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Article
Publication date: 25 May 2012

Ronald van Nattem and Adri Proveniers

Total outsourcing is now a common strategy for delivery of building maintenance and facilities services. Standing on the cross roads of “vanish or reinvent oneself” the…

Abstract

Purpose

Total outsourcing is now a common strategy for delivery of building maintenance and facilities services. Standing on the cross roads of “vanish or reinvent oneself” the Maintenance and Control Division of the corporate real estate management (CREM) Service of the Eindhoven University of Technology puts new focus on the operational aspect of CREM and gives less weight to the outside market. Based on engineering management viewpoints on CREM rather than pure economic management viewpoints, the purpose of this paper is to investigate under what conditions a mutual cooperation between in‐house staff and external contractors is successful in implementing new solutions, in effective as well as efficient ways.

Design/methodology/approach

A single case methodology in the format of a real business case. Based on theoretical and pragmatic engineering management principles, a business case was developed with the help of a well‐known Business Consultancy. The business case had an interim evaluation and will have a final evaluation.

Findings

From the interim evaluation, it can be concluded that the CREM entrepreneurial cooperation is on the right track towards promising results in reaching its efficiency and effectiveness goals. Real cooperation in joint cross‐functional expert teams is felt as experimental and thus time consuming. So CREM entrepreneurial cooperation is only suitable for complex CREM situations where there is a real need for innovative solutions. In spite of this, a sufficient number of large and some international external contractors in diverse aspects of building and building services were willing to participate in CREM entrepreneurial cooperation. In line with the English saying “the proof of the pudding is in the eating”, the official tendering of the next round will prove if the external contractors will be as satisfied as the university with the business case results.

Originality/value

The paper offers a non‐conformist view on mainstream outsourcing trends based on engineering management viewpoints on CREM, rather than pure economic management viewpoints. Also, the business case format of the case study is original.

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Book part
Publication date: 1 December 2008

Soo Hong Chew, King King Li, Robin Chark and Songfa Zhong

Purpose – This experimental economics study using brain imaging techniques investigates the risk-ambiguity distinction in relation to the source preference hypothesis (Fox…

Abstract

Purpose – This experimental economics study using brain imaging techniques investigates the risk-ambiguity distinction in relation to the source preference hypothesis (Fox & Tversky, 1995) in which identically distributed risks arising from different sources of uncertainty may engender distinct preferences for the same decision maker, contrary to classical economic thinking. The use of brain imaging enables sharper testing of the implications of different models of decision-making including Chew and Sagi's (2008) axiomatization of source preference.

Methodology/approach – Using fMRI, brain activations were observed when subjects make 48 sequential binary choices among even-chance lotteries based on whether the trailing digits of a number of stock prices at market closing would be odd or even. Subsequently, subjects rate familiarity of the stock symbols.

Findings – When contrasting brain activation from more familiar sources with those from less familiar ones, regions appearing to be more active include the putamen, medial frontal cortex, and superior temporal gyrus. ROI analysis showed that the activation patterns in the familiar–unfamiliar and unfamiliar–familiar contrasts are similar to those in the risk–ambiguity and ambiguity–risk contrasts reported by Hsu et al. (2005). This supports the conjecture that the risk-ambiguity distinction can be subsumed by the source preference hypothesis.

Research limitations/implications – Our odd–even design has the advantage of inducing the same “unambiguous” probability of half for each subject in each binary comparison. Our finding supports the implications of the Chew–Sagi model and rejects models based on global probabilistic sophistication, including rank-dependent models derived from non-additive probabilities, e.g., Choquet expected utility and cumulative prospect theory, as well as those based on multiple priors, e.g., α-maxmin. The finding in Hsu et al. (2005) that orbitofrontal cortex lesion patients display neither ambiguity aversion nor risk aversion offers further support to the Chew–Sagi model. Our finding also supports the Levy et al. (2007) contention of a single valuation system encompassing risk and ambiguity aversion.

Originality/value of chapter – This is the first neuroimaging study of the source preference hypothesis using a design which can discriminate among decision models ranging from risk-based ones to those relying on multiple priors.

Details

Neuroeconomics
Type: Book
ISBN: 978-1-84855-304-0

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Article
Publication date: 1 January 1999

STEVE STRONGIN and MELANIE PETSCH

Many companies have either rejected or reduced the size of risk management (hedging) programs because they do not believe that the market will reward them sufficiently for…

Abstract

Many companies have either rejected or reduced the size of risk management (hedging) programs because they do not believe that the market will reward them sufficiently for the reduction in earnings volatility. In fact, many commodity companies would take the argument a step farther and argue that the market will punish them for reducing their commodity exposure.

Details

The Journal of Risk Finance, vol. 1 no. 1
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 20 August 2018

Manu Gupta and Puneet Prakash

This paper aims to study differences in risk behavior between holding companies that undertake both banking activity and insurance underwriting (labeled financial holding…

Abstract

Purpose

This paper aims to study differences in risk behavior between holding companies that undertake both banking activity and insurance underwriting (labeled financial holding companies or FHCs) and stand-alone bank holding companies (BHCs).

