Thursday, August 27, 2020

Business Ethics Essay Example | Topics and Well Written Essays - 1750 words - 3

Business Ethics - Essay Example He further contends that those partners that have more noteworthy force, criticalness and authenticity may affect business execution. For example, PricewaterhouseCooper Company participates in policymaking process in the organization. Accordingly, on the off chance that they apply more noteworthy force and other striking nature models, they may wind up making a block to viable authoritative presentation. Be that as it may, there are the two advantages and restrictions of utilizing notability model in this commitment movement. The advantages incorporate noteworthy commitment to the idea administration and creating compelling answers for worldwide difficulties. Be that as it may, the issues may incorporate presenting difficulties and make dangers to worldwide issues. What is a potential future manager of me really doing as far as partner commitment exercises? What's my opinion of their exercises? Would i be able to perceive any connection with Power, Legitimacy and Urgency, and why the y picked this partner commitment movement? The conceivable future worker as far as commitment exercises will take part in viable dynamic procedure, educating ability system, warning board, taking part in corporate obligation announcing and partaking in other huge corporate jobs. Their exercises upgrade quality administrations in business exercises; henceforth, it is essential to direct business in understanding to the association prerequisites and rules. Drawing in partners in business exercises is imperative yet it is recommendable to arrange them as indicated by their work execution. This is on the grounds that partners vary and some have changed interests in business exercises. For example, the striking nature model is broadly utilized by numerous partners in business exercises over the globe; along these lines, utilizing a compelling partner the board technique can empower one to live up to their need and desires effectively. Consequently, there is a huge connection among force, authenticity and earnestness since this partner commitment will prompt better administration and affecting different towards accomplishing association objectives effectively. What could/should, in the event that I had the decision and dynamic force in my future managers organization, the organization be doing, which it as of now isn’t, as far as partner commitment exercises? How, utilizing Mitchell’s et al’s. (1997) â€Å"salience† (significance) properties (Power, Legitimacy and Urgency); would i be able to legitimize that as a decent action for them to do? On the off chance that I had a decision and dynamic force in my future bosses organization, the partners in the organization would pass on certain obligations, for example, bookkeeping the executives jobs, enlisting representatives and other minor organization exercises. This is on the grounds that a few partners may apply their capacity, authenticity and earnestness in a way that may present difficu lties to compelling execution; along these lines making representatives to get ineffective. Partners can influence the business result emphatically or contrarily (Crane and Matten, 2004). For example, a few partners may utilize capacity to assume responsibility for financial specialists on the off chance that the organization is secretly held as opposed to traded on an open market. By utilizing Mitchell’s remarkable quality model traits, I can excuse great exercises for partners, for example, arranging, dynamic procedure, direct administration and venture coordination process. Course Four: Ethical Leadership Debate Guiding Reflective Question Student Reflection What was the meaning of ‘

Saturday, August 22, 2020

Antonio Vivaldis Biography :: essays research papers

Antonio Vivaldi was conceived in Venice on March fourth, 1678. Despite the fact that appointed a minister in 1703, as indicated by his own record, inside a time of being appointed Vivaldi no longer wished to praise mass due to physical objections ("tightness of the chest") which highlighted angina pectoris, asthmatic bronchitis, or an apprehensive issue. It is likewise conceivable that Vivaldi was mimicking disease - there is a story that he here and there left the special raised area so as to rapidly write down a melodic thought in the sacristy.... In any occasion he had become a minister without wanting to, maybe in light of the fact that in his day preparing for the organization was regularly the main conceivable route for a poor family to get free tutoring. In spite of the fact that he composed many fine and vital concertos, for example, the Four Seasons and the Opus 3 for instance, he likewise composed numerous works which sound like five-finger practices for understudies. What's more, this is correctly what they were. Vivaldi was utilized for a large portion of his working life by the Ospedale della Pietã . Frequently named a "orphanage", this Ospedale was in certainty a home for the female posterity of aristocrats and their various dalliances with their fancy women. The Ospedale was in this manner plentifully supplied by the "anonymous" fathers; its decorations verged on the extravagant, the youngsters were all around cared for, and the melodic principles among the most elevated in Venice. A considerable lot of Vivaldi's concerti were in fact practices which he would play with his numerous capable understudies. Vivaldi's relationship with the Ospedale started directly after his appointment in 1703, when he was named as violin instructor there. Until 1709, Vivaldi's arrangement was restored each year and again after 1711. Somewhere in the range of 1709 and 1711 Vivaldi was not connected to the Ospedale. Maybe in this period he was at that point working for the Teatro Sant' Angelo, a show theater. He likewise stayed dynamic as an author - in 1711 twelve concertos he had composed were distributed in Amsterdam by the music distributer Estienne Roger under the title l'Estro armonico (Harmonic Inspiration). In 1713, Vivaldi was given a month's leave from the Ospedale della Pietã so as to organize his first show, Ottone in estate, in Vicenza. In the 1713-4 season he was indeed joined to the Teatro Sant' Angelo, where he delivered a show by the arranger Giovanni Alberto Rostori (1692-1753). Most definitely, the finish of 1716 was a high point for Vivaldi.

