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This paper analyzes the special character of currency risks associated with equity investments in emerging capital markets. Such investments are an important and growing source of funds for financing projects which contribute to the rapid pace of growth in emerging markets. While investors in any foreign market face the consequences of possible changes in the value of foreign currency, uncertainty about the terms for currency conversion in emerging markets are aggravated by the interaction of capital flows and currency values, particularly for countries which rely heavily on external sources of financing. In such an environment, it is essential for investors to understand the characteristics of currency risk in order to incorporate them in their investment decisions. This paper analyzes equity market returns and currency fluctuations in a group of emerging markets by comparing them to a set of developed countries. By traditional measures of risk emerging markets appear to have low levels of currency risk. This paper demonstrates that there has also been substantial changes in currency risk in emerging markets which have not occurred in developed markets. This paper also discusses methods of hedging currency risk, taking into account the limitations on hedging strategies in emerging markets and the special characteristics of currency risks in those markets.

The UN Global Compact promotes values of precautionary approach to environmental changes and business sustainability, which are eagerly embraced by MNCs; however the recognized emerging country risks pose a challenge for continuous commitment to those principles in the subsidiaries. Especially political and currency risks are considered significant in the subsidiaries located in the emerging markets. Therefore, those risks are often shifted to the local partners as the pursued core principle of the risk management strategies. The objective of MNCs is in fact to limit MNCs responsibility for the liabilities and losses in the emerging markets in case of market downturns, and in effect the advocated risk management practices exacerbate the severity of the emerging market crises.

The chapter explores those corporate practices on the examples of numerous major international market players in case of several historical, but recent examples of the emerging market currency crises.

The concerns addressed in the chapter include: the preference for local financing exposing at risk local banking sectors in the emerging markets, excessive liquidity and minimal capital commitments and investments leading to weaker currency fluctuations and resulting in private capital speculations and capital flight (to safety or to quality). The intensified global competition for international investments in form of FDIs resulted in the erosion of the capital requirements, reduced social and business infrastructure commitments requested, limited currency controls, and other components of the regulatory framework easing in the emerging markets. Other identified in the research key components of the risk management strategies applied by MNCs, destabilizing the emerging markets in financial (both fiscal and currency) crises include: intercompany payments and financing such as: transfer pricing, local sourcing and reimbursements for both tangible and intangible assets transfer.

Demonstrated approach of MNCs appears ethically questionable and reflects the disparity of the bargaining powers. It also undermines the intentions of the Ten Principles of the UN Global Compact. The corporate citizenship is found difficult to dominate over the conflicting self-centered interests of MNCs operating in the emerging markets, especially in times of crises. The consideration of the non-compulsory ethically based initiative, as the alternative to the failing effectiveness of the international market regulations, requires restoration of the public and an individual value of the reputation (image, name) built on social responsibility and accountability, unfortunately so much diluted over the last two decades.

The chapter examines the effect of MNCs risk management of their foreign operations on the crises in the emerging markets with focus on inward FDIs flows and inward FDIs stock fluctuations and debt financing. The results evidence the repetitive nature of the self-interest driven corporate behavior.

Financial sustainability in emerging market economies crucially depends on stable foreign capital inflows as these countries lack adequate domestic capital and sophisticated technology. This study attempts to examine the impact of major political risk factors in the emerging market economies along with basic economic fundamentals such as institutional variables like per capita electric consumption, trade openness, and real rate of interest. We have followed a static panel data approach in studying the impact of these crucial variables in Foreign Direct Investment (FDI) inflows in 15 major emerging economies for the period 2000–2014. Risk perceptions, i.e., political risk data, have been collected from the International Country Risk Guide (ICRG) provided by the Political Risk Services (PRS) Group. In our research purpose, we have considered dependent variable as FDI inflows for 15 emerging countries during the period 2000–2014, which are drawn from the United Nations Conference on Trade and Development (UNCTAD, 2014, 2015) FDI database. Our results demonstrate that there are six subcomponents of risk perception (political risk) which are statistically significant in explaining variation in FDI inflows of the major emerging countries. The results show that government stability, socioeconomic conditions, religious tension, and bureaucracy quality have a positive impact on FDI inflows of emerging countries, whereas internal conflict and law and order have a negative impact on FDI inflows of these countries. Stable government is more attractive to foreign investors. Again, an improvement in the socioeconomic conditions is positively related with FDI inflows in emerging countries. Decreasing bureaucracy leads to a reduction in corruption, and assists expanding FDI flows in the emerging country.

