Risk Allocation Research Articles

The Impact of CMA CGM Libra on the Allocation of Risk in a Maritime Adventure

The Impact of CMA CGM Libra on the Allocation of Risk in a Maritime Adventure

Risk allocation through Shapley decompositions with applications to variable annuities

Risk allocation through Shapley decompositions with applications to variable annuities

Is Ppp the New Firepower For Islamic Finance That Will Accelerate Progress Towards (SDGS)?

Having access to essential infrastructure services is pivotal in creating economic opportunities and bringing social services to the poor. Their deficiency leads to a number of negative consequences and lost opportunities (the World Bank indicates that currently 1 billion people live without electricity, 663 million people lack access to safe drinking water, 840 million people are located more than 2 kilometers from all-weather roads, and 4 billion people cannot access the Internet). The systematization of the results of World Bank research proved that lower-and middle-income countries need to spend on average 4.5 percent of GDP to deliver infrastructure services and achieve the infrastructure-related Sustainable Development Goals (SDGs). The urgency of solving this problem lies in the fact that in many countries, the high levels of investment required for infrastructure cannot be financed by the public purse alone. Therefore, the governments of these countries should pay attention to private investments as a tool for additional fundraising. The article presents the results of the analysis, which proved that the Private-Public Partnership has increasingly become a common structure for the delivery of public infrastructure. It offers the opportunity for governments and nongovernmental bodies to achieve more efficient projects by sharing risks and giving the private sector a chance to bring innovation to the design, construction, operation, and maintenance of public infrastructure. The study theoretically proves that public-private partnership offers monetary and non-monetary advantages for the public sector, in particular: allowing the allocation of public funds for other local priorities, distributing project risks to both public and private sectors, improved efficiency and project implementation processes in delivering services to the public, emphasizes Value for Money (VfM) – focusing on reduced costs, better risk allocation, faster implementation, improved services and possible generation of additional revenue. In the paper, based on a comparative analysis of conventional bonds and Sukuk (Islamic bonds), it was concluded that conventional bonds represent the issuer’s pure debt, while the latter offers multiple benefits: lower costs of funds due to higher rating via credit enhancement, access to the capital markets, diversification of funding sources, off-balance sheet financing (via securitization), improvement of financial ratios, and potential risk reduction.

Will Inflation Expectations Affect Residents’ Financial Exclusion?

Based on the data of Chinese Household Finance Survey (CHFS) in 2015, this paper uses instrumental variable method to conduct empirical research on the relationship between residents’ inflation expectation and financial exclusion. The results show that individual inflation expectation can significantly improve the probability of residents’ financial exclusion. Individual inflation expectation has a significant positive impact on the exclusion of residential investment products and credit products. Furthermore, through the interaction term, it is found that only in the group with high inflation expectation, economic information can significantly reduce residents’ financial exclusion. In addition, inflation expectation has obvious heterogeneity in the exclusion of different financial products. In addition, individual inflation expectations also have a significant impact on the number of residents’ financial products, rising inflation expectations raised the residents in the low risk allocation on financial products, to reduce the risk allocation of the financial product, at the same time, individual inflation expectations of residents, there is no significant difference among the production and business operation loans accounted for, But it has significantly increased the share of consumer loans.

Allocation of Climate-Related Risks in Investor–State Mining Contracts

Allocation of Climate-Related Risks in Investor–State Mining Contracts

Procurement and innovation risk management: How a public client managed to realize a radical green innovation in a civil engineering project

Public clients’ decisions on the procurement and contracting of civil engineering projects have far-reaching effects on the development and implementation of innovations. Two decades ago, a trend towards the use of integrated contracts started to improve constructability and stimulate innovations. However, for radical innovations, the unilateral allocation of innovation risks to the main contractor is undesirable since most of the associated innovation risks are difficult to assess and manage due to the inherent uncertainties. An in-depth case study was used to investigate the development and application of an alternative public-client-led approach to realizing a radical innovation in a civil engineering project. This study shows that: (1) government championship, through a proactive participation of the public client in the initiation, development and implementation of the project and the willingness to bear innovation risks; (2) the application of innovation risk management strategies and the availability of a fall back option; (3) the establishing of favourable organizational and relational conditions, were determinative factors for the successful development and implementation of the intended radical innovation. Furthermore, seven propositions have been derived that together provide instruments through which public clients can actively promote the development and implementation of radical innovations in civil engineering projects. Subject classification codesManaging Project Risk; Managing Project Innovation; Contract Procurement and Tendering