Motivational interviewing Essay Example | Topics and Well Written Essays - 3000 words

Inspirational talking - Essay Example Asma’s case offers a down to earth model that persuasive meeting, which is customer focused, helps the customer to know her issues and create proper answer for tackle the current issues. Inspirational meeting can be depicted as a customer focused and mandate style of directing that is planned for carrying conduct change by helping customers to investigate, dissect and resolve troublesome conditions. When contrasted with different kinds of advising methods, inspiration meeting is objective arranged and spotlights straightforwardly on alternatives that are accessible for conduct change. The investigation and goals of the troublesome condition confronting the customer is the fundamental focal point of inspiring conduct change (Longshore &Grills,2000). Inspirational meeting, which applies the trans-hypothetical model of progress, advances social change by ending unfortunate conduct or receiving sound practices through six phases of conduct change. These are readiness, activity , backslide, thought, support and pre-consideration. Inspiration to change is animated by the customer and isn't forced by others, for example, advisors. Other inspirational methodologies weight on influence, compulsion, and useful showdown however dissimilar to inspiration talking with, they neglect to prepare and distinguish the inherent qualities and objectives that are basic to invigorate client’s conduct change. In inspiration intercession, a client’s status to change is a progressive result of relational relationship thus a specialist ought to be responsive and profoundly mindful to the persuasive indications of the customer. In inspiration talking with, restorative relationship resembles an organization which is planned for making a positive situation for change (Miller &Rollnick,1991). Substance misuse has become an upsetting and perilous contemporary pattern that has influenced the political, social and monetary existences of individuals. Its suggestions a re far bringing and numerous partners have proposed suitable measures to check it. One of the solid proportions of annihilating substance misuse and limiting its belongings is to help individuals to change their perspectives and practices towards its utilization and create propensities that will stop them from utilizing drugs. Inspiration meeting has become a basic instrument of helping individuals to limit tranquilize admission or stop the bad habit out and out (Block &Wulfert,2000). As a gathering, our job is to apply inspiration talking with standards in destroying and limiting the effect of substance misuse. The name of our customer is Asma. Our gathering comprises of four individuals, who fill in as a group in helping substance misuse customers to come out of the condition through persuasive meeting. The individuals are Fadumo, Glyn, Sharon, and Perpetua. Fadumo assumed a key job by picking a suitable culture that the gathering would draw the customer from. The way of life picked was Somali culture. Glyn figured out how to make suitable plans for the gathering and later educated the individuals about it. Sharon figured out how to watch the talking condition, distinguished the slip-ups for amendment and recorded the meeting. Perpetua was commanded with the job of overseeing issues engaged with recording of the meeting and correspondence issues, for example, overseeing email correspondence. The customer moves toward the gathering to help her to quit taking substances. As

Friday, August 21, 2020

LAW Essay Example | Topics and Well Written Essays - 3500 words

LAW - Essay Example The component truth of the assent, then again, alludes to the necessity that the assent by either or all gatherings must not have been vitiated by any deception, deceitful or something else, while the ability to contract is an individual prerequisite with respect to the gatherings of the agreement that they don't have any lawful exclusions to go into it. An exclusion for instance is minority. At last, the lawfulness of the agreement alludes to the capacity of the agreement and its terms to hold under the steady gaze of the law. Put at the end of the day, the agreement must not be legitimately invalid (Mead, Sagar and Back p 56). The issue at bar, requires the use of the laws of agreement development especially on the legitimacy of acknowledgments and offers. The current issue concerns the underlying period of agreement making which is the arrangement of the agreement. The issue here lies in the way that there was a mistake of the various components of the understanding like offer and acknowledgment and the difficult tries to decide if there was a substantial development of an agreement and with which parties. The issue includes UCL Property Developers, the enticing party, and two organizations competing for the structure contract: the DC Builders, and; the GB Construction. The request for occasions is: first, UCL gave out solicitations to delicate to building contractual workers for the development of its organization workplaces; second, DC Builders and GB Construction were the most minimal bidders and pre-qualifiers for  £ 2, 250,000, and  £ 2, 410,000, separately and each joined its own conditions and terms unmistakable from UCL’s; third, UCL granted DC with the agreement, in a letter, yet for a marginally less sum and as per its own terms; fourth, DC took steps to pull back its offer if UCL doesn't correct acknowledgment inside five days; fifth, DC officially

