 11 : 59 p . m . ct !
advocare does offer a meal replacement shake but is only to replace 1 meal a day . you still need to eat 2 additional meals and snacks .
join me while we take a look look through reviews of advocare to see if it’s a legitimate business opportunity for you , or a complete scam .
noooooo . the individuals using / selling advocare do it for all different reasons . and good products will sell with whatever business plan it goes with .
we also liked the debt buster program with advocare . they were the only company that we have reviewed that provided financial management advice for its distributors .
after testing positive , she hired los angeles - based anti - doping research to test the advocare products and found both contained clenbuterol , the lawsuit said .
with the saints qb leading the way , advocare is using its sports ties to build a nutrition empire . but is the company really pushing false hope ?
this course of action is heavily promoted by one of advocare’s top earners , danny mcdaniel , to help deflect any negative rhetoric and avoid even reasonable questions . even though this tactic is used to avoid the truth , it doesn’t change the fact that more than ninety - eight percent of all active distributors have failed to make any serious money since advocare was founded ( see income disclosure statement ) , and there is no real proof that advocare’s products work as claimed .
there are other ways to develop a good flow of residual income besides selling advocare products . blogging is always popular and writing about what you love , like you’re doing here , has made many people successful . just like advocare though , it requires a concerted , consistent effort ; you just can’t give up .
overall , we were confident that distributors would be pretty happy working with advocare . the 40 percent profit margin on items was generous . also , we felt that the discounts for distributors and advisors was generous , at 20 percent and 40 percent respectively . we recommend advocare , both for their products and for distributors .
a few hundred spectators showed up friday to watch the saints practice at the new 55 , 000 - square - foot advocare sports performance center at the greenbrier .
“advocare has been an outstanding partner to work with , and i am really excited to continue this relationship and represent advocare for three more seasons , ” bayne said in the release . “it’s a top - notch organization with a great group of employees and independent distributors who share our core principles of hard work and determination .
trevor bayne and the no . 6 roush fenway racing ford team will partner with leading health and wellness company advocare for the full 2014 nascar nationwide series season .
let the summer celebrations begin with all new advocare rehydrate® berry lemon ice . trust us when we say this flavor will change the way you hydrate this summer !
one thing that i did not see you mention was that advocare’s products are not gluten free . this is a big deal for alot of us out there .
disclaimer : advocare is a registered trademark . the views in this article are just my opinion and may differ from the company’s views . individual results will vary .
advocare employs around 247 people in the united states and claimed net sales of fewer than 100 million in 2009 . its corporate headquarters are in carrollton , tx .
they have been stealing pictures of people who use beachbody products and using them to sell their own . advocare is a scam ! ! . . .
the company advocare uses athletes like drew brees to promote products . npr ' s rachel martin speaks with mina kimes of espn the magazine about allegations against the organization .
their roll in advocare is small , monetarily motivated , and while the research they do may be a foundation for some of advocares products , they have little to do with their formulation . if any of these individuals fully believe in advocare , then they would publish it along with all of the other boards and projects they list .
advocare has many good things going for it . here is what we found out about their compensation for distributors , called the
5 ways to earn income
:
olympic swimmer jessica hardy tested positive for banned breathing enhancer , clenbuterol . hardy was taking arginine extreme , a free supplement from advocare , which had clenbuterol in it .
the company also sponsors a nascar sprint cup car and in 2015 became the
official sports nutrition partner
of mls . there ' s an ncaa basketball tournament called the advocare invitational and football ' s advocare v100 texas bowl , both owned and broadcast by espn . the network also owns the advocare texas kickoff . ( independent of his role at espn , analyst dr . jerry punch sits on the company ' s sports advisory council ; nfl analyst trent dilfer is a former endorser . in a statement , espn said of the network ' s business with the company :
advocare sponsors select espn - operated events and is also a sponsor across select espn platforms .
)
recommending diet and lifestyle changes is common sense , but it is also a smart business practice on the part of advocare . there are a lot of wonderful , inspirational stories that you will hear about people using advocare products . i suspect that many of those transformations come from the nutrition and fitness programs that people have started and not the products themselves .
networking and information sharing is an important part of the work of advocare . it serves to increase awareness of the need for advocacy , and also allows for the staff at advocare to keep abreast of new issues and new approaches to service provision . advocare is actively involved in the australian network for the prevention of elder abuse . at a state level it is member of the western australian network for the prevention of elder abuse , the seniors alliance , and funds a part time executive officer for the alliance for the prevention of elder abuse .
“advocare is extremely proud to call roush fenway racing and trevor bayne partners , and we look forward to continuing our great relationship on and off the track . we are also excited about
great advocare review elliott ! i was in it for a hot minute…loved the spark… . it just wasn’t for me though…too many home parties and too many pills for my taste… = )
these are some great success tips , chuck . i’ve been struggling to build my advocare business for the past 11 months . hopefully , this can help me get over the hump .
advocare supports the drew brees foundation , started by drew and his wife brittany and participated in the
the amazing race
event in new orleans presented by the foundation .
i agree with you that there are many different ways to make money online or offline . while advocare is a great business model , it is by no means the only business model .
a dallas county jury awarded $ 1 . 9 million in damages against advocare in 2009 . the lawsuit was based on allegations of deceptive trade practices and unfairly cancelled agreements . bruce and teresa badgett were let go from their distributor contract unfairly . on top of the $ 1 . 9 million in damages , advocare was forced to also pay the badgett ' s legal fees .
through their day to day contact with clients and the staff who provide care , the advocates at advocare have developed a strong understanding of the need for older people and people with disabilities to have their rights supported and upheld . advocare takes every opportunity to promote this with funders and decision makers . in its first year of operation advocare made a submission to the wa ministry of justice and has since made other submissions to inquiries by the senate and the house of representatives committees . where knowledge was lacking , advocare has initiated its own inquiries , in 2002 it conducted a research project to ascertain incidence and prevalence of elder abuse in wa and , more recently , a pilot study with the intent of gaining a better understanding of the experience of elder abuse .
it makes complete sense to find people that love the advocare products because then they can really promote them . someone who doesn’t like the products and just wants to make some quick cash isn’t going to stick around for the long run . so i better get out there and find a lot of advocare lovers because chances are , some of them will also want to become distributors .
as advocare has grown , it has signed dozens of high - profile athletes as endorsers , including nfl qbs andy dalton , philip rivers and alex smith , mlb pitcher doug fister and crossfit champion rich froning . but no spokesman matters more - - to the company , its distributors or its prospective recruits - - than brees . in 2014 , the saints trained next to the advocare sports performance center in west virginia ; brees lends his imprimatur to a line of db9 nutrition bars and supplements . in one commercial ( like several advocare spots , the ad ran on espn ) , brees appears on - screen in a suit , talking to the camera as pictures of families flash behind him .
i ' ve seen product results , and so have thousands of people who trust advocare ,
he says in the ad .
and the financial benefits can be just as rewarding for those who want more and decide to build their own advocare business .
advo - truth needs your help with “ federal trade commission : the direct sales company advocare international should be investigated by the ftc . ” . join advo - truth and 77 supporters today .
dr . stohs is the former advocare seinor vice president of r & d . ; he is also a retired dean . outside of advocare supplement sales , i could find very little info . on his professional career . what i did find is that he is also involved with
purely 4 heath
. and is cited in reports supporting hydroxycut in 2010 with dr . keen .
advocare doesn ' t disclose what percentage of its products are sold to people who aren ' t members .