РЕВІТАЛІЗАЦІЯ СТАРОПРОМИСЛОВИХ ТЕРИТОРІЙ НА ОСНОВІ ПУБЛІЧНО-ПРИВАТНОГО ПАРТНЕРСТВА

In modern conditions there is a need for a comprehensive approach to solving problems of life and development of old industrial territories. In these conditions, the generally accepted world practice of public-private partnership is relevant, the advantage of which is to attract private business to traditionally public sectors of the economy, as well as the desire to eliminate the shortcomings of other management methods through optimal allocation of resources, responsibilities and risks. The aim of the article is to systematize the concept of revitalization of old industrial territories, research of tools for effective implementation of public-private partnership in the practice of revitalization of old industrial territories and possible directions of their development. It is determined that the points of innovative growth of the old industrial territories of Ukraine should be investments in research and development, increase in the production of science-intensive products, institutional changes at the legislative level. In order to modernize and develop old industrial areas on an innovative basis, the authors substantiate the need for projects involving public-private partnership mechanisms, such organizational and economic form of interaction between government and business, in which the state acts as a business entity as an active partner that stimulates structural modernization of economic sectors and provides for the transfer of business part of the economic, organizational and managerial functions of production of public goods, provision of public services, management of state property. In the context of the transition of Ukraine's economy to an innovative path of development, the authors identified the growth points of the old industrial territories of Ukraine: investing in research and development, increasing the production of science-intensive products, institutional changes at the legislative level. The experience of recent years shows that with a properly formed structure of public-private partnership mechanisms, this organizational and legal form is extremely beneficial for both public and private sectors, and for the society.

A New and Efficient Fourier Method for Risk Quantification and Allocation of Credit Portfolios

A New and Efficient Fourier Method for Risk Quantification and Allocation of Credit Portfolios

On the Limited Liability of Cooperative Notary Public Institutions

Article 4 of the Opinions of the Ministry of Justice on Promoting the Work of Cooperative Notary Public Institutions stipulates that a cooperative notary public institution is featured by “being jointly financed by eligible notaries public” and “the assets of which being jointly owned by the cooperators and the liabilities of the institutions being limited to their total assets”. The controversy thus arises over the liabilities of cooperative notary public institutions. Limited liability is a special application of civil liability in the field of commercial law. It is a statutory risk allocation mechanism, which is part of the organization laws regarding the separation of assets and liabilities and not necessarily related to legal personality. Defining cooperative notary public institutions as “non-legal person organizations”, through the adoption of notary public legislation, not only meets the practical needs of the reform of the notary public system, but also conforms to the framework of civil subjects under the Civil Code.

Counterparty risk allocation

Counterparty risk allocation

Linear fractional differential equations in bank resource allocation and financial risk management model

Abstract The advantage of the linear fractional differential equation for bank resource allocation and financial risk management is that it can test random fluctuations in different functional forms. Given this paper is modelling the asset allocation risk model for rural commercial banks, the linear fractional differential equation analysis method is used to make policy recommendations. The research results of this paper show that credit risk is significantly negatively correlated with the bank's resource allocation. The degree of negative correlation between different levels of credit risk and bank resource allocation is different. Appropriate liquidity risk can optimise the bank's resource allocation.

Countercyclical Financing as a Tool for Facilitating Investment Activity in Russia: An Overview of Approaches

Aim. The presented study aims to investigate the use of the project financing mechanism to increase the investment activity of businesses and to identify opportunities for the allocation of cyclical risks and the corresponding development of project financing conditions.Tasks. The authors briefly overview the investment climate and investment activity of large businesses in Russia; provide a general description of the project financing mechanism in the implementation of investment projects and the allocation of risks among participants; consider the factor of price volatility and the proposed structuring of project financing with allowance for potential changes in prices for the project’s products.Methods. This study uses general scientific research methods (analysis, synthesis, induction, deduction), including analysis of public information through the example of major Russian companies, analysis of the key indicators of investment activity, analysis of risk allocation options in the financial flows of projects. Specific methods of financial analysis are also used to examine the results of the implementation of investment projects.Results. The key indicators of investment activity of the major Russian companies are presented. The possibility of using the mechanism of project financing and risk allocation among participants is determined.Conclusions. The investment activity of a considerable part of large Russian businesses is moderate. At the same time, there is a huge potential for growth using either internal funds (profits, accumulated cash balances) or project financing instruments. An example of using the mechanism of accelerated repayment of debt financing is provided.