2013 Wait List Freshman - UGA Undergraduate Admissions

2013 Wait List Freshman - UGA Undergraduate Admissions 2013 Wait List Freshman We plan to make the final wave of freshman decisions available by 6PM today. For some students, you will be offered a place on our wait list. Every year our office has to predict approximately how many students we can admit in order to enroll our freshman class, but we can never be sure how many students will enroll until after the May 1 commitment deposit deadline has passed. If the number of students who say they will be attending UGA is lower than we expect, we may need to go to our wait list group in order to get the size that we want for our freshman class. Every year we have about 1,000 students on the wait list. We carefully monitor the deposits coming into the University to see where we are in comparison to the predicted freshman numbers. For those of you who have been wait-listed, here is a chance for you to comment. Please remember that this is not a blog where you should post statistics or throw fellow classmates under the bus. These types of comments will be deleted. The Wait List FAQ can answer some questions, but the most important thing you need to do is decide if you want to remain on the wait list. Follow the instructions on the status check or wait list letter we mailed to let us know if you want to stay on the wait list or if you want to decline this option and move forward with admission at another college. If you decide to stay on the wait list, you should still move forward with an alternate college plan as we will not know about any wait list options until May at the earliest. If you select to stay on the wait list, we will know that you still want to attend UGA if an opportunity opens up. The key word in wait list is wait as this is not a quick process. So please be prepared to wait. This year there are three options for the wait list reply. You can say no, please do not consider me for the wait list. The next option is to remain on the wait list, but only if it is for the Fall term. The third option is to remain on the wait list and be considered for both Fall and Spring terms. This is so that if there is space available for the Fall term, we will look at all of the students who have asked to remain on the wait list. If the only space available is for Spring term, we will only look at students who said Fall or Spring. Once you select an option, you cannot change it so be sure to think about your decision before you make your selection. We will not know details about the wait list until after May 15, and it may be well after that. Please be patient with our office and read the FAQ before asking questions as it can give you a great deal of information.