The different scenarios of climate change, such as floods, temperature change and storms, are considered the main drivers influencing the building sector. Understanding how and when these climatic risks will emerge, specifically financial risks, is pivotal in dealing with these risks and applying the adaptation and mitigation strategies so as to minimise the effects and damages. Thus, the purpose of this paper is to discover the financial risks emerging from climate change impact on the building sector and determine the timescale of occurrence for such risks.

The research methodology formulated in this study is founded on a systematic literature review and statistical analysis. Built on this, the potential financial risks emerging from climate change scenarios (CCS) were identified and designed as a questionnaire to collect data from UK expert professionals. Statistical methods were used to rank and compare the outcomes of the survey.

The research observed that around 40 per cent of the participants in this study indicated that one-third of the total identified financial risks (23 factors) would emerge within 5-10 years. The most important factors are increased insurance excess and additional expense in insuring buildings in flood risk zones, whilst the least important financial risks are inability to repay debts and un-insurability because of climate change.

This study is limited to the UK, and regional implications are not covered. However, it is a starting point.

The main contribution of this research project is establishing and developing clusters of the potential risks emerging from CCS, which can assist professionals in the building sector in the management and development of strategies to cope with these emerging risks.

Emerging construction companies often liquidate due to their inability to institute strategies to handle their business risks. This study investigated the skills and strategies adopted by emerging contractors to overcome business risk factors to make their businesses sustainable.

A qualitative research approach was adopted for the study. Semi-structured interview questions were used to solicit information from emerging contractors within the Construction Industry Development Board (CIDB) Grade one (1) to four (4) in the Gauteng Province of South Africa. The data gathered were analysed using qualitative content analysis to identify the main themes.

The study's findings indicate that emerging contractors face business risk factors that impact their project execution hugely. Thus to overcome these risk factors, they implement various strategies to curtail the risk they encounter in their businesses. These strategies include; human resource management (employing experienced and skilled labour and training of staff); communication management (with other employees about set goals); financial management (effective pricing of tender documents); procurement management (ensuring materials are available as and when necessary in their projects) and quality management (ensuring effective work supervision); among others.

Although the study concentrated on the emerging construction firms in the Gauteng Province of South Africa, the findings may be applicable in other provinces and beyond South Africa.

In order for emerging contractors to prevent the collapse of their businesses, there is the need to be educated on effective project risk management to identify potential business risk, the mirage associated with the notion of the construction business profitability, effective tender pricing and strategic business partnership. These strategies, if well thought, will help sustain their businesses and growth in the construction industry.

The study has identified the management strategies used by emerging contractors to sustain their businesses in the construction industry. Thus, the finding will guide both emerging contractors who are already in the construction business and those planning to enter the construction market.

This paper aims to identify proactive supply risk management methods which can be used to reduce or remove risk sources during the supplier selection process, in the context of Western‐based manufacturing companies that source from emerging markets.

Learning from the literature and conducting multiple‐case study analyses of five Western‐based manufacturing companies' sourcing experiences from emerging markets.

The experiences of five Western‐based manufacturing companies suggested that applying the risk management process into supplier selection was particularly important and effective for supply risk reduction when sourcing from emerging markets. Supply risk sources must be identified and proactive supply risk management methods must be used to remove or reduce risk sources for effective supply risk management. The proactive risk management methods discovered in this research are: conducting a supplier questionnaire covering a wide range of business dimensions of the supplier; performing a technical review; negotiating a risk mitigation plan; employing local‐based procurement staff; using a total cost estimate; applying a strict part qualification process.

A multiple‐case study methodology employs a limited number of case studies and therefore may restrict the generalisation of research findings. Manufacturing companies are used as case study organisations for this research. Therefore, the research findings are particularly applicable and useful to manufacturing companies but might not be valid for other types of company. The research focuses on supply risk reduction during the supplier selection process, while further research into other stages of the supply management process is desirable.

The generated proactive supply risk management methods are useful to manufacturing companies looking to source or aiming to improve their sourcing experiences from emerging markets.

The literature provides valuable contents in terms of concepts but lacks proactive supply risk management methods for supply risk management when sourcing from emerging markets. The generated proactive supply risk management methods based on first‐hand information are valuable both to academics and practitioners in this field.

