Narrow Results

This study investigates the effect of market competition and development indicators on bank risk-taking behavior, capital regulation, and efficiency of banks in Asian emerging economies in light of their recent financial liberalization. Using stochastic frontier analysis (SFA) for measuring cost and profit inefficiency and regressed simultaneous equations by following the approach of generalized methods of the moment (GMM) the study covers a sample of 191 banks for the period between 2000 and 2014 in three Asian emerging economies such as Bangladesh, China, and India. The robust empirical results of GMM panel estimator reveal three core findings: first, intense competition of Asian banks has a positive association with risk-taking but has a negative correlation with regulatory capital and inefficiency. Second, it provides evidence that in economic progression, sample banks having a strong tendency of taking the risk. But no significant relationship found between GDP growth and capital, and GDP growth and inefficiency. This paper thus provides compelling insights to the policy makers and bank managers in setting appropriate strategy for a financial institution in the region.

Due to the increasing ubiquity of the internet, the “internet of things” (IoT) has become an essential technology, penetrating people’s daily lives and influencing the industry. However, the diversity of environments and lack of standards have left the IoT exposed to security and privacy threats. This paper examines these risks, the security requirements of the IoT, the time trend of IoT-security related research, and key security technologies related to the IoT.

Reducing credit procyclicality represents one of the key challenges on the regulatory agenda to reform the financial system architecture. Some early experiences may provide some insights on how countercyclical regulations may be effective. The Spanish dynamic provisions scheme implemented in 2000 is one of the main reference points in this context. We analyze the effects of dynamic provisions on managerial accounting discretion and ex-ante risk-taking behavior by banks. We empirically examine a sample of Spanish banks using quarterly information from 1995Q1 to 2013Q4. Our findings suggest that the counter-cyclicality of provisions has been reduced over time, as it has also been the case of managerial discretion (income smoothing and profit signaling). However, the results suggest that banks game on dynamic provisions by taking an ex-ante riskier behavior once the dynamic provisioning scheme is adopted.

Many countries worldwide are facing a significantly high demand for water and power, and Saudi Arabia has one of the highest water consumption rates per capita in the world. Water and power plant (WPP) projects following the independent water and power plant (IWPP) approach have typically involved a plethora of risks, and since about 75% of IWPP projects in Saudi Arabia have failed to meet specified objectives, effective risk management (RM) implementation is key to the success of any public or private project. Practitioners have related their experience about RM in IWPP projects in Saudi Arabia through semi-structured interviews, and these are analysed through the grounded theory approach. The paper concludes with an emergent diagram that illustrates three major phenomena, eight categories and 18 subcategories affecting the implementation of RM in WPP projects in Saudi Arabia.

This paper analyses the effect of regulatory pressure on bank behavior, using a sample of Tunisian banks covering the period 2005–2020. First, the paper examines the impact of regulatory capital on bank profitability and risk. Second, it contributes to the literature which has received scant attention from researchers investigating the nonlinear impact of regulatory pressure on bank behavior. Third, we consider different determinants of bank profitability and risk. Finally, we use both static and dynamic models to test for the persistence of bank profitability and risk, as well as to make sure that the results are not biased by endogeneity. The results suggest that regulatory capital pressure improves bank profitability and stability. This effect is, however, conditioned by the existence of a certain threshold, after which stringent capital regulation may have adverse effects. Our results have important policy implications on optimal bank capital regulation.

This chapter studies the use of a proposed integrated competency development approach to address the challenges which a bank’s risk management function faced during the COVID-19 pandemic. It studies the challenges and regulatory reforms after the 2008 Global Financial Crisis. It argues that these reforms were not sufficient to address the challenges in the longer term. It revisits the key features of the proposed integrated approach to risk management competency development. Next, it studies and identifies four major challenges together with the corresponding risk management competency development requirements. It finds that these requirements can be inferred from the proposed integrated approach. It proposes that this integrated approach is, and will likely remain, relevant to helping banks build resilience as they confront future pandemics and challenges.

This article will look at the ways an organisation can prepare for, deal with and then recover from a cyber attack against it. There are multiple possible scenarios that can be attributed to a cyber attack. This paper looks at the creation of security policies, cyber incident response plans and organizational risk and cyber insurance.

Documented cases involving Edward Snowden (Greenwald et al., 2018) and Chelsea Manning (Lewis, 2018) highlight the need for an effective employee risk mitigation process.

Mitigation has generally focused on system and network access controls to determine the risk level and where possible neutralise the threat. However, these controls rely on access to a computer network before behaviour analysis can determine the threat potential.