Design/methodology/approach

The paper examines the discretionary accruals of FHCs to comparable BHCs and compares their bad loans-to-assets ratio in the future.

Findings

FHCs have lower discretionary accruals (loan loss provisions and realized capital gains) than BHCs. FHCs fare better than BHCs in terms of bad loans-to-assets ratio. Insurance underwriting has a dampening effect on discretionary accruals of FHCs.

Research limitations/implications

This study raises additional research questions. Do shared governance and insurance underwriting serve as substitutes or complements? Will regulatory environment affect this relation?

Practical implications

When reported earnings do not match true earnings, the market participants lose the ability to price correctly, and the regulators lose the ability to effectively regulate banks. From the regulatory perspective, these findings suggest insurance underwriting by banks mitigate potential market distortions.

Originality/value

This paper is the first to study the effect of underwriting insurance risk on earnings management behavior of BHCs and its link to risk governance.

Details

The Journal of Risk Finance, vol. 19 no. 4
Type: Research Article
ISSN: 1526-5943

Keywords

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Article
Publication date: 6 March 2007

Bob Ritchie and Clare Brindley

The purpose of this paper is to examine the constructs underpinning risk management and explores its application in the supply chain context through the development of a…

Abstract

Purpose

The purpose of this paper is to examine the constructs underpinning risk management and explores its application in the supply chain context through the development of a framework. The constructs of performance and risk are matched together to provide new perspectives for researchers and practitioners.

Design/methodology/approach

The conceptual and empirical work in the supply chain management field and other related fields is employed to develop a conceptual framework of supply chain risk management (SCRM). Risk in the supply chain is explored in terms of risk/performance sources, drivers, consequences and management responses, including initial approaches to categorization within these. Two empirical cases are used to illustrate the application of the framework.

Findings

A new framework is presented that helps to integrate the dimensions of risk and performance in supply chains and provide a categorisation of risk drivers.

Research limitations/implications

SCRM is at an early stage of evolution. The paper provides a clarification of the dimensions and constructs within this field together with directions for future research and development.

Practical implications

The focus on performance in terms of efficiency and effectiveness linked to risk drivers and risk management responses provides insights to managing and measuring risk in supply chains.

Originality/value

The paper consolidates the work in an emerging strand of supply chain management. Two key challenges facing the research community are addressed, the ability to prescribe strategies to address particular risk drivers and the interaction of risk management and performance.

Details

International Journal of Operations & Production Management, vol. 27 no. 3
Type: Research Article
ISSN: 0144-3577

Keywords

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Article
Publication date: 14 April 2014

Mahmoud Bekri, Young Shin (Aaron) Kim and Svetlozar (Zari) T. Rachev

In Islamic finance (IF), the safety-first rule of investing (hifdh al mal) is held to be of utmost importance. In view of the instability in the global financial markets…

Abstract

Purpose

In Islamic finance (IF), the safety-first rule of investing (hifdh al mal) is held to be of utmost importance. In view of the instability in the global financial markets, the IF portfolio manager (mudharib) is committed, according to Sharia, to make use of advanced models and reliable tools. This paper seeks to address these issues.

Design/methodology/approach

In this paper, the limitations of the standard models used in the IF industry are reviewed. Then, a framework was set forth for a reliable modeling of the IF markets, especially in extreme events and highly volatile periods. Based on the empirical evidence, the framework offers an improved tool to ameliorate the evaluation of Islamic stock market risk exposure and to reduce the costs of Islamic risk management.

Findings

Based on the empirical evidence, the framework offers an improved tool to ameliorate the evaluation of Islamic stock market risk exposure and to reduce the costs of Islamic risk management.

Originality/value

In IF, the portfolio manager – mudharib – according to Sharia, should ensure the adequacy of the mathematical and statistical tools used to model and control portfolio risk. This task became more complicated because of the increase in risk, as measured via market volatility, during the financial crisis that began in the summer of 2007. Sharia condemns the portfolio manager who demonstrates negligence and may hold him accountable for losses for failing to select the proper analytical tools. As Sharia guidelines hold the safety-first principle of investing rule (hifdh al mal) to be of utmost importance, the portfolio manager should avoid speculative investments and strategies that would lead to significant losses during periods of high market volatility.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 7 no. 1
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 4 October 2011

Mazin A.M. Al Janabi

The purpose of this paper is to originate a proactive approach for the quantification and analysis of liquidity risk for trading portfolios that consist of multiple equity assets.

Abstract

Purpose

The purpose of this paper is to originate a proactive approach for the quantification and analysis of liquidity risk for trading portfolios that consist of multiple equity assets.