Friday, June 26, 2020


Throughout the history of financial crises, prudential regulators and central banks have been considerably involved in developing a wide spectrum of regulatory tools to ensure the smooth functioning of the banking sector and maintain financial stability. Deposit insurance, Lender of Last Resort (LLR), prudential regulation and supervision have been extensively discussed in academic and literature as the three major components of government financial safety net. In the midst of these regulatory tools, the regulation of bank capital stands out as one of the most critical in the view of fostering banking stability and preventing financial crises. Regrettably, bank capital regulation (Basel II) has turned out to be a massive fiasco, probably the one of the most crucial main failings in banking regulation that intensified the severity of the recent global financial turmoil. Firstly, this chapter will discuss the history and rational behind bank capital as regulatory tools, and secondly examine the extent to which Basel II contributed to both the occurrence and the severity of financial crisis 07/08. Finally, we will examine the nexus between financial innovation and systemic risk, and critically discuss how central banks and financial regulators have lost sight of systemic risk control in the light of weaknesses of the incumbent macro-prudential regulatory framework. HISTORICAL PERSPECTIVE OF BANK CAPITAL REGULATION The Banking system performs special functions including: asset transformation, liquidity insurance, development of payment systems and transmission of monetary policy impulses, investment monitoring, and risk diversification. The nature systemic banking risk and the pivotal role of banks in promoting economic development have been culminant considerations that underpin the rationality of banking regulation, Goodhart et al (2001, p.10) and Llewellyn (1999). One important lesson policy makers have learned from historical episodes of financial crises is the intrinsic fragility of the banking sector. Asset-liability maturity mismatches, banks runs and stock market crashes or any turbulent financial shocks at macro-level can deplete banks capital, resulting in systemic banking failures and serious disturbances in the financial system. The interconnectedness between banks with derivatives networks and financial linkages intensify the gravity of banking sector problems and eventually resu lt in a widespread of counterparty and systemic risk, leading to severe economic contractions and disruptions as we witnessed during the recent financial turmoil that followed the subprime crisis, Heffernan (2005). The main rationale behind introducing minimum capital adequacy requirement was to ensure that Banks hold sufficient capital to buffer against adverse financial shocks and unexpected losses, thus foster banks solvency and financial stability. Santos (2000, p.1) explained the importance of bank capital from the role it plays in banks soundness and risk-taking incentives, and from its role in the corporate governance of banks.  He argued that bank capital help not only reduce excessive risk taking and moral problems of created by deposit insurance, and but also consolidate the stability of the banking system by reinforcing the stand alone strength of banks in the midst of unexpected brutal financial storms, thus containing the eruption of systemic banking failures and minimizing the cost of government bailouts. Strong capital buffers are meant to absorb bank losses and minimize the occurrence of bank failures. The higher are the risks exposures of a Bank, the higher will be its capital charges; bank capital standards act a disciplinary mechanism that monitor Banks risk taking incentives. According to Allen and Gale (2007.p.193), bank capital plays a key risk sharing function by acting as a buffer that offsets depositors losses and allows orderly liquidation of the banks assets in the worse scenario of a bank failure. They further argued that incomplete markets justifies regulators involvement in setting bank capital to ensure optimal risk sharing and social welfare though appropriate capital rules that effectively mitigate the negative systemic externalities of bank failures. In 1988, G10 Nations signed Basel Accord for international bank capital standards. On December 1992, Basel I capital regulated were implemented to ensure that Banks h old sufficient capital to buffer against their credit risk exposures. Fast pace developments in financial innovations, market-based finance, securities and derivatives trading led policy makers to amend Basel I in 1994 and 1999 to provide more accurate capital provisioning covering wider aspects of financial risks including market risk, interest rate risk and operation risk. In June 2004, as a response to mounting criticisms against Basel I that followed the Asian financial crisis [1997-98], the Basel Committee for Banking Supervision (BCBS) published a new complex framework with three pillars titled Basel II. First of all, Basel I was criticized for inadequately coverage of all bank risks exposures. Secondly, risk calibrations and weightings were too simple and not properly done, thus did not accurately reflect actual underlying risks, Weber (2009). Thirdly, most importantly Basel I framework neglected issues regulatory arbitrage, Jackson et al. (1999). Atkinson et al (2008b, p.70) argued that Basel I allow Banks to easily manipulate their capital requirements using a disintermediation strategy by shifting between on-balance sheet assets with different weights, and by securitizing assets and shifting them off balance sheet. As a result, financial institutions accumulated excess capital, higher than minimum regulatory requirements, which regrettably did not constrain their risk appetite, Blundell-Wignall et al (2008). Basel II was scheduled to be fully operational by the end of 2006. However, the complexity of risk-sensitive capital requirements calibration under Basel II was so complex that it required longer transition periods than previously planned. Many financial institutions had not yet fully implemented Basel II till 2007 when the subprime crisis erupted in the US. Though Basel II cannot be fully blamed for triggering the subprime crisis, the entire financial crisis has thrown significant light on deficiencies of Basel II regime. Consequently, appropria te corrective measures have been implemented in the so called Basel II enhanced framework- 2009 and many other financial reforms are underway to strengthen banking regulation at an international level. UNDERSTANDING THE DEFICIENCIES OF BASEL II SYSTEM PILLAR 1: Risk Measurements Basel II is based on three pillars. The first pillar defines minimum capital level banks should hold as reserve to buffer against unforeseen losses. The calibration of risk adjusted capital adequacy requirements is based on complex risk weights applied separately to different asset classes and then summed up to determine total Risk weighted asset ( risk coverage included: operational risk (OR), credit and market risk (MR)). The basic principle under Pillar I is to assign capital charges based on the size risk exposures. Simply put: the higher the risk exposures are, the higher is the level of capital buffers imposed. Calibration of capital requirements: {RWA= {12.5(OR+MR) + 1.06SUM [w(i)A(i)]} (where: w(i) is the risk weight for asset I A(i)) see: Atkinson et al (2008b, p.72 }. Basel II provided Banks with three options with regard to their risk assessments based on which capital charges are defined. Small financial institutions with no capacity to model their risk and quantify their risk exposures internally could follow either the simplified approach with the fixed risk weights terms defined in Table 1, or a second approach based on external rating provided by Credit Rating Agencies (CRAs). The third option is the internal ratings-based (IRB) approach under which big sophisticated banks are allowed to use their internal risk management model to assess the probability of default (PD) and losses given risk exposures at default (LGDs), Blundell-Wignall et al (2008). The IRB system required not only high caliber internal expertise to gauge risk-sensitive weights with complex aggregation and quantitative risk modeling methods; but also high level of banking supervision to ensure full disclosure, transparency and accuracy of risk inputs in these financial risk models. In all cases, it is critical to properly