[ distributors ] don ' t necessarily report those to advocare ,
levy says .
but we do know that our products are extensively sold and consumed .
the company points out that nearly 400 , 000 non - distributors have purchased products through its members ' sites .
with saints quarterback drew brees and other athletes leading the way , advocare is using its sports ties to build a nutrition empire . but is the company really pushing false hope ? tom farrey reports .
by 2007 , though , business began to boom again . when the economy collapsed , millions of americans were either out of work or looking for extra cash ; advocare ' s message - - work from home , make more money , design your own life - - glimmered like an oasis . the company hired an experienced ceo and doubled down on sports marketing . in 2010 , advocare brought on brees as its national spokesman ; the company pays him for his appearances , gives him products and donates to his charity . brees , who declined an interview with espn but answered questions via email , says he ' s been an advocare user since 2002 .
advocare products have had a big role in my success as an nfl player and have certainly prolonged my career ,
he says .
dr . kraemer lives and works in connecticut . he owns and runs a lab producing and testing supplements , but yet again , no professional mention of advocare . since his lab is funded by grants , it becomes easy to see how and why he would want to get involved with companies like advocare . by either subsidizing his labs research , or by direct payment , dr . kraemer is able to earn a living and keep his employees employed . dr . kraemer is also on the board for other supplement companies , bommarito performance systems and imagenetix . again , these are competitors to advocare .
professional and celebrity endorsements are used quite heavily as a way to gain trust . i have heard many times that these sponsors are not paid and support advocare because of the great products they make . while i did not dig into the endorsement side of advocare , i did stumble upon the contradiction of the claim ,
unpaid endorsers
with one of their most notable endorser , drew brees .
truth is , if advocare were to yank the comp plan tomorrow , the passion and desire for those who
help
others would go along with it . the motivator is all about money .
they don ' t make magic pills and nobody has said that they do . anybody who things the magic pills exist suffer from ignorance and that ' s not an advocare distributor ' s problem . anybody who thinks they can get rich selling this stuff suffers from ignorance . sure , there are some that make some good money but those who quit their jobs to start selling advocare lack intelligence .
advocare is a multilevel marketing ( mlm ) company that sells nutrition and weight loss supplements . if you are on facebook , twitter , or pinterest , chances are you know someone that is a distributor for these products . advocare has become increasingly popular in recent years , signing on numerous famous athletes as endorsers . they even recently recruited rich froning as an endorser—the professional crossfitter who holds a 4 - time record of the crossfit games’ “fittest man on earth” title ! so , if rich froning is “getting sparked up” to get through his crossfit wods , should you be too ? is advocare actually healthy ?
stephanie klein - davis | the roanoke times july 25 , 2014 bryce harris ( # 79 ) and zach strief ( # 64 ) practice on friday morning at the advocare performance center at the greenbrier .
memorial may be made to the victory juction gang camp in honor of adam petty , mail gifts to advocare international , 2727 realty road , # 134 , carrollton , tx 75006 , attn : memorials .
nascar driver trevor bayne , who drives the no . 6 advocare car says ,
it ' s a great product , and i really do feel like it helps me in the race car .
as you probably know from the advocare website itself , it has a deep product line with everything from supplements and health drinks to energy bars . it’s a fully - stocked health and wellness product company .
it’s one thing if a distributor is providing false claims – i don’t know that’s the case – but anyone considering advocare as a business should know that network marketing is the greatest profession in the world .
most people recruit “down” rather than “ recruit up . ” this is a huge mistake as i see it . typically , the people most successful reps in advocare were already successful in their previous endeavors .
i’ve been a distributor with advocare for 6 months and have run through my friends and family contacts on facebook . i’ve generated about 10 customers . how do i start getting customers outside of these contacts ?
we started with advocare in june of 2013 to simply save money on products . i was formerly a collegiate football player and complete nutrition junkie , but saving money made sense ! . . .
every mlm fosters its own culture . some promote glitz and glamour ; others , like advocare , push a more wholesome image .
drew is the kind of person , really on the field as well as off , that embodies who advocare is and what our brand is all about ,
levy says . that brand aligns perfectly with the quarterback ' s reputation : family man . philanthropist . devout christian .
stephanie klein - davis | the roanoke times july 25 , 2014 new orleans saints coach sean payton is interviewed after the first morning of practice at the new advocare performance center at the greenbrier resort on friday .
securing athlete endorsers is a key part of advocare ' s model . the company lists more than 65 of them on its website , so while drew brees is unquestionably its face , the roster is deep .
i just did a natural cleanse , is advocare for me ? – justasiam - [ … ] now some of the doctors and products mentioned , i kinda liked what they professed to do . so i was…
they also have an advocare 24 day challenge which challenges customers to lose weight with their products in just 24 days . some of the results i saw were pretty astounding as far as weight and inches lost .
when you find your leader , that’s the person you want to spend most of your time and energy with . this is one of the best advocare success tips if you want to build a big organization .
if anyone has been
financially ruined
by advocare , the greatest blame can most likely be found in the person making the claim . people make bad choices everyday and typically don ' t blame themselves .
i started advocare jan 1 went thru the cleanse part . wasnt getting the energy people were talking about . than i started the second phase was three days into it than wam i . . .
stephanie klein - davis | the roanoke times july 25 , 2014 uzo - diribe , chidera ( # 96 ) olb , runs through drills as the new orleans saints practice on friday at the advocare performance center .
ragus decided early on that advocare would focus on sports , and he enlisted coaches from nearby southern methodist university to work for him . one of advocare ' s earliest distributors , bruce badgett , says the company ' s top salesmen made dozens of trips to nfl locker rooms , forging handshake deals with strength coaches for the chiefs , cowboys and oilers . occasionally , he says , they even set up the players ' wives with lucrative distributorships . ( the company denies that this practice occurs . ) advocare ' s sports ties
gave us credibility with every person - - every mom who has a son playing football ,
badgett says .
when you become an advocare distributor , you sign a long , complicated contract - - the latest version is 33 pages - - that outlines the company ' s pay plan . advocare ' s products are generally pricier than their store - brand equivalents , but advisors can buy them at a discount to resell . ( advocare forbids distributors from using sites like amazon or ebay ; widespread availability would undermine the direct - selling model . ) if advisors sign people up , they can earn up to 3 . 5 percent of the retail value of products bought by their recruits and the people below them , and receive bonuses for growing their downlines .
while advocare doesn ' t broadcast its religious side to the public - - levy says it is a secular company - - former distributors say christianity permeates the culture . the company ' s sacred text , ragus '
guiding principles ,
opens with the admonition :
honor god through our faith , family and friends .
several distributors say advocare thrives inside churches , where pre - existing networks make it easier for distributors to preach the good news of multilevel marketing .
there are some congregations here in dallas where , if you participate in some of the groups , you will participate in advocare ,
one former member says .
martin : mina kimes is a reporter with espn the magazine . we ' ve been talking about her investigative story about the company advocare . thanks so much for talking with us and sharing your reporting , mina .