Design/methodology/approach

The paper presents a coherent modeling method whereby the holding periods are adjusted according to the specific needs of each trading portfolio. This adjustment can be attained for the entire portfolio or for any specific asset within the equity trading portfolio. This paper extends previous approaches by explicitly modeling the liquidation of trading portfolios, over the holding period, with the aid of an appropriate scaling of the multiple‐assets' liquidity‐adjusted value‐at‐risk matrix. The key methodological contribution is a different and less conservative liquidity scaling factor than the conventional root‐t multiplier.

Findings

The proposed coherent liquidity multiplier is a function of a predetermined liquidity threshold, defined as the maximum position which can be unwound without disturbing market prices during one trading day, and is quite straightforward to put into practice even by very large financial institutions and institutional portfolio managers. Furthermore, it is designed to accommodate all types of trading assets held and its simplicity stems from the fact that it focuses on the time‐volatility dimension of liquidity risk instead of the cost spread (bid‐ask margin) as most researchers have done heretofore.

Practical implications

Using more than six years of daily return data, for the period 2004‐2009, of emerging Gulf Cooperation Council (GCC) stock markets, the paper analyzes different structured and optimum trading portfolios and determine coherent risk exposure and liquidity risk premium under different illiquid and adverse market conditions and under the notion of different correlation factors.

Originality/value

This paper fills a main gap in market and liquidity risk management literatures by putting forward a thorough modeling of liquidity risk under the supposition of illiquid and adverse market settings. The empirical results are interesting in terms of theory as well as practical applications to trading units, asset management service entities and other financial institutions. This coherent modeling technique and empirical tests can aid the GCC financial markets and other emerging economies in devising contemporary internal risk models, particularly in light of the aftermaths of the recent sub‐prime financial crisis.

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Article
Publication date: 1 April 2003

MORTON N. LANE and ROGER G. BECKWITH

The year 2002 was a record for insurance securitization. It's official. According to Marsh and McLennan $1.22 billion bonds were issued in 2002 versus $1.136 billion in…

Abstract

The year 2002 was a record for insurance securitization. It's official. According to Marsh and McLennan $1.22 billion bonds were issued in 2002 versus $1.136 billion in 2000. Our own readings of history are slightly off calendar, usually measuring the 12 months in between first quarter ends. Nevertheless, like Marsh we believe that the most recent 12 months represent something of an uptick in activity. Like the margin by which the Marsh record was set, the magnitude of the uptick is small, tiny in fact, but potentially a significant harbinger of directional change. In truth, these are crumbs of comfort for those toiling in the vineyards of insurance securitization. The harvest from a great deal of intellectual and financial investment still eludes us. Notwithstanding, this article records the trends that have occurred during our last 12 months and the messages they contain for that brighter securitization future that surely lies ahead.

Details

The Journal of Risk Finance, vol. 5 no. 1
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 1 January 2006

Roger Williams, Boudewijn Bertsch, Barrie Dale, Ton van der Wiele, Jos van Iwaarden, Mark Smith and Rolf Visser

The purpose of this paper is to examine the field of risk management in relation to the connection to quality management. It poses and attempts to answer three questions…

Abstract

Purpose

The purpose of this paper is to examine the field of risk management in relation to the connection to quality management. It poses and attempts to answer three questions. What can quality teach risk management? What can risk management teach quality? What must both risk and quality management still learn? This is an area which has so far not been explored by the quality management fraternity.

Design/methodology/approach

The examination is built on more than 20 years' experience in the area of quality management and extensive involvement in recent developments around risk management (e.g. the Australian/New Zealand standard for risk management – AS/NZ4360, the development of a risk management model by the European Foundation for Quality Management, and the launch of risk‐based instruments by a number of private companies).

Findings

Amongst the major findings are that there are three types of risks: predictable risks that organisations know they face; the risks which an organisation knows it might run but which are caused by chance; and the risks which organisations do not know they are running.

Practical implications

It is pointed out that in the past the challenge for quality management professionals was to support process and design improvements, but the challenge of the future is to improve relationships in order to reduce and manage the most important risks.

Originality/value

The paper outlines how the quality management discipline can help with the management of these types of risks.

Details

The TQM Magazine, vol. 18 no. 1
Type: Research Article
ISSN: 0954-478X

Keywords

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Article
Publication date: 1 August 2006

Michael R. Powers

The purpose of this editorial is to study the relationship between the pure risks of insurance and the speculative risks of other financial markets in the context of…

Abstract

Purpose

The purpose of this editorial is to study the relationship between the pure risks of insurance and the speculative risks of other financial markets in the context of financial services “convergence”.

Design/methodology/approach

The editorial recasts the difference between pure risks and speculative risks as a distinction between empirical risks (which arise from observable natural processes largely insulated against behavioral effects) and market risks (which contain substantial non‐empirical or behavioral components).

Findings

Using the empirical risk/market risk dichotomy, it is argued that there is little reason to anticipate a dramatic convergence of insurance and other financial markets.

Originality/value

The editorial challenges conventional distinctions between insurance and other financial risks, as well as conventional expectations regarding financial services convergence.

Details

The Journal of Risk Finance, vol. 7 no. 4
Type: Research Article
ISSN: 1526-5943

Keywords

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