calibrate risk for capital regulation to be effective. Source: Adrian Blundell-Wignall and Paul Atkinson (2010) BASEL II COMPOUNDED BANKS APPETITE FOR MORTGAGES As we discussed earlier on in the previous chapter, macroeconomic conditions (abundant liquidity and low interest rates between) led financial institutions to seek after higher return. Atkinson, Blundell-Wignall, and Lee (2008a) argued that Basel II stimulated financial institutions appetite for mortgage financing, hence helped fuel the housing bubble. Under Basel I, 50 % capital weight was required for on-balance sheet mortgages and Zero for secruritzed mortgages shifted off balance sheet through SIV, while newly published Basel II (2004) required 35%, and possibly as lower as 15% or 20% for sophisticated banks, depending their ability to use the complex internal ratings-based (IRB). However, under Basel II capital charges will apply for mortgages whether treat on and off balance sheet. The Basel Committee allowed banks to anticipate new bank capital rules (Basel II) before they become fully operational in January (2008) as planned in many countries. It is therefore rational that lower capital weights inevitably made mortgages more attractive for large banking groups such as Citi and Northtern Rock that opted for (IRB), allowing them to aggressively invest in residential mortgage backed securities (RMBS) to generate higher return on capital for low-capital-weighted mortgages, (see: Figure 1, Basel II advance estimates compared to Basel I Minimum Capital for Commercial Banks in the US). Fannie Mae and Freddy Mac (GSEs), main players in the US mortgage market, grew their mortgage portfolios from $160Bn to $1.5 trillion between 1990 and 2003. The Fed did not respond to this systemic threat, but rather stimulated the housing bubble with excessive quantitative monetary stimulus post the 2001 recession. These low interest rate policies triggered a demand bubble for mortgages, resulting in GSEs mortgages portfolio exploding to approximately $3.2 trillion in 2007, Carosio (2010). Blundell-Wignall and Paul Atkinson (2008a) have empirically modeled the impact of Basel II introduction in 2004 on RMBSs acceleration (see Summary of result in Figure 2). In 2004, many other financial institutions which continued to operate under Basel I immediately responded to this regulatory arbitrage opportunity by rapidly accelerating mortgage lending through extensive off-balance sheet securitization vehicles (SIV), while awaiting Basel II to become fully operational. Figure 1 Figure 2: Model-based Contributions to the RMBS Explosion RISK CONCENTRATION AND REGULATORY ARBITRAGE The Basel system defines Risk adjusted Capital requirement based on a mathematical model many assumptions, most notably the portfolio invariance assumption; that is risk adjusted capital charges should depend only on the risk of that loan, not on the portfolio to which it is added Atkinson et al (2008b, p.72). Mathematically speaking, capital charges for credit risk exposures of mortgage loan rises linearly with respect to holdings in that assets type, but remain independent to the exposure size that is, appropriate diversification is simply assumed! Blundell-Wignall et al.(2010, p.4). Such assumption facilitates the application of mathematical models underpinning Bank capital rules with the convenience of simple additivity. However, not only portfolio invariance rules out the importance of specific risk diversification and its impact on the overall portfolio risk, but it also most importantly fails to consider the concentration risk in the portfolio. This created an arbitrage oppo rtunity created that enable banks to expand their investment in profitable mortgage lending by significantly leveraging their capital without considering the danger of excessive risk concentration mortgage assets. THE NORTHERN ROCK EXAMPLE Northern rock, a key player in the UK mortgage market, was one of the first banks to anticipate Basel II and choose IRB approach. The Bank aggressively concentrated and grew its mortgage assets by excessively rolling short-term debt. Northern rocks rapid expansion of mortgage products in anticipation of Basel II was fully fueled by massive liquidity funding on wholesale markets which regrettably did not properly match with its liabilities. As a result, the explosion of the subprime meltdown (with falling house prices, collapse of CDOs markets and huge default mortgages products, liquidity frozen on financial markets), Northern rock to suffered a bank run; the first bank run recorded in Britain since 1866. Northern rock achieve considerable average annual assets growth rate estimated to 20% and concentrated more than 75 % of its assets in mortgage related assets to lower their capital charges. The regulatory arbitrage opportunity led the bank to forgo an equity building culture for credit expansion culture based on debt building in order to uplift shareholders return on capital and share price, Atkinson, Lee et al (2008, p.9). In June 2007, as the subprime earthquake began to erupt, Northern Rock recorded GBP 2.2bn equity capital and GBP 113bn total assets, making the bank one of the most highly leveraged in the midst of the liquidity turmoil. Their risk weight asset under Basel II was GBP 19bn, equivalent to 16.7 % total assets; while Under Basel I their capital charges amounted to GBP 34bn (a ratio of 30 % to total assets), Atkinson, Lee et al (2008, p.9). Bank of England intervened with  £23 billion liquidity injection; approximately 15times the amount of regulatory capital required by Basel II [ £1.52 billion], Rochet (2008, p.7). MORAL HAZARD AND THE ROLE OF CREDIT RATING AGENCIES In the IRB approach risk inputs are subjective and this exacerbates moral hazard problems in the banking system in the absence of a tight and robust supervisory framework. Off balance sheet and over the counter risk exposures (like CDSs) were not fully observable by financial regulators. Also, the unavailability of sufficient historical data (about new structured financial products) made it a difficult task for quantitative risk managers to model and forecast risk exposures; increasing the tendency of banks to become less transparent in risk disclosure and manipulate inputs in risk modeling to reduce their bank capital requirements, Blundell-Wignall and Atkinson(2008b). According to Bair (2007), Chair of the Federal Deposit Insurance Corporation (FDIC), ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ the key risk inputs that drive the advanced approaches are subjective ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ unreliable and unproven. In the context of the subprime crisis, financial regulators failed to e xercise higher level of due diligence vis-à  -vis the reliability and accuracy of IRB system of banks. As a result of risk was mispriced and capital charges were inconsistently lower with regard to actual risk. The role of Credit Rating Agencies in the financial turmoil 07/08 has been extensively discussed. External rating by CRAs is a fundamental part of risk assessments approaches under pillar I (Basel II). CRAs, legally authorized risk experts, were trusted enough not only with the potential to advise banks on risk rating and analytics, but also with the capability to provide credible, consistent and accurate inputs to risk ratings, based on which regulatory bank capital are charged. However, this overreliance in CRAs turned to be scandalous, particularly regarding the misprice of risk associated to senior tranches of CDOs that were rated triple AAA, making them seem riskless and very attractive to investors. As matter of fact CRAs boosted the demand CDOs which eventually hel ped boost the housing bubble. Also, the misprice of risk, led to insufficient capital buffers that has significant increased the magnitude of banks vulnerability due to excessive risk concentration in subprime related exposures. PRO-CYCLICALITY EFFECTS Heid (2003), Gordy and Howells (2004), Pederzoli et al (2009) provide substantial evidence of pro-cyclical effects of risk-sensitive bank capital requirement. While asset prices tend to increase the upper phase of the business cycle, in contrast, the riskiness of assets tend to fall, encouraging bank to take on extra risk and aggressively compete to increase their profit in so called good times. Brunnermeier, Goodhart et al (2009, Page xii) argued that competitive forces activates an automatic disciplinary mechanism, causing banks to respond to