A ticking time-bomb: Managing intangible asset risk

  • Intangible assets represent the majority of a company’s value.
  • However, intangible asset risk is often underestimated or ignored.
  • Identifying unrecognised intangible assets may generate new revenue streams or strategic advantage.

Bomb stuck on concrete wall

We live in an information economy. Intangible assets, including data, trade secrets, content, software code, brand, industrial know-how, confidential information, design and patents, now represent over 87 per cent of company value. These are the most important assets a company owns. They are also the primary source of company performance — with the exception of real estate, virtually all economic growth is driven by intangible assets.

Research unequivocally demonstrates that sustainable long-term company value is derived primarily via leveraging intangible assets. But, while many companies studiously track fixed assets such as desks, machine and company cars, they frequently fail to identify intangible assets that are significantly far more valuable. These assets are typically absent, mispriced or under-valued on balance sheets. As a result, significant intangible value remains unrealised or unknown.

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