supplements don ' t create a healthy lifestyle . eating healthy does but what advocare is intended to do is to promote a this healthy lifestyle while offering vitamin - rich supplements to use in conjunction with healthy eating .
while advocare sells numerous weight loss shakes , protein bars , and nutritional supplements , for the purposes of this post , i’ll be focusing on the trendy product advocare spark® energy . according to the spark product tagline , it promises to be “a sugar - free source of long - lasting energy” . as far as advocare products go , i certainly could have highlighted another of their products with many more toxic ingredients and health concerns than spark . but i feel compelled to focus on this product , in part because i have personally suffered from the effects of a lack of energy , fatigue , and mental fogginess that this product claims to eliminate and i have discovered the real solution to these problems ( hint - it’s not advocare ) . this product is a perfect example of why even seemingly “better choices” will still never be a healthier option than simply choosing real food .
when you join advocare , you start your own business . you become an entrepreneur . you need to transition to the entrepreneur mindset if you want to succeed with your advocare business . this means you have a big vision , clearly identified goals , a plan for success , and a strong work ethic . it means you see things before they exist , and you take the long - term view , instead of expecting immediate gratification .
to be frank , i’m appalled that products like advocare® are allowed to be sold in our country . it just demonstrates that although many supplements can benefit one’s health , they are not tested and regulated by the fda .
whether you are building your advocare business online or offline , you should use an auto - responder . this is a software program that helps you manage your leads . basically , it automates your follow - up process .
advocare international , l . p . is a nutrition , weight - loss and skin - care company founded by charles ragus . ragus , joining herbalife in 1983 , become one of the company ' s top distributors . in 1989 , he founded a company called omnitron . wade v omnitrition became a landmark case in the legalities of running a mln . this lawsuit shut down omnitrition . ragus came back in 1993 and created advocare international .
at the event , the ferros didn ' t explain , in detail , how they actually sell advocare . but they provide plenty of information elsewhere . in addition to running a facebook group with nearly 12 , 000 members , the couple operate a website that ' s replete with training materials . one powerpoint , titled
how to present advocare properly ,
says :
health crisis + financial crisis = opportunity .
it goes on to claim that the direct - sales industry has
more millionaires than any other industry .
( after being presented with questions about the ferros ' site by espn , advocare asked the couple to take several documents down . )
this is one of my most important advocare success tips . do not confuse busy work with being productive . the only two activities that pay you in advocare are retailing and recruiting , for personal recruits , and helping your team members do it . everything else you do is busy work . spend at least 90 % of your “business hours” on retailing and recruiting and your business will grow . focus on busy work and you will spin your wheels .
it ' s a process . i disagree that people sell advocare to
desperately make money
. my wife sells advocare , and we don ' t need extra money to get by , but we use the proceeds for things like an extra vacation . if you could make an extra $ 2 , 000 a year by living healthy and promoting others to do the same , i fail to believe where you can find the negative in that .
like other mlms , advocare created a ladder system for its salespeople ; in order to climb the ranks - - which range from
advisor
to platinum - - and earn bigger bonuses , members had to recruit . badgett , along with several other distributors who joined advocare in its early years , rose to the pinnacle , earning millions . at one point , he says , he presided over a downline of more than 30 , 000 people , collecting commissions on sales from members many levels beneath him . in 1999 , he and his wife bought a ranch in oklahoma and named it advocare acres , branding their horses with the company ' s logo , a swooping a .
advocare has formed a strategic alliance with informed - choice to certify the products that carry the informed - choice logo are banned substance free , although former olympic swimmer jessica hardy may have another opinion . informed - choice does not test all of advocare’s products , and they only test for the presence of banned substances . what they don’t test for is ingredient quality , quantity , or efficacy . but they would love it if you believed that they did .
advocare claims to provide physical and financial wellness , through the sale of sports performance , nutritional , weight control , and skincare products ( advocare ) . similar to other mlm companies , such as mary kay , vemma , and herbalife , they recruit distributors to sell their products via word of mouth and face - to - face sales , all the while promoting the idea that wealth and success can be obtained by anyone that adheres to their business model .
- posted an updated promotional video ; while a previous version of the same video stated that advocare
offers the average american the chance to make an above - average income ,
the phrase was cut from the new version .
dr . dudrick lives and works in connecticut . no professional mention of advocare in any of his listed credentials . he also developed , markets and sells his own supplements -
myogence
which is advocares
catalyst
. urltoken
during the presentation i was surprised by how much they favored supplementation over a proper , healthy diet with one of the most disturbing bits of info . being the use of advocare muscle gainer mixed into a baby ' s formula .
a few years ago , advocare ' s product
kickstart spark
was targeted to children age 4 - 11 . it contained 60 mg of caffeine and came under severe scrutiny from pediatricians for the high dosage of this stimulant .
with its decision monday , the panel shortened hardy ' s competition ban to one year , from two . carrollton - based advocare said tuesday in a statement that the panel ' s finding
is in direct conflict
with
independent
testing that showed hardy ' s supplements to be free of contaminants . also , the company said , the arbitration process was
severely flawed ,
in part because advocare was not allowed to participate or even attend .
i mean all business when it comes to economy is mlm . i think you are bashing the complete business model everyone uses and i think that the advisory board made advocare products because of their profession and knowledge . not became doctors , nutritionists , etc . . . because of advocare . if one person in a mixer does the wrong thing in portraying the products , such as say mix w / baby formula , why didn ' t you correct them ?
just like you have a schedule at your job , you need a work schedule for your advocare business . this means you plan out your week each week . you determine what days , at what time , and what activities you will do to grow your advocare business each week . plan it out , schedule it in your day planner and have the discipline to do the things you know you should be doing , even when you don’t feel like doing it .
the lawsuit claims carrollton , texas - based advocare assured hardy its products did not contain banned substances . hardy said she regularly took two of the company ' s products during training for the trials - - arginine extreme and nighttime recovery .
stephanie klein - davis | the roanoke times july 25 , 2014 zach arms of lewisburg holds his nephew blake , 9 months as he watches the new orleans saints practice at the new advocare performance center at the greenbrier resort on friday .
“our goal is to have a strong , sustainable partnership ( with advocare ) for a long time , ” rootes said . “they have deep roots in texas with a national footprint , and we will work hard to deliver value . ”
advocare® offers a variety of supplements and weight - loss programs , with the 24 - day challenge being the most popular program . the 24 - day challenge is the most popular program because it supposedly helps people “get skinny” in just 24 days . the program consists of a 10 - day “cleanse” phase followed by an additional 14 days of a “max” phase . advocare® advertisements claim that the supplements taken during the “cleanse” phase will rid your body of toxins and prepare your body to better absorb nutrients . these supplements include an omega - 3 fatty acid supplement and an energy drink . according to advocare® , these supplements will help jump - start your weight - loss efforts by ridding your body of water weight .
therefore , just as you have with other dsa members veema , burnlounge , and herbalife , we request you launch an investigation into advocare international to determine if it is operating as a pyramid scheme or as a legitimate direct sales organization .
a buddy of mine has been on advocare for roughly 2 months . he is down 70lbs . he’s starting his 24 day challenge team in jan and wants me to join . it’s great that he lost all that weight , but i just don’t see loosing 70lbs in roughly 1 1 / 2 months very healthy . also , i have high blood pressure , and energy drinks and supplements concern me . does this spark drink and any other advocare products affect my blood pressure ?
stephanie klein - davis | the roanoke times july 25 , 2014 drew brees ( # 9 ) quarterback for the new orleans saints passes during friday morning ' s practice at the advocare sports performance center at the greenbrier resort in west virginia .