the dynamics of markets development during economic booms by: (i) expanding their balance sheets to take advantage of the fixed costs of banking franchises and regulation (ii) trying to lower the cost of funding by using short-term funding from the money markets and (iii) increasing leverage. According to Nickell et al. (2000), Bangia et al. (2002), macroeconomic and market conditions are keys drivers of asset values, stock market volatil ity and credits risk factors across the entire business cycle. It therefore becomes rational that risks vary in line or pro-cyclically with the business cycle, increasing the tendency to lax risk judgments in good times and overestimate them is bad times. Dowd (2009, p.161) and Repullo and Suarez (2009) explained how risk inputs in IRB and external rating (CRAs) tends to be less rigorous in times of economic booms as compared to recession times, leading to degrade risk weights in expansion phases of the business cycle. This ultimately resulted in lower capital charges in good times, as we have witnessed during the recent housing bubble, encouraging credit expansion through excessive leveraging of capital when a downturn is most probable. Dowd (2009) argued that the procyclicality of Basel II risk sensitive capital requirement contributed to the severity of crisis. Figure 3 is a perfect graphical illustration of risks fluctuation over the business cycle in the United States. The char t is graphical representation of the trends in aggregate assets as a ratio of risk-weighted assets over the US business cycle (represented by trends in GDP). We could easily observe that risk weighted assets followed a downward trend during the high tech bubble also referred to as the dot com bubble (1998-2000). Oppositely, following the bursting of the dotcom bubble which triggered the 2001 recession, risk weighted asset took an upward sloping trend. The same procyclical effects were also remarkable in the last phase housing bubble with the introduction of Basel II in 2004. Figure 3: US GDP and Total Assets/Risk-weighted Assets Blundell-Wignall and Atkinson (2008b) argued the IRB approach and external rating of CRAs (Under pillar I) exacerbated this procyclicality impact. He explained that neither banks nor CRAs predicted with complete accuracy future asset prices and stock market volatility. They all based their risk rating estimations of probability of default and loss given default based on actual business cycle conditions. Financial innovations (CDOs, CDS) facilitated regulatory arbitrage by making possible for banks to reduce their capital charges by either shifting risk off balance through SIV (motor of securitization process) or transferring credit risks to other financial counterparts by trading CDSs. Faulty risk assessments permitted banks to become highly leveraged, up to 40:1, Blundell-Wignall et al (2008a). Basel II over-relied on both banks internal risk rating models and credit rating agencies risk assessments which unfortunately turned out to be too procyclical. FAILINGS IN BANKING SUPERVISION: PILLAR 2 AND 3 Pillar 2 emphases on the banking supervision process in which prudential supervisors stress test banks soundness and provide them with essential prudential guidance to ensure that they hold sufficient capital buffers for risks that might have been overlooked under Pillar 1. An effective banking supervision review process requires a forward looking approach with dynamic provisioning of capital charges to effectively in counteract all risks misjudgments under Pillar I. The extraordinary complexity large financial institutions and instruments and fast pace nature of financial markets movement makes a challenging task for supervisors to keep themselves updated with dynamic markets practices, structures and complexity, and to forecast with accuracy futures markets volatility and assets prices, Blundell-Wignall (2008a, p75) . The subprime crisis was mainly a sequel of massive supervisory failures. It is interesting to know that Bair (2007), Chair of the FDIC, expressed dubious concerns o n regulators ability to mitigate the shortcoming of risk-sensitive bank capital rules. He argued that the unreliability of capital adequacy standards makes it even more rational to question the ability of ill-equipped financial supervisors in overcoming the defects of capital standards requirements (in Pillar I). Scientists including astronauts, physicians, engineers and mathematicians are now heading quantitative risk modeling teams within large financial institutions. These risk modelers often called quant determine internal risk tolerance using extremely complex mathematical financial models such as Value at Risk models (VaR), (the most widely used risk model, often discredited for being alarmingly sophisticated, inaccurate and grounded in misleading assumptions), Dowd(2009). Dowd (2009, p.148) argued that sophisticated VaR Models used by banks are unreliable due to high level complexity (and so greater scope for error), less transparency (making errors harder to detect), and gre ater dependence on assumptions (any of which could be wrong). Banking supervisor were far behind latest trends of financial innovation, particularly in risk management, and as a result could not match the level of expertise of investment banks quantitative risk modelers. Regulators did not have skills to accurately assess and control risk-taking and dynamically gauge capital charges. Not only supervisors overrated internal risk management models, but their extreme lasses-faire attitude vis-à  -vis banks potential to adequately manage their risk exposures internally created exorbitant moral hazard problems that eventually ruined institutional risk management systems and corporate governance. For example, in the United Kingdom, the Financial Services Authority (FSA), renown as one of the best highly sophisticated financial supervisors with qualified staffs, authorized Northern Rock adherence to Basel II IRB approach. Though FSA fully understood that this decision would significantly reduce and weaken Northern Rocks capital, but it couldnt exercise supervisory due diligence and prevent the bank from compounding risk taking, expanding lending through leveraging of capital, excessively concentrating its assets in mortgages products to benefit lower capital charges. Pillar 3 places emphasis on market discipline and disclosure and enforce sanctions to ensure sound and transparent risk management practices within banks. Having discussed the shortcomings of the supervisory review process, the unreliability and subjectivity of risk inputs in internal risk management models (under IRB approach), and the procycilaty of risks, it is rational to be skeptical about the accuracy risk reporting. How can supervisors ensure market discipline if they can properly assess risk themselves? Financial markets volatility and bubbles, and the complexity of new structured financial securities make the mark-to-market reporting complicated and inaccurate. In addition, risk reporting fo r OTC traded derivatives and off-balance exposures are extremely difficult and very demanding for both to supervisors and insiders; giving enough room to these last one to manipulate their institutional risk management system to achieve higher return, hence worsening moral hazard problems. KPMGs Audit Committee research survey (2008) indicated out of 1 080 audit committee members (including 150 in the UK), only 38% were satisfied with internal risk reporting, Kirkpatrick (2009, p.11). FINANCIAL INNOVATION AND SYSTEMIC RISK Though deficiencies of the Basel system enable financial institutions to lower their capital requirement and expand mortgage lending to uplift returns, the debate about casual distortions in banking regulation cannot be ended without further elaborating on the key role played by financial innovations both in the housing bubble and the spread of systemic risk. As financial institutions aggressively sought after higher return in the midst of the global liquidity bubble, the crisis recorded an uncontainable explosion of highly complex financial innovations on a global scale. Credit Default Swaps (CDSs) and Collateralized Debt Obligations (CDOs) are incontestably the most popular structures financial products that have played a critical role in the financial crisis, see Figure 45. In simple terms, CDOs are bonds underlying pools of asset back securities such as mortgages; and CDSs is a credit risk transfer contractual agreement