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Risk management is now considered the responsibility of all financial services professionals, not just senior leaders or risk specialists. Very little is known about the…
Risk management is now considered the responsibility of all financial services professionals, not just senior leaders or risk specialists. Very little is known about the role of staff in risk management, so the purpose of this paper is to, first, clarify what constitutes “desirable” risk management behaviour by financial services staff based on the practitioner and regulatory literature. Based on this understanding, the authors analyse the characteristics of those who are most likely to display such behaviour.
The paper analyses some 36,000 survey responses across ten banks headquartered in Anglo countries.
Desirable risk management behaviour at the employee level includes compliance but goes well beyond mere compliance to include speaking up, thoughtful engagement with and accountability for the risk management framework. The authors find a significant negative association between individual risk tolerance and desirable risk management behaviour. Older workers as well as those with greater seniority are more likely to report desirable risk management behaviour. The link between female gender and risk management behaviour is not supported after controlling for individual risk attitudes. The authors provide evidence that females who succeed in financial services do not conform to traditional female stereotypes.
Findings suggest financial institutions should hire/retain more older workers and those with lower risk tolerance to improve risk management. Hiring more females, however, is not likely to lead to better risk management.
The paper is the first to investigate risk management behaviour in financial services staff. The research exploits a unique, difficult to obtain data set.
In 1997, in this journal, Elizabeth Sheedy published a paper investigating exchange relationships in derivative markets. This paper was significant for two reasons. It was…
In 1997, in this journal, Elizabeth Sheedy published a paper investigating exchange relationships in derivative markets. This paper was significant for two reasons. It was the first article to consider the marketing of these important financial instruments. Second, her article set out a forceful argument that relationships in this context were breaking down, and that the advantages associated with a relationship model of exchange had not appeared, and indeed had to some extent facilitated the series of well publicised derivative disasters. In this paper, the authors respond to Sheedy’s call for further research through an empirical examination of the over‐the‐counter equity derivatives market in the USA and Britain, arguing that while relationships in this market do, to a limited degree, exhibit characteristics atypical of wider financial services contexts, the relationship paradigm continues to be relevant, and indeed inherent, to over‐the‐counter derivative exchange.
To better understand corporate risk management practice in Hong Kong and Singapore. To explore popular perception that use of derivatives in Hong Kong and Singapore lags…
To better understand corporate risk management practice in Hong Kong and Singapore. To explore popular perception that use of derivatives in Hong Kong and Singapore lags that in the US. To explore possible speculative use of derivatives in these Asian countries.
A survey of non‐financial corporations using the format of the 1998 Wharton study. I investigated the extent to which derivatives are used, how they are used, and methods for their oversight.
Derivatives are used more extensively in Hong Kong and Singapore than in the US. They are particularly popular for managing foreign exchange risk. Their use is more speculative than is common in the US; that is, market predictions play a significant role in the size and timing of hedge trades and derivatives are often used for active management of exposures. A lack of controls and management oversight (such as derivatives policies, regular valuations) is apparent, despite the extent of derivatives use.
Potential bias may have arisen due to the method used for recruiting survey respondents. In this study post‐graduate students contacted and interviewed company staff, often based on their personal contacts. In contrast, the Wharton surveys have been mailed to potential respondents. Students may have been more likely to select companies that traded derivatives. The sample size (131 firms) is smaller than that of the Wharton studies, but probably sufficient to establish common trends.
Need to address poor oversight of derivatives trading in order to prevent further disasters. Need to scrutinise the speculative use of derivatives to ensure that it is value‐adding for firm owners.
To highlight the extent of speculative use of derivatives in Hong Kong and Singapore. To encourage further scrutiny and controls over the use of derivatives by directors of and investors in non‐financial corporations in these countries.
In 1994/95 the derivatives industry was rocked by a series of high‐profile derivatives disasters. For example, litigation between Procter & Gamble and Bankers Trust highlighted a troubled relationship between banks and corporate clients. Examines the success of relationship marketing in the derivatives industry in light of these events. Participants in the derivatives industry in Sydney and Hong Kong are interviewed to determine whether the watershed cases of 1994/95 caused, or were indicative of, a more widespread deterioration in relationships. However, the expected benefits of relationship banking have remained largely unrealized. Concludes that further work is needed to overcome the significant impediments to successful implementation of relationship banking.