“for me it’s more than a sponsorship . i regularly use their products to stay in top form on and off the track . my wife ashton and i are also independent distributors for advocare , as are several other roush fenway employees . ”
advocare international , l . p . , v . badgett , bruce and teresa badgett : : 2012 : : texas court of appeals , fifth district decisions : : texas case law : : texas law : : us law : : justia
bottom line , in our opinion , advocare is simply a product based pyramid scheme masquerading as a direct sales company with overpriced , and over hyped products that are similar to every other product you can find in your local nutrition product aisle .
that’s a internationally recognized board of experts in the scientific and medical field as well as health and fitness . i’m sure dr stanley dudrick founder of tpn and credited with saving the lives of 10k and more premie babies as well as surgical patients unable to eat by oral means , would not be associated with a company that does not produce and provide the best products for advocare to market . and the us soccer teams now use advocares rehydrate instead of gatorade . research advocare again .
in advocare and other mlm companies , you can build a business for hundreds of dollars – be in profit very quickly – and build a walk - away income in 3 - 5 years . it’s a shame more people don’t realize this .
if you stick with advocare and work at it like a business you will succeed . i was making $ 0 a month for 6 to 8 months but i did not stick with it . my good friend kirk however , did stick with it and he has made a good amount of money over the last two years . advocare is his life . i was unable to put that much of a commitment into it and as you can see one of us was not successful .
i am new advocare advisor . i am loving it ! it ' s not easy . . . but is any sales job ? what you get in is what you get out . and the products are out of this world amazing !
since joining advocare , brees says he ' s been stopped on the streets by
literally thousands of people
who tell him how the company has changed their lives :
i have literally never had a single person come up to me and say anything negative about advocare products or the business model .
he adds ,
i see the lives that it changes , not only as a direct result of taking the products but the financial independence it gives many of its distributors .
i am an advocare distributor and enjoy the products and how i feel on them . i have tried multiple products and advocare is by far the best . hate to burst your bubble but we do have a boards of medical doctors that formulates our products and they do go through a process to make sure they are safe . just because you think they are unsafe just means that’s your opinion so don’t come down on us that also have our opinion that this is an incredible line .
some have wondered if advocare also utilizes strategic lawsuits to control how many distributors are active , and to some extent who succeeds . they have incorporated what amounts to meaningless product guarantees as most people have been recruited by family or a friend , and most likely have no intention of returning the products due to the fear of personal retribution . advocare distributors have incorporated religion and god to ingratiate themselves and take advantage of relationships of trust within faith communicties . this further helps disguise the deceptive behaviors .
chuck does a great job of explaining why you should lead with the product . i have never used the advocare products before but his suggestions on working the business make sense . promoting good products will beat out promoting the business opportunity every time .
as charles pointed out here , let numbers work for you . make a plan and follow it . before you know it you will have a highly successful advocare business , and you will feel both pride and joy knowing you did it right .
advocare and its athlete endorsers pitch the company as a way to change lives and achieve
financial freedom .
salespeople can make money by selling products , though the big bucks come from recruiting members . but the odds are long . of advocare ' s 517 , 666 salespeople in 2014 , only 0 . 54 percent made $ 10 , 000 from the company and just 0 . 06 percent exceeded $ 100 , 000 . here are the numbers from that year , the most recent available .
31 . an overview of the entire marketing plan • he plan is the same for everybody t • ou are the variable y • or some this is a 90 day plan f • or some it is a 6 month plan f • or some it is a 1 year plan f • or some it could be a 2 year plan f • he important thing to know is… t the plan works ! personal testimonials reflect individual experiences of advocare independent distributors and are not necessarily typical of the results you may obtain . weight loss varies with individual effort , body composition , eating patterns and exercise . if you have a medical condition or are pregnant or nursing . advocare recommends that you consult your healthcare professional before starting an advocare product regimen .
stephanie klein - davis | the roanoke times july 25 , 2014 jimmy graham , ( # 80 ) tight end for the new orleans saints is interviewed by the media following friday morning ' s practice at the advocare sports performance center at the greenbrier .


volume risk is a commodity risk which refers to the fact that a player in the commodity market has uncertain quantities of consumption or sourcing , i.e. production of the respective commodity .

examples of other circumstances which can cause large deviations from a volume forecast are weather ( e.g. temperature-changes for gas consumption ) , the plant-availability , the collective customer outrage , but also regulatory interventions .

volume risk

volume risk is one of the core components of business risk ( revenue risk ) , the another being price risk ( or margin risk ) .
patients at high risk of death after lung - volume - reduction surgery . - pubmed - ncbi
volume risk is the risk that product origination ( sales ) volumes will materially deviate from the planned / budgeted / expected amounts due to external or internal factors . the volume metric may be referencing the number of transactions , the total size of transactions etc .
when limiting the private partner’s exposure to volume risk , the contract should provide access for the authority to the upside if demand is greater than expected .
in social infrastructure projects , higher use of the facility is generally not a natural policy objective and volume / use risk should be removed from the contract .
lung - volume - reduction surgery is a proposed treatment for emphysema , but optimal selection criteria have not been defined . the national emphysema treatment trial is a randomized , multicenter clinical trial comparing lung - volume - reduction surgery with medical treatment .
home > appendix structuring and drafting the tender and contract - describing main risks > 1 . 2 describing main risks during the operations phase and potential allocation > 1 . 2 . 1 revenue risk – demand or volume risk [ 3 ]
forward fixing your prices and accepting volume flexibility on that fixing , protects you against budgetary catastrophe in times of high consumption . in many cases , spot contracts are less expensive than forward fixings with volume flexibility . this clearly illustrates that with a forward fixing contract with volume flexibility , risk is shifted from the client to the supplier and not the other way around . and that makes the claim that spot contracts are less risky absurd .
most of a company’s costs are fixed costs that occur regardless of sales volume . as long as a business earns a substantial profit on each sale and sustains adequate sales volume , fixed costs are covered and profits are earned . other company costs are variable costs incurred when sales occur . the business earns less profit on each sale but needs a lower sales volume for covering fixed costs .
javier orlando pantoja robayo & andrea roncoroni , 2012 .
optimal static hedging of energy price and volume risk : closed - form results ,
documentos de trabajo cief 010668 , universidad eafit .
same thing when a period of larger than expected consumption coincides with high energy spot prices . in those cases , you will experience that the old contract with its volume conditions wasn’t such a bad idea after all . in such contracts , the volume issue only starts to bite once you’ve hit the threshold volumes . for this reason we recommend any clients that want to have a high degree of certainty over what their future energy prices will be to sign traditional forward fixing contracts , even if they come with volume conditions ( nowadays some suppliers offer consumers of smaller volumes forward fixing contracts without volume conditions ) . if you want to sign a spot contract , only do it when you are willing to keep the price of at least 20 % of your volume unfixed and open for the spot market . and if you have a high volume uncertainty , you should keep the price open for the spot market for even higher parts of the volume .
measures of risk - adjusted performance revise accounting earnings to take into consideration the level of risk a company assumed to generate them .