The beta coefficient used for the cost of equity calculation is at the heart of the valuation process. This study conducts comparative analyses of the classical capital asset pricing model (CAPM) and downside CAPM risk parameters to gain further insight into which risk parameter leads to better performing risk measures at explaining stock returns.

The study conducts a comparative analysis of 16 risk measures at explaining the stock returns of 4531 companies of 20 developed and 25 emerging market index for 2000–2018. The analyses are conducted using both the global and local indices and both USD and local currency returns. Calculated risk measures are analyzed in a panel data setup using a univariate model. Results are investigated in country-specific and model-specific subsets.

The results show that (1) downside betas are better than CAPM betas at explaining the stock returns, (2) both risk measure groups perform better for emerging markets, (3) global downside beta model performs better than global beta model, implying the existence of the contagion effect, (4) high significance levels of total risk and unsystematic risk measures further support the shortfall of CAPM betas and (5) higher correlation of markets after negative shocks such as pandemics puts global CAPM based downside beta to a more reliable position.

The data are limited to the index securities as beta could be time varying.

Results overall provide insight into the cost of equity calculation and emerging market assets valuation.

The framework and methodology enable us to compare and contrast CAPM and downside-CAPM risk measures at the firm level, at the global/local level and in terms of the level of market development.

This chapter discusses the regulatory challenges faced by financial institutions in emerging countries and it presents their specific features compared to financial institutions in developed countries. It offers a practical way of implementing regulatory changes while accounting for emerging countries’ specific features. Using a principle-based approach, this chapter builds on the recent regulatory developments in both developed and developing market economies. It relates these developments to industry best practices as well as the current state of the art in risk management and corporate governance. The findings show how the regulation of financial institutions in emerging countries differs from that in developed countries. Different approaches to mitigate the divergences and fill the gaps are discussed. Both regulators and financial institutions in emerging countries will find this chapter offers a practical point of view based on field and industry experience on how to interpret and apply regulations and adopt best practices in risk management in a way that accounts for emerging countries’ specific features.

This chapter identifies three crisis warning indicators driven from trading in emerging markets’ carry trades, and empirically examines whether these indicators could predict two major financial crises that hit the global financial markets in the last decades — The 1997–1998 Asian crisis and the 2007–2008 global crisis. The probit regression is used to examine the power of the three indicators in forecasting financial crises, using data from eight Asian emerging countries which serve as proxies for emerging markets, independent of the origination of the crisis. I use both fixed effect and random effect estimation to measure crisis impacts. The empirical results show that financial crises could have been predicted. Probit estimation show that carry trade returns can predict a financial crisis, and the estimation results are robust to both panel level and country-level analysis. These three indicators are by no means an exhaustive list of all possible predictors of financial crisis. The literature suggests other fundamental indicators of financial crises such as the current account deficit and foreign debt. However, this chapter cannot fully consider these indicators for lack of data at this point in time. Although financial crisis may be better predicted by the well-known fundamental indicators, the contribution of this chapter is simply that carry trade-related indicators can help in predicting crises.

Most research ethic review procedures refer to the principles of safety and security only as sub-criteria of other ethical principles such as the protection of human subjects in research, thereby ignoring the public good aspect of safety and security. In addition, Research Ethics Review Committees (RECs) are usually dominated by philosophers, ethicists, medical doctors, and lawyers with limited practical backgrounds in safety and security risk management. This gap of knowledge restricts ethics reviews in carrying out project-specific safety and security risk management and defers this responsibility to lawmakers and national legal authorities. What might be sufficient in well-regulated and well-understood environments, such as the safety of individuals during clinical research, is insufficient in managing rapidly changing and emerging risks – such as with emerging biotechnologies – as well as addressing the public good dimension of safety and security.

This chapter considers governance approaches to safety and security in research. It concludes that legal mechanisms are insufficient to cope with the complexity of and the fast progress made in emerging technologies. The chapter also addresses the role and potential of research ethics as a safety and security governance approach. It concludes that research ethics can play an important role in the governance of such risks arising from emerging technologies, for example through fundamental rights and public good considerations. However, in reality the current capacity of ethics in the safety and security governance of emerging technologies is limited. It is argued that in newly emerging areas of research currently applied legal compliance–based approaches are insufficient. Instead, inclusion of fundamental risk management knowledge and closer interactions between scientists, safety, and security experts are needed for effective risk management. Safety and Security Culture provide frameworks for such interactions and would well complement the current legal compliance–based governance approaches in research ethics.