Determining the threat posed by individuals is a challenging concept as human behaviour can be unpredictable as there may be an exponential number of factors that can influence movement patterns. There are also environmental considerations that may have a direct impact on the movement of an individual.

To address this threat, an algorithm has been developed that attempts to identify anomalous human behaviour patterns within a controlled physical environment. The algorithm incorporates multi-dimensional factors such as office entry points, trajectories, time analysis and the physical attributes of the environment. The algorithm also incorporates categorical (qualitative) and continuous (quantitative) attributes within the detection process.

The algorithm was embedded within a threat detection application that was designed to be independent of the monitoring solution providing the source data. It achieved this through a data restructure process to ensure it met the criteria of the anomaly detection process.

The algorithm was evaluated within a real-life scenario, leveraging data from a Bluetooth proximity human monitoring solution installed within a financial services institution located within the City of London. The data tracked the movement patterns of 50 contractors working for the target organisation. This then fed into the algorithm to determine the potential threat posed by trusted contract employees operating within a multi-storey, open plan office building.

The U.S. economy faces significant risks from unabated climate change. Every year of inaction serves to broaden and deepen those risks. In 2014 Michael R. Bloomberg, Henry M. Paulson Jr., and Thomas F. Steyer founded the Risky Business Project. The purpose of the project was to examine the economic risks presented by climate change and the opportunities to reduce these risks.

Climate change poses increasingly serious risks to human society. Climate change is the outstanding survival and ethical issue of our time. Climate change is now moving the planet into new uncharted risky states since civilization began. Climate change risk management, (climate risk management for short) is a best practice. Urgent action is needed…

Cryptocurrencies are witnessing a growing interest from investors and the media. They are increasingly perceived as a new class of assets through added benefits, such as hedging capabilities and diversification. However, this does not preclude the fact that cryptocurrencies can be risky assets. Within such a context, diverse studies were carried out at various risk levels. Our chapter bridges this gap and tries to reconcile varying positions on risk across cryptocurrencies. Particularly, we provide a detailed overview on the main risks to be considered by crypto-traders, namely, technology, fraud, legal, market, liquidity, and COVID-19 pandemic risks. The main findings show that the occurrence of any technological failure tends to raise insecurity and distrust in the cryptocurrency technology. This fact can be even further spoiled through fraud schemes and fake trading volumes. Additionally, the legal framework of the cryptocurrencies is still inconclusive. In terms of market risk, these crypto-assets are riskier than fiat currencies and there is a significant risk contagion across large-cap cryptocurrencies. Then, a significant relationship exists between liquidity and efficiency in the cryptocurrency market, since price dynamics can influence the market liquidity. Finally, it sorts out that the COVID-19 pandemic heavily affected the cryptocurrency markets. This chapter underlines current challenges for investors, regulators, and policymakers.

Innovation in financial technology is often conceptualized as centering upon technological developments or novel applications of technology to undertake financial transactions. Yet the drivers of innovation often lie in the global mobility of people, organizations, ideas, skills, capital, and technology (Armano and Javarone, 2017). While mobility is increasingly in the reach of ordinary people, such as through migration, access to technology, or education, the ability to produce innovation or consume innovative products is unevenly distributed. Moreover, new products on the market are more likely to cause problems or risks to consumers as their potential impacts have not yet been fully tested. This is especially true of the new range of financial products, commonly known as “FinTech,” that are emerging in the consumer market. Today, there are far more financial services available to consumers, and they are provided by a wide range of companies, many of whom are not traditional financial service providers. The availability of financial services through the Internet, and their use on mobile devices, means that consumers can access a far wider and more specialized array of financial products from companies located around the world. This greater level of access and choice in financial products has the potential to deliver both positive and negative effects for consumers. On one hand, it can expand consumer choice, increase access to product information, assist with financial literacy, and decrease transaction costs. On the other hand, it may exacerbate certain social and economic issues, such as fraud, user errors, learning difficulties, ineffective UX, stress, and financial mismanagement. Within this context, “mobility” is a useful analytical tool to identify the different kinds of effects that emerge from financial innovation within different populations, and in different use-cases. In this chapter, I explore the relationship between innovation, mobility, and change, and how this relationship affects consumers. I discuss a range of issues that increased access to financial products presents for consumers, particularly in the areas of product mobility, human mobility, and information mobility. I draw upon the “mobilities turn” (Schiller and Salazar, 2013; Sheller and Urry, 2006), which has addressed the various ways, both positive and negative, in which the increased mobility of people, things, and information around the world affects people’s lives and social relationships. I end with a discussion of the challenges researchers face in keeping up-to-date with the social effects of financial transformation.