“no volume risk” is often cited as one of the advantages of a spot energy contract . and indeed , these contracts don’t have “volume conditions” in the sense of minimum or maximum volumes that have to be / can be consumed . many buyers of energy have gone through agonizing experiences when they ran into the threshold levels of such traditional volume conditions . this was particularly a problem in 2009 . many industrial consumers of energy saw their consumption drop below levels that they hadn’t anticipated even in their worst nightmares .
high concentrations of risk aren’t necessarily bad . everything depends on the company’s appetite for it . unfortunately , many companies have never articulated a risk strategy .
we define risk broadly to include any event that might push a company’s financial performance below expectations . typically , the measure used is capital at risk , earnings at risk , or cash flow at risk , depending upon whether the focus is on the balance sheet , the income statement , or cash flows .
a company must not only understand the types of risk it bears but also know the amount of money at stake . less obviously , it should understand how the risks different business units take might be linked and the effect on its overall level of risk . in other words , companies need an integrated view . american express , for example , might discover that a sharp slump in the airline industry had exposed it to risk in three ways : business - volume risk in its travel - related services business , credit risk in its card business ( the risk of reimbursing unused but paid - for tickets ) , and market risk from investments made in airline bonds or aircraft leases by its own insurance unit .
board processes . boards need to review the effectiveness of their own risk - management processes periodically . they should look at committee structures and charters , how well board members understand risk policies , and the value of their interactions with management on risk . some companies use a formal self - assessment tool that allows directors to rate the effectiveness of board - level risk - management processes in areas such as risk transparency and reporting , committee meetings , and risk expertise . reviews should take place about once a year .
the first risk is what we refer to as volume risk . there are a lot of good and bad things that can happen on any one lease . the possible good things include anything that increases output , such as : new horizontal or vertical wells may be drilled , new technology can be implemented , shallower zones can be opened up , etc .
this is the 19th year of asia risk magazine ' s awards , which recognise best practice in risk management and derivatives use by banks and financial institutions around the region .
formal modelling of business risk ( and its components ) is in a rather nascent stage . it is not one of the recognized regulatory risk types that attract capital requirements .
to create a risk culture , companies need a formal , company - wide process to review risk , with each business unit developing its own risk profile that is then aggregated by the corporate center . the reviews are a way of ensuring that managers at every level understand the key risk issues and how they should be dealt with . drawing up a monthly heat map is one way of establishing a formal risk - review process .
[ 5 ] in some light rail schemes based on volume payments , the risk is also shared by a system of bands as in some shadow toll roads . for example , this is the case for a number of light rail transport ( lrt ) ppps in spain .
after evaluation and pulmonary rehabilitation , we randomly assigned patients to undergo lung - volume - reduction surgery or receive medical treatment . outcomes were monitored by an independent data and safety monitoring board .
readers of my previous blog article ( in dutch ) will have remarked that i was quite agitated by misleading sales of spot contracts to end consumers . i would want to come back on a specific issue , the volume risk , and write a separate blog article in english on .
companies must also provide education and training in risk management , which for many managers is quite unfamiliar , and establish effective incentives to encourage the right risk - return decisions at the front line . judging the performance of business - unit heads on net income alone , for instance , could encourage excessive risk taking ; risk - adjusted performance should be assessed , too . ultimately , people must be held accountable for their behavior . good risk behavior should be acknowledged and rewarded and clear penalties handed out to anyone who violates risk policy and processes .
segregation of duties . companies must separate employees who set risk policy and monitor compliance with it from those who originate and manage risk . salespeople , for instance , are transaction driven—not the best choice for defining a company’s appetite for risk and determining which customers should receive credit .
risk ownership . the existence of a corporate risk organization doesn’t absolve business units of the need to assume full ownership of , and accountability for , the risks they assume . business units understand their risks best and are a company’s first line of defense against undue risk taking .
disaster risk reduction ( drr ) and climate change adaption ( cca ) in international cooperation .
one way of gaining a transparent , integrated view is to use a heat map : a simple diagram showing the risks ( broken down by risk category and amount ) each business unit bears and an overall view of the corporate earnings at risk . the heat map tags exposures in different colors to highlight the greatest risk concentrations ; red might indicate that a business unit’s risk accounted for more than 10 percent of a company’s overall capital , green for more than 5 percent . ( exhibit 2 shows a risk heat map that flags high credit risk in two units . ) to make risks transparent—and to draw up an accurate heat map—companies need an effective system for reporting risk , and this requires a high - performing risk - management organization .
finally , business - volume risk , stemming from changes in demand or supply or from competition , is exposure to revenue volatility . the leading us carrier united airlines , for instance , filed for protection under chapter 11 of the us bankruptcy code this year after falling demand hit its revenues .
caution is warranted in the use of lung - volume - reduction surgery in patients with emphysema who have a low fev1 and either homogeneous emphysema or a very low carbon monoxide diffusing capacity . these patients are at high risk for death after surgery and also are unlikely to benefit from the surgery .
each industry faces its own variations on the four types of risks ; each company should thus develop a taxonomy that builds on these broad risk categories . in pharmaceuticals , for instance , a company could face business - volume risk if a rival introduced a superior drug and higher operational risk if an unexpected product recall cut into revenues . in addition , the company would have to consider how to categorize and assess its r & d ; risk—if a new drug failed to win approval by the us food and drug administration , say , or to meet safety requirements during clinical trials .
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top - notch talent . risk executives at both the corporate and the business - unit level must have the intellectual power to advise managers in a credible way and to insist that they integrate risk - return considerations into their business decisions . risk management should be seen as an upward career move . a key ingredient of many successful risk - management organizations is the appointment of a strong chief risk officer who reports directly to the ceo or the cfo and has enough stature to be seen as a peer by business - unit heads .
the directors’ unfamiliarity with risk management is often mirrored by senior managers , who traditionally focus on relatively simple performance metrics , such as net income , earnings per share , or wall street’s growth expectations . risk - adjusted performance
in public transport projects , assuming a vertical integrated approach ( i . e . service to the user is included in the scope of the infrastructure dbfom ) , it is clear that higher utilization is a success in terms of public strategy . however , providing the public with a safe mobility option is essential . most of the best ppp structures for large integrated transport infrastructure ppps are based on a mixed revenue regime . part of the payments are linked to volume / actual use , but with volume risk being tempered with a portion of payments based on quality or availability [ 5 ] .
to manage risk properly , companies must first understand what risks they are taking . to do so , they need to make all of their major risks transparent and to define the types and amounts of risk they are willing to take—goals often facilitated by the creation of a high - performing risk - management organization that accurately identifies and measures risk and provides an independent assessment of it to the ceo and the board . although these steps will go a long way toward improving corporate risk management , companies must also go beyond formal controls to develop a culture in which all managers automatically look at both risks and returns . rewards should be based on an individual’s risk - adjusted—not simply financial—performance .