between a buyer and a seller, where by the seller agrees t o compensate the buyer in the event of default in exchange of periodic fee till the CDS contract reaches maturity. The originate distribute model enabled banks off load risks from their balances through structured investment vehicles (SIVs) and facilitated credit risks transfer to a wide spectrum of investors into wider markets. Figure 4 Figure 5: Growth in CDS Before the crisis, many were those who firmly believed that the securitization will strengthen financial stability through effective dispersion of credit risk, making macroeconomic and adverse financial shocks easily absorbable and spread across a diversified pool of investors, Shin (2009). Before the subprime crisis, the IMF (2006,p.51) also believed that the dispersion of credit risk by banks to a broader and more diverse group of investors, rather than warehousing such risk on their balance sheets, has helped make the banking and overall financial system more resilient. When the subprime crisis erupted, everyone i ncluding Financial regulators got to realize that risk transfer through securitization can contribute to financial fragility and increase systemic risk in the absent of adequate supervision. Demyanyk and Hemert (2007) and Keys et al. (2007) provide solid empirical evidence that securitization eroded sound principles of underwriting standards and resulted in very poor credit quality. According to Aloko and Tuson (2010, p.6), the Mortgage Meltdown marked the end of this age of ignorance and lifted the veil on the ugly truth of securitization. It is very regrettable that prudential regulators neglected the simple fact that credit risks transfer will enhance financial stability in the short run but at the detriment of rising systemic risk in the long run. The more risk is transferred through complex and highly leveraged financial instruments (such as CDSs or CDOs), the stronger becomes interdependencies and financial linkages between counterparts within the financial system, hence the h igher level of systemic risk! Regulators overlook the danger of CDOs and CDSs systemic risk exposures and how this exposure could be managed if the worst comes to the worst Chorafas (2009, p. xii). SLUMBERING REGULATORS AND SYSTEMIC RISK Fannie Mae and Freddy Mac (GSEs) grew their mortgage portfolios from $160Bn to $1.5 trillion between 1990 and 2003, and then to approximately $3.2 trillion in 2007, Carosio (2010). The senior tranches of CDOs were rated AAA by CRAs, making them appear very attractive and as safe as US government bonds, while in reality they were very risky junk bonds. The markets for CDOs grew rapidly to approximately $1.2 trillion by the end of 2007 according to IMF statistics. CDSs markets was over the counter, out of control, unlimited and significantly exploded to feed investors natural instincts to mitigate their credit risk exposures to collateralized debt obligations (CDOs). Investment banks heavily traded CDSs to hedge against their excessive risk concentration in mortgage related assets; over $60 trillion CDSs were outstanding in the wake of the subprime meltdown (Dowd 2009, p46). CDSs eventually became a major source of revenues for many financial institutions and large insurance companie s. For example Lehman Brothers had approximately $ 400Bn outstanding CDSs obligations to honor, Brettell Karen(2008). A greater systemic trouble would have evolve if the US federal government did not provide $170Bn immediate assistance to AIG, which was also on the edge of bankruptcy with over a $1.6 trillion in CDSs obligations to counterparts including US large investment banks and many other large financial institutions across the globe. Lehmans bankruptcy in Sep 2008, the greatest of financial story, triggered a systemic spread of credit defaults and financial panic on international financial markets. The fear of counterparties risk severely contracted liquid on interbank markets as banks felt insecure lending to each other, see figure 67. The systemic fallout of Lehman Brothers collapse has exacerbated the liquidity crisis and the international market situation, which had been unsettled for more than a year, see: Bank of France Commission Bancaire (2008). Rapid propagation o f contagion risk led to uncontainable systemic breakdown that undermined global financial stability and exacerbated financial markets distress. The lack of due diligence and inability of financial regulators to impose markets discipline and anticipate the systemic implications uncontrolled financial innovations (complex securitizations, unlimited networks of toxic CDS) compounded systemic risk and resulted in a highly leveraged and fragile banking system. According to Chorafas (2009, p. xiii) financial regulators including FSA, SEC watched this happening in the false belief that markets correct their own excesses. They all got it wrong, and macroprudential regulation inevitably failed. Figure6: Three month and interbank rate Figure7: Financial market liquidity indexes Source: Bloomberg: (e) Lehman Brothers Bankruptcy Source: Bank of England, 2009 POOR MACRO-PRUDENTIAL SURVEILLANCE Based on the experiences of past financial crises, Davis E P (1999) examined financial data and macroeconomic indicators needed for macro-prudential surveillance. The table below show a cross county study that indicates different factors which have led to historical episodes of financial crises across the globe, see Table 2. It is interesting to notice that most factors which caused financial crises in the past as the same which triggered the recent global financial turmoil. There is enough reason to believe that regulators either have chosen to be blind and neglect all early signal of the development systemic risk in financial system, or they were incapable to impose market discipline on banks. The debt bubble originating from both macroeconomic imbalances and extensive securitization, the excessive risk concentration in mortgage products, the housing bubbles, decline in lending standards, faulty risk reporting and supervisory systems, uncontrolled financial innovations, unlimited trade of toxic OTC derivatives (CDSs) were clear symptoms that a financial crisis was under way. These alarming alerts should have been timely addressed to prevent or contain the severity of the recent financial turbulence. Do regulators really learn from their past mistakes, many were the warning signals to the subprime meltdown, debt accumulation financial innovation and risk concentration, unfortunately as the Larosià ¨re report confirm there was no regulatory responses till these embryonic systemic risk signals fully developed and engulfed the entire the financial system. The High-level group on financial supervision in EU (Report 2009, p40) affirmed to have identified macro-prudential risks there was no shortage of comments about worrying developments in both macroeconomic imbalances and the lowering price of risk, for example; [However] there was no mechanism to ensure that this assessment of risk was translated into action. Table 2: Macro-prudential surveillance indicato rs Davis E P (1999) THE UK EXAMPLE In the United Kingdom, macro-prudential regulation failed due defects in the tripartite regulatory system introduced by Gordon brown in 1997 under which the banking supervision functions were separated from Bank of England and delegated to an independent and well structured financial regulator (FSA). In the context of regulatory failures in the UK, it is no longer a secret that the FSA overemphasized on micro-prudential regulation (the supervision of individual financial institutions) and unfortunately paid less attention to systemic risk developments in the financial system (macro-prudential supervision). The FSA not only failed enforce market discipline on banks excessive risk taking and leverage (Northern rock case) but also had no capabilities to gauge systemic risk and stress test the stability of the UK financial system as a whole. The tripartite structure resulted in imperfect information flows between the Bank of England and the FSA, leaving the central bank with no powers over the banks and a bank regulator with no remit to monitor the bigger picture Osborne (2009, p.15). A clear lesson to retain from the financial is that systemic risk has significantly grown in todays globalized financial system and as such a perfect coordination between micro and macro prudential regulation is imperative to ensure financial stability.