‘PERICULUM VERBUM GENERALE EST’: RISK ALLOCATION IN THE COMMENTARIES OF JACQUES CUJAS

Jacques Cujas was a French humanist and one of the most distinguished 16th-century legal experts. This paper analyses the rules governing liability and the meaning of periculum (risk) in his commentaries to Roman law.
 My study is focused on two examples which offer surprising interpretations of risk. The first case concerns a person who lost an object given for valuation. Here Cujas uses the term periculum in two different meanings. The first is general and covers all types of irresistible events. The second is limited to only one type of event – theft. This distinction is fundamental for the evaluation of the legal consequences arising from the loss of the object. Te inspector would have had to bear the risk of theft (periculum furti), but not other risks, especially not those related to force majeure.
 The second case I discuss deals with the complexities of risk allocation in the contract of sale. In one of his earlier commentaries, Cujas accepted the Roman legal principle of periculum emptoris – that the risk of the loss of the object sold should be on the buyer. At the same time, in his discussion of particular cases Cujas was flexible in allocating various risks to either of the parties, thus paving the way for his future change of mind on periculum venditoris.

Dear-enemy effect between two sympatric bird species

Although interspecific interactions appear to be less competitive than intraspecific ones, interspecific territoriality is much more frequent and more stable than is commonly believed. When territorial interactions between competing species are repeated, discrimination between heterospecifics can allow for a more precise allocation of resources and risk. An example of such a strategic approach is the dear-enemy effect, according to which individuals are less aggressive to familiar than unfamiliar individuals. We investigated the occurrence of the dear-enemy effect in territorial interactions between two nonpasserine bird species: water rail, Rallus aquaticus , and little crake, Zapornia parva , which compete for food and nest site resources. We used a cross-species playback experiment where water rails received calls of strangers and neighbouring little crakes, while little crakes received calls of water rails in the same manner. In addition, each focal pair was exposed to control calls of little grebes, Tachybaptus ruficollis . In both species, territory holders produced more calls in response to heterospecific strangers than heterospecific neighbours, and the response to control stimuli was the weakest. Furthermore, little crakes often approached and attacked the loudspeakers and mostly when they heard the calls of stranger water rails. Our results indicate that both species were able to distinguish not only each other from the control species, but also specific individuals of the second species. In line with the dear-enemy effect, water rails and little crakes adjusted their territorial response according to the intruder's status, being most aggressive to heterospecific strangers. These findings suggest an adaptive territorial response to resource competition that is commonly confirmed among conspecifics but rarely between individuals of different species. • We studied the dear-enemy effect between two competing bird species. • Water rails and little crakes recognized specific individuals of the other species. • Both species responded with lower vocal intensity to heterospecific neighbours. • Stronger nonvocal response to stranger calls was observed only in little crakes.

How Transport Infrastructure Cost Evaluation Is Affected by choice of inflation index

Transport infrastructure projects typically take a number of years to complete and there is a strong case for adjusting ‘nominal costs’ incurred in different years to ‘real costs’ in base year prices by using an inflation index. The literature on the funding and financing of transport infrastructure projects and investment in public works addresses the choice of inflation index as a metaphorical footnote on the treatment of costs incurred in different years. This article gives deeper consideration to this issue and identifies the substantial effect the choice of inflation index has on ex-post cost evaluation. ‘Inflation shopping’ can occur when there are alternative inflation indices to choose between, and where the choice of inflation index has a substantive effect on the outcome of ex-post cost evaluation and the allocation of inflation risk between parties. Data from Crossrail, a large rail scheme in London, is used to illustrate the effect of the choice of alternative inflation indices on ex-post cost evaluation outcomes.

Determination of government guarantee and revenue cap in public–private partnership contracts

PurposeConsidering there is a lack of research in determining the optimal levels of government guarantee and revenue cap, the objective of this research is to determine their optimal levels to achieve a reasonable financial risk allocation between governments and private investors while avoiding overly lucrative conditions for private investors.Design/methodology/approachExpanded net present value (NPV) analysis and bargaining game theory are employed to construct the core of the determination process. The risk gap between governments and private investors is assessed via an expanded NPV analysis to see if the financial risk has been shared reasonably, based on which the range of the government guarantee is decided. A bargaining model is then created to help locate the optimal level of the government guarantee. Finally, a revenue cap, often combined with the government guarantee in public–private partnership (PPP) agreements, will be determined if overly lucrative conditions for private investors are observed or governments suffer a risk spillover.FindingsReferring to a real PPP project in Australia, Project BA is created to validate the applicability of the proposed determination process. The outcome shows that the proposed determination process in this paper is capable of determining the optimal levels of government guarantee and revenue cap. The government preferences towards risk allocation will influence the values of the optimal levels. Governments may also consider to alleviate the control over investors' net profits to mobilise private investors into PPP projects.Research limitations/implicationsThere is a potential possibility that the revenue cap fails to control the financial risk for governments or the overly lucrative condition for private investors. In other words, even though the revenue cap is set at the minimal level, the financial risk for governments still beyond their tolerance range or the overly lucrative condition for private investors still occurs. Future research may focus on other financial protective schemes which help to better control the financial risks for governments and profits for private investors.Originality/valueGovernment guarantees are frequently used as an investment incentive to reduce the probabilities of suffering loss for private investors. Nevertheless, the financial risks for governments may increase after providing guarantees and, as a result, revenue cap is required by governments to avoid placing themselves in an unprotected situation. By recognising the importance of the two contractual parameters, many scholars dig into their option values. However, there are very rare research works focussing on the method of determining the specific levels of government guarantee and revenue cap. To overcome the limitations of existing models and enrich the methodology for government guarantee and revenue cap determination, this paper contributes to the body of knowledge by developing a government guarantee and revenue cap determination process which contributes to a reasonable allocation of financial risks between governments and private investors.