) and the integration of risk management into day - to - day decision making . companies that fail to improve their risk - management processes face a different kind of risk : unexpected and sometimes severe financial losses ( exhibit 1 ) that make their cash flows and stock prices volatile and harm their reputation with customers , employees , and investors .
clear individual responsibilities . risk - management functions call for clear job descriptions , such as setting , identifying , and controlling policy . linkages and divisions of responsibility also need to be defined , particularly between the corporate risk - management function and the business units . should the corporate center have the right to review their risk - return decisions , for example ? should corporate risk - management policies define specific mandatory standards , such as reporting formats , for the business units ?
this report updates the chartis report solvency ii technology solutions 2014 , focussing on risk management systems for the insurance industry .
seldom figures in these managers’ targets . improving risk management thus entails both the provision of effective oversight by the board (
the amount of debt and equity that makes up a company ' s capital structure has many risk and return implications .
the task of the risk organization is to identify , measure , and assess risk consistently in every business unit and then to provide an integrated , corporate - wide view of these risks , ensuring that their sum is a risk profile consistent with the company’s risk strategy . the structure of the organization will vary according to the type of company it serves . in a complex and diverse conglomerate , such as ge , each business might need its own risk - management function with specialized knowledge . more integrated companies might keep more of the function under the corporate wing . whatever the structure , certain principles are nonnegotiable .
chartis is the leading provider of research and analysis on the global market for risk technology and is part of incisive media .
the common cause of lower demand is an economic down - turn which as a general business risk should be borne by the private partner . however , lower demand may also depend on competing facilities , network risks , or other subtle risk events .
but more needs to be done . by focusing on risk - adjusted performance , not just on traditional accounting measures , business managers will develop a better understanding of the risk implications of their decisions . for businesses that require large amounts of risk capital , suitable metrics include shareholder value analysis and risk - adjusted returns on capital . a risk - adjusted lens helped one credit card company understand , contrary to expectations , that returns from new customers and customers about whom it had little information were more volatile than returns from existing customers , even if these groups had the same expected customer value . historically , that had been the key metric for approving new customers . now the approval process also takes into account the higher risk that is associated with new customers .
[ 6 ] for a definition and deeper explanation of “network risks” , see partnerships victoria ( risk allocation and contractual issues , 2001 ) . other examples of network risk , according to partnerships victoria are when a government agency controlling bulk water distribution may be unable or unwilling to supply raw water to the ppp water treatment facility in the necessary quantity or quality . a more abstract example of network risk is the risk that government will enter into other arrangements for accommodation services competing with those supplied under the contract .
board risk reporting . reports to the board and its committees must go beyond raw data by setting out , for example , what the key risk - return trade - offs might be . data alone probably won’t reveal the real issues or promote proper debate .
in the swiss alps , risk management professionals regard the implementation of new climate change adaptation strategies , such as the swiss integrated risk management approach national platform for natural hazards ( planat ) as the right step forward . planat is a comprehensive and holistic approach , which considers a broad range of preparedness , response , and recovery strategies on a societal level for natural hazard risk reduction ( planat
reichel , c . & frömming , u . u . int j disaster risk sci ( 2014 ) 5 : 41 . urltoken
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risk comes in four main varieties . the first , market risk , takes the form of exposure to adverse market price movements , such as the value of securities , exchange rates , interest rates or spreads , and commodity prices . ford , for instance , was hit by market risk in 2002 , when palladium prices tumbled and it had to take a $ 952 million write - down on its stockpile .
on a theoretical level , local environmental knowledge is increasingly being recognized as an important component in risk management . however , through our research it became apparent that professional actors of risk management do not yet fully implement the potential of local frames of reference and strategies of action into their risk management plans , even though this kind of knowledge contains various prevention , coping , and adaptation strategies that deal with expected future uncertainties ( frömming
demand risk may occur in a contradictory form : the higher the demand , the higher the risk . this happens in projects where the revenue is based on availability . in such contexts , a volume of use higher than anticipated by the government , in terms of the design of the facility , may seriously impact the service quality or even the availability . a compensation mechanism should be established in these cases so as to restore the economic equation of the project contract . this can be done by including in the payment mechanism a portion linked to the use of the service or other measures .
as for defining the level of risk companies will accept , one common approach for them is to decide on a target credit rating and then assess the amount of risk they can bear given their capital structure . credit ratings serve as a rough barometer , reflecting the probability that companies can bear the risks they face and still meet their financial obligations . the greater the level of risk and the lower the amount of capital and future earnings available to absorb it , the lower the credit ratings of companies and the more they will need to pay their lenders . companies that have lower credit ratings than they desire will likely need to reduce their risk exposure or to raise costly additional capital as a cushion against that risk .
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demand risk transfer should be always be considered with caution . significant transfer of the risk , with no mitigation or sharing mechanisms , should only be considered when boosting demand is essential to the success of the project from the government’s perspective ( see section 4 . 9 ) . another general rule for deciding the allocation of use / demand is the scope of the project . if the essence of the ppp is to operate institute tariffs or collect tolls , some exposure to risk should naturally be included in the contract . however , if the contract does not provide the necessary tools for managing the demand risk ( basically , the ability to influence the management of the service provision to the user ) , the risk should not be transferred .
the head of market risk unit leads a team in charge of contributing to the optimization of the liquidity , funding and lending functions of the bank .
, the proposal of a contract without any such volume obligations sounds very tempting . and indeed , a spot contract is a ‘you only pay what you consume’ type of contract . some such contracts really look at what you consume on an hourly basis and multiply that with the spot price for that hour . most spot contracts look at the monthly consumption and multiply that with the average spot price for that month . so , even if your consumption drops to zero , no problem , no energy will be billed . if your consumption doubles , you’ll pay the spot price for that extra energy . no more thresholds to keep an eye on , just simply pay for what you consume . i can understand why some people call that ‘no volume risk’ . but i don’t agree with them . not at all .
finally , to convey the message that the potential downside of every decision must be considered as carefully as the potential rewards , ceos should be heard talking about risk as often as they talk about markets or customers . the ceo’s open recognition of the importance of good risk management will influence the entire company .
even world - class risk management won’t eliminate unforeseen risks , but companies that successfully put the four best - practice elements in place are likely to encounter fewer and smaller unwelcome surprises . moreover , these companies will be better equipped to run the risks needed to enhance the returns and growth of their businesses . without adequate risk - management programs , companies may inadvertently take on levels of risk that leave them vulnerable to the next risk - management disaster , or , alternatively , they may pursue
recklessly conservative
strategies , forgoing attractive opportunities that their competitors can take . either approach will surely be penalized by investors .
a wholesale insurance firm is looking for a compliance analyst to join their growing business in this newly created role as the risk & compliance e . . .