The following sections are included:

• Average Returns are the Main Focus
• Compound Return Facts: Tail Risks Dominate!
• Compound Returns a Function of Risk
• Big Problem: Tail Events More Frequent than Normal Distribution
• Think Tails of the Distribution: Concentrate on Normal Events
• Relative Performance Evaluation
• Investment Strategies — Asset Allocation Static Constraints are Costly
• Factors that Affect Terminal Wealth
• Measuring Tail Risk Using Market Prices
• Tail Gains/Losses from Opiton Prices
• Enhancing Compound Returns Through Dynamic Risk Management (1996—2015)
• Using Option Prices to Forecast Risk Changing Risk Proactively
• Using Option Prices to Measure Risk
• Uncertainty of the Distribution of Returns
• Adaptive Strategy — Pre and Post “2008” Crisis
• Issues

We study three widely used liquidity measures and find that they all carry significant premiums beyond the size, book-to-market, and momentum effects. Although liquidity as a risk factor bears a significant return premium, it is better characterized by a characteristic-based model. Further analysis shows that (1) although the premium persists for up to five years following formation, it diminishes over time and becomes insignificant in the post-1960 period; (2) the premium is larger for stocks with higher idiosyncratic risk. Thus, the empirical results provide some evidence that supports the mispricing argument.

Storytelling in leadership research is usually approached positively and seen as a non-problematic resource or even a “tool” for leadership purposes. However, using stories and narratives involves challenges for leaders. Storytelling may result in intended outcomes, but it also carries a risk for undesirable leadership consequences. In the storytelling approach, there is a hidden assumption that listeners are homogeneous and that they are not critical or active. Empirical studies rarely approach failed storytelling experienced by leaders: the feelings of failure, reasons, and consequences. In this chapter, we focus on the risky nature of leadership storytelling as well as the element of learning to be a better leader inherent in it. Based on empirical qualitative data, we apply thematic and content analysis on interviews from 13 leaders. Based on the findings, we present the following five special dimensions/themes of failure, illustrating the risks involved in leadership storytelling: (a) diversity of the audience, (b) situation/context, (c) loss of authority, (d) storytelling skills, and (e) audience misinterpretation. We interpret the findings in the context of the leaders’ personal experiences, their meaning for the leaders’ self-reflection, and the leaders’ leadership learning for the future. Moreover, we discuss these dimensions from the perspective of diversity and the hidden assumption in the storytelling approach that the listeners are a homogeneous group.

This chapter complements the chapters on technical reviews and software reliability engineering in Vol. 1 of the handbook. It is primarily concerned with the verification of code by means of testing, but an example of an informal proof of a program is also given. A practitioner's view of testing is taken throughout, including an overview of how testing is done at Microsoft.

The Bucharest Stock Exchange, with all its economical, social and political problems and sudden ups and downs, is a good reflection of the transition period that emerging economy is currently undergoing. This study focuses on the use of an appropriate methodology for constructing efficient stock portfolios in an extremely unstable market that makes the trade-off between risk and return even more difficult to achieve. The objective is set in order to assess the market behavior: employing the Markowitz model, to construct a set of optimum portfolios under a number of varying constraints and to compare them with the market portfolio. The results obtained are presented in the chapter along with a discussion of the main problems encountered due to the particular features of a stock market in a state of transition.

In the context of underground construction, forensic engineering is taken to be the application of engineering principles and methodologies to determine the cause of a performance deficiency, often a collapse, in an excavation, and the reporting of the findings, usually in the form of an expert opinion within the legal system. The procedures that may be used in forensic geotechnical investigations and the interface of the engineer with the legal system are discussed. The application of the principles and methodologies outlined are illustrated through a brief account of the investigation of the collapse of a small part of an excavation in the Lane Cove Tunnel Project, Sydney, Australia, on 2 November, 2005.

Material imbalances at some companies have been traced to the procedures they use for forecasting demand based on the usual normality assumption. In this paper we discuss a simple and easy to implement nonparametric technique to forecast the demand distribution based on statistical learning, and ordering policies based on it, that are giving satisfactory results at these companies. We also discuss an application of this nonparametric forecasting method to portfolio management.

In this paper, we develop an expected utility maximization model for Chinese rural residents who make their health care and health insurance decisions in two stages, choosing among no insurance, the New Rural Cooperative Medical System (NRCMS), and a commercial health insurance. It is found that although not everyone benefits from the NRCMS, it does improve the welfare of a large number of rural residents and help them seek a higher level of medical care service. The results suggest that additional aid to the extremely poor is still needed during catastrophic medical loss, and detailed provisions that can differentiate the support level to rural residents based on income are needed. It is also found that commercial health insurance can still play a role in protecting rural residents from financial losses caused by health risks.