ESG Transformation and Transfer Pricing Implications

ESG issues may have an impact on international value chains and, therefore, also the transfer pricing set-up. The transfer pricing topics are manifold and may refer to business restructuring, allocation of functions and risks, service charges and cost allocations.

Understanding the Decisive Causes of PPP Project Disputes in China

Disputes are inevitable in public-private partnership (PPP) projects and generate great losses of time and money in practice. If an in-depth understanding of dispute sources can be obtained beforehand, the process of PPP may become more smooth. This paper aims to identify and assess the causes of PPP disputes between the public and private sectors. First, 15 causes are explored based on the PPP litigation cases from China Judgments Online. Second, the Decision-Making Trial and Evaluation Laboratory (DEMATEL) method is utilized to provide a holistic understanding of the relative importance and define the cause-effect categories among PPP dispute sources. The results demonstrate that the top three decisive causes of PPP disputes are the repudiation of contracts (result category), lack of expertise and experience (reason category), and unreasonable risk allocation (result category). Further, dispute avoiding strategies are proposed to minimize or completely avoid the occurrence of PPP disputes. The outputs are expected to add meaningful insights to potential sources of dispute and dispute prevention mechanisms in PPPs. To some extent, the investors can develop strategic measures through the findings before entering into PPP markets.

Maternal and foetal outcomes following natural vaginal versus caesarean section (c-section) delivery in women with bleeding disorders and carriers.

Bleeding disorders are uncommon but may pose significant bleeding complications during pregnancy, labour and following delivery for both the woman and the foetus. While many bleeding disorders in women tend to improve in pregnancy, thus decreasing the haemorrhagic risk to the mother at the time of delivery, some do not correct or return quite quickly to their pre-pregnancy levels in the postpartum period. Therefore, specific measures to prevent maternal bleeding and foetal complications during childbirth, are required. The safest method of delivery to reduce morbidity and mortality in these women is controversial. This is an update of a previously published review. To assess the optimal mode of delivery in women with, or carriers of, bleeding disorders. We searched the Cochrane Cystic Fibrosis and Genetic Disorders Coagulopathies Trials Register, compiled from electronic database searches and handsearching of journals and conference abstract books. We also searched the Cochrane Pregnancy and Childbirth Group's Trials Register as well as trials registries and the reference lists of relevant articles and reviews. Date of last search of the Group's Trials Registers: 21 June 2021. Randomised controlled trials and quasi-randomised controlled clinical trials investigating the optimal mode of delivery in women with, or carriers of, any type of bleeding disorder during pregnancy were eligible for the review. No trials matching the selection criteria were eligible for inclusion. No trials matching the selection criteria were eligible for inclusion. The review did not identify any randomised controlled trials investigating the safest mode of delivery and associated maternal and foetal complications during delivery in women with, or carriers of, a bleeding disorder. In the absence of high quality evidence, clinicians need to use their clinical judgement and lower level evidence (e.g. from observational trials, case studies) to decide upon the optimal mode of delivery to ensure the safety of both mother and foetus. Given the ethical considerations, the rarity of the disorders and the low incidence of both maternal and foetal complications, future randomised controlled trials to find the optimal mode of delivery in this population are unlikely to be carried out. Other high quality controlled studies (such as risk allocation designs, sequential design, and parallel cohort design) are needed to investigate the risks and benefits of natural vaginal and caesarean section in this population or extrapolation from other clinical conditions that incur a haemorrhagic risk to the baby, such as platelet alloimmunisation.

Modeling optimal thresholds for minimum traffic guarantee in public–private partnership (PPP) highway projects

Optimal upper and lower thresholds model