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these elements will go a long way toward improving risk management but are unlikely to prevent all undue risk taking . companies might thus impose formal controls—for instance , trading limits . indeed , the recently adopted sarbanes - oxley act , in the united states , makes certifying the adequacy of the formal controls a legal requirement . yet since today’s businesses are so dynamic , it is impossible to create processes that cover every decision involving risk . to cope with it , companies need to nurture a risk culture . the goal is not just to spot immediately the managers who take big risks but also to ensure that managers instinctively look at both risks and returns when making decisions .
the ceo , with the help of the board , should define the company’s risk strategy . but more often than not , it is determined inadvertently , every day , by dozens of business and financial decisions . one executive , for example , might be more willing to take risks than another or have a different view of a project’s level of risk . the result may be a risk profile that makes the company uncomfortable or can’t be managed effectively . a shared understanding of the strategy is therefore vital .
in such an environment , companies not only protect themselves against unforeseen risks but also enjoy the competitive advantage that comes from taking on more risk more safely . the ceo of one fortune 500 corporation , asked to explain his company’s declining performance , fingered the
lack of a culture of risk taking
; its absence , he explained , meant that the company was unable to create innovative , successful products . by contrast , a senior partner of a leading investment bank with excellent risk - management capabilities noted ,
our trading operation has created a series of controls that enable us to take more risk with more entrepreneurialism and , in the end , make more profits .
1 . 2 describing main risks during the operations phase and potential allocation up 1 . 2 . 2 revenue risk – tariff levels ( only in user - pays ppps )
education and expertise . training programs might be needed for current and new board members . boards should also look at whether they need new members with risk - management expertise .
companies might also be tempted to adopt a more risk - averse model of business in an attempt to protect themselves and their share prices . william h . donaldson , the chairman of the us securities and exchange commission ( sec ) , acknowledged this trend when he told an interviewer that he was concerned about a
loss of risk - taking zeal .
the way we mitigate against this type risk is by buying thousands of interests in thousands of properties . we make estimates about the projected future output of a property in the process of making an offer or buying a deal , but those are guesses based on historical production ; and they’re always wrong . oil and gas do not grow under the ground ; these fluids are trapped there . as you remove volume , there is less fluid in the reservoir and thus less pressure to push the fluids to the
low pressure sink
that is created around the well bore . thus , in the absence of any other risk factors , the production volume normally goes down over time . this is what we mean by the term decline . so to make a guess as to what future volumes are going to be , we plot the recent historic production against time and simply project the
decline curve
forward into future periods to see what those volumes might be if the current decline holds . usually , the assumption is that whatever the decline is now will be the decline for the life of the property under our
guesstimates .
the temperature increase also means that small glaciers are expected to disappear , while larger glaciers will suffer a volume decrease of up to 70 % by 2050 . although the period between 1985 and 2000 experienced particularly hot summers , the swiss glaciers have lost 20 % of their mass within only the last 15 years . in addition to a decrease of water resources , the decline of ice is leading to a loss of stability of adjacent slopes ( rebetez
the heat map gives a top - level indication of whether a company is sticking to its strategy and provides for corrective action . but both depend upon the next two elements of this risk - management program .
in transport projects , if the transport service to the user is not included in the scope of the contract , but the contract relates only to the infrastructure , transferring demand risk does not provide value for money .
sometimes these guesses are off only a little bit and sometimes by a lot , but they are always off . but what happens is that the ones that do better than we guessed and the ones that do worse tend to offset each other . so our guess on any one property is always wrong , but as a group , we are usually pretty close . so our
volume
risk goes way down by owning a lot of properties relative to someone who owns one or a few . out of a thousand leases , if one goes down , hopefully another increases and unless one or two leases make up the majority of the income , they tend to balance out .
professional stakeholders in risk and hazard management are becoming increasingly aware of the progressive potential of the resilience concept , instead of simply trying to keep social - ecological systems as stable as possible and in balance . with the exploration of local knowledge and its integration into risk and hazard management , one can develop an approach that directs attention to the acquisition of local skills and knowledge that help the local population adapt to and cope with future environmental changes .
the second type of risk is simple price risk . the price of oil goes up and down and whoever holds a property is subject to the variances of the markets that set prices . one thing that happens though to me as a buyer is that if i use the same source of price guesses for future periods every day , then the valuations i used over , say the last five years , should be the same as the average price over the previous five years . which is probably not a bad price to use today . going forward with the portfolio we have , same thing though . who knows ? none of us can get away from price risk .
a company’s board of directors should understand and oversee the major risks it takes and ensure that its executives have a robust risk - management capability in place . to assure appropriate oversight , the board must address a few key issues .
in other words , every second company was struck at least once , and some more frequently , by a severe risk event . such events are thus a reality that management must deal with rather than an unlikely
tail event .
an example of a subtle network risk is the risk related to traffic light priority in light rail transport ( lrt ) projects . usually , a government will grant priority at intersections and traffic lights for the lrt vehicles to maintain the commercial speed levels as prescribed . so when the mobility authority does not provide traffic light priority to the light rail and this affects the commercial speed , the private partner should be given relief from punctuality obligations and an excuse for certain payment deductions .
taking and managing risk is part of what companies must do to create profits and shareholder value . but the corporate meltdowns of recent years suggest that many companies neither manage risk well nor fully understand the risks they are taking . moreover , our research indicates that the problem goes well beyond a few high - profile scandals . mckinsey analyzed the performance of about 200 leading financial - services companies from 1997 to 2002 and found some 150 cases of significant financial distress at 90 of them .
in a few industries , companies have already begun to invest in developing sound risk - management processes . for example , many financial institutions—prodded by regulators and shaken by periodic crises such as the us real - estate debacle of 1990 , the emerging - markets crisis of 1997 , and the bursting of the technology and telecommunications bubble in 2001—have worked to upgrade their risk - management capabilities over the past decade . in other sectors , such as energy , basic materials , and manufacturing , most companies still have much to learn .
© infopro digital risk ( ip ) limited ( 2018 ) . all rights reserved . published by infopro digital services limited , haymarket house , 28 - 29 haymarket , london , sw1y 4rx . companies are registered in england and wales with company registration numbers 09232733 & 04699701 .
if your consumption is higher than 5 . 000 mwh , you will pay the spot price for those extra volumes . if at the end of the year the aggregated volume of the months is 60 . 000 mwh , the volumes you haven’t consumed and for which you got back the spot price ( in certain months ) will equal the extra volumes bought at spot price ( in certain months ) . if you’re lucky , you might have consumed less in exactly those months when the spot prices were high and more in the months with low prices . you could actually make some extra money that way . but it could also be the other way around . the opportunity and risk are even higher when you have a contract that settles on an hourly basis . it should be remarked that in that case , an extra problem occurs of checking such bills based on hourly consumptions , fixed levels and rates .
owning oil and gas interests has two main types of risk that an owner needs to be aware of . factors outside of your control may result in large and unexpected gains , or may lead to sudden loss of income . in this blog post , i’ll explain how i view these factors .
sébastien chaumont & peter imkeller & matthias müller & ulrich horst , 2005 .
a simple model for trading climate risk ,
vierteljahrshefte zur wirtschaftsforschung / quarterly journal of economic research , diw berlin , german institute for economic research , vol . 74 ( 2 ) , pages 175 - 195 .
first of all , it should be remarked that the zero energy volume risk proposition only holds as long as you keep everything open for the spot market . many such spot contracts also have clauses that allow you to forward fix your prices . such fixings are then always made for capacity blocks . let’s say you are a client with such a spot contract and you expect you will consume 60 . 000 mwh next year and you want to fix your price 100 % . your supplier will come back to you with something like ‘ok , your load duration is 6 . 000 hours on an annual basis , so i’m going to fix a 10 mw calendar year block for you’ . if your contract is then regulated based on monthly consumption times the average spot price for that month , every month that you consume less than 5 . 000 mwh , you will pay the fix price and get back the spot price for the unconsumed volumes .
directors confirm this view . a 2002 survey by mckinsey and the newsletter directorship showed that 36 percent of participating directors felt they didn’t fully understand the major risks their businesses faced . an additional 24 percent said their board processes for overseeing risk management were ineffective , and 19 percent said their boards had no processes .
operational risk is exposure to losses due to inadequate internal processes and systems and to external events . for example , allfirst , a baltimore - based subsidiary of allied irish banks , lost $ 691 million at the hands of a single rogue trader whose practices went undetected for five years until he was caught in 2002 .
the level of returns required will vary according to the risk appetite of the ceo and the board . some might be happy taking higher risks in pursuit of greater rewards ; others might be conservative , setting an absolute ceiling on exposure regardless of returns . at a minimum , the returns should exceed the cost of the capital needed to finance the various risks .
credit risk is exposure to the possibility that a borrower or counterparty might fail to honor its contractual obligations . in 2002 , for instance , the bank of new york announced that it would increase its loan - loss provision by $ 185 million , to a total of $ 225 million , for the third quarter of 2002 , largely because of loans it had made to telecom companies .
operating leverage is the degree to which a firm or project can increase operating income by increasing revenue . a business that generates sales with a high gross margin and low variable costs has high operating leverage . the higher the degree of operating leverage , the greater the potential danger from forecasting risk , where a relatively small error in forecasting sales can be magnified into large errors in cash flow projections .
[ 4 ] however , there may be situations where user payments are considered as a source of funds for the project , but where maximizing the use is not the highest priority of the authority ( for example , some dynamic tolling aimed to manage traffic congestion ) . therefore , the authority may decide to remove the demand risk and assume it by structuring the revenue regime under an availability payment scheme .
if a competing facility promoted by the authority ( or by the government in general ) , which was not announced or planned at the time of the tender , causes a down - turn in traffic compared to previous projections , this is commonly ( or should be ) considered a retained risk event . competing facilities are the clearest case of network risks [ 6 ] that should be taken back by the authority .
as with any strategy , a company’s risk strategy should be
stress - tested
against different scenarios . a life insurance company , for example , should examine how its returns would vary under different economic conditions and ensure that it felt comfortable with the potential market and credit losses ( or with its ability to restructure the portfolio quickly ) in difficult economic times . if it isn’t comfortable , the strategy needs refining .
board structures . the board must decide whether risk oversight should be vested in an existing committee ( such as the audit or finance committee ) , in a new committee , or divided among a number of committees . the audit committee might seem the natural choice , but as it already faces expanded responsibility to ensure the accuracy of financial reporting , it might not be able to cope with a further expansion of its charter .
professional actors in hazard management frequently raised the argument that local environmental knowledge is too “subjective” for complementing existing “objective” scientific knowledge used by hazard and risk management plans . but from our point of view , instead of dichotomizing local knowledge and scientific knowledge , we should look for their affinities . “objective” scientific knowledge and its underlying values are much less neutral than often claimed , ignoring certain values and issues and favoring others . as foucault (
it is the taking of risks that ultimately creates shareholder value . the right response , therefore , is to strike a balance that protects the company from the costs of financial distress while allowing space for entrepreneurship . management should have the freedom to work in an environment where the potential rewards of any business decision are consciously weighed against the risks and where the company is happy with the level of risk - adjusted returns resulting from that decision .
based on a holistic approach , the anthropological data not only showed local perceptions of climate change , but also what different coping strategies in agriculture and forestry were used in order to face related natural hazards . these local frames of reference and coping strategies both have an impact on how vulnerable or resilient local communities are in times of climate change . this in turn is important for adaptive risk management dealing with new uncertainties in an ecological and societal change .
to manage risk properly , companies need to know exactly what risks they face and the potential impact on their fortunes . often they don’t . one north american life insurance company had to write off hundreds of millions of dollars as a result of its investments in credit products that were high - yielding but structured in a risky manner . these instruments yielded good returns during the economic boom of the 1990s , but the severity of subsequent losses took top management by surprise .
triggered by the climate change discourse , professionals in risk management , such as scientific advisors and political actors , increasingly realize that these new uncertainties related to environmental changes have to be included into their calculations , instead of maintaining current action plan routines . as dr . ruedi haller , the head of the research and geospatial information section at the only swiss national park , indicated with regard to the significant changes in weather patterns in recent years , which he related to climate change :
) . the multimedia map format that we used allows end users of the map to choose between various map features to access multimedia information such as digital video , digital photos , and written text , which were georeferenced before being integrated into the map . the final map thereby helps users to compare , analyze , and present qualitative and quantitative spatial information . in addition , it creates a platform that visualizes local spatial knowledge and makes it directly comparable with official hazard maps in risk management .
formulating such a strategy is one of the most important activities a company can undertake , affecting all of its investment decisions . a good strategy makes clear the types of risks the company can assume to its own advantage or is willing to assume , the magnitude of the risks it can bear , and the returns it demands for bearing them . defining these elements provides clarity and direction for business - unit managers who are trying to align their strategies with the overall corporate strategy while making risk - return trade - offs .
the data from the safien valley show that a wide range of local environmental knowledge exists in the fieldwork area . much of this knowledge is directly relevant to the local population’s ability to protect against and cope with natural hazards , the occurrence and intensity of which are likely to increase in times of climate change . however , an important finding of our research is that these bodies of local environmental knowledge are rarely taken into account by professionals in disaster control , and they generally do not inform avalanche records . almost all key informants complained that their often highly differentiated knowledge about avalanches or mudflows was rarely considered in the creation of risk and hazard plans :
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as much as we hope for these positive developments , negative events do occur very frequently . the production casing can collapse , wells can
water out
, the operator can take off with everyone ' s money , and so forth .
the most common negative event is that wells get plugged out as non - commercial . remember , with the exception of taxes , you own a non - cost - bearing interest . let ' s say for example way back you or your predecessor in interest signed an oil and gas lease with an exploration company . that lease granted the company and its partners ( the working interest owners ) the right to drill a well . the mineral owner ( s ) received a royalty interest under the lease or leases , thus creating the royalty owners . the company and / or the working interest owners paid 100 % of the cost of drilling , completing , and producing the well or wells and you paid and pay nothing to keep the well producing . they get 100 % of the revenue less the royalty interest , which means they are receiving something like 75 % to 87 . 5 % of the income , but paying all of the bills .
when the working interest owners make less money from the production than the lease is costing them to produce it , and all or most of the possible opportunities have been tried or studied , they will plug the wells and walk away . this means you could be getting $ 1000 a month on a well that is very important to you but that is uneconomic or non commercial for the operator . these companies will not produce a money losing well for very long . so you go from a big check to nothing when non commercial well gets plugged and it can be a nasty surprise . leases all have an economic life ; some are shorter and some are longer ; but eventually the costs are going to exceed the revenues .
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for this analysis , we defined financial distress as a bankruptcy filing , a ratings - agency downgrade of two or more notches , a sharp decline in earnings ( 50 percent or more below analysts’ consensus estimates six months earlier ) , or a sharp decline in total returns to shareholders ( at least 20 percent worse than the overall market in any one month ) .