Monday, May 25, 2020

Human Resorce Management vs. Operations Management...

Orlandus Leonard Human Resources Management vs. Operational Management Kaplan University MT 435 Operations Management Human Resources Management and Operational Management are two very distinct managements that are strangely co-dependent of each other in my view. Operations Management is responsible for designing, operating and improving productive systems or in layman’s terms, systems for getting work done. Operations Managers are found in all walks of life. In anything you basically do or have done there are operations managers. When you go to the store, when you buy gas, in factories, in hospitals, banks even in your government there are operation managers. They are the ones who design systems, who ensure the quality of your†¦show more content†¦Congruence- the goals must be consistent such as recruiting talented workers capable of innovative research and development of company products. Project management is managing the work to develop and innovate or even change within an existing operation. There are five steps in this management: Initiating the project, Planning and controlling all activities to keep the project on schedule, executing every phase of the projects process, monitoring/ controlling reviewing and regulating the progress and performance of all phases of the project, Closing process this is where all processes are finalized and completed to officially close the project out. Human Resource Management basically deals with the people or resources while Project Management deals with the project and what needs to be done, while Operations management deals with doing the job. References Russell, R. S., Taylor III, B. W. (2014). Operations and Supply Chain Management, 8th edition. Hoboken, New Jersey: John Wiley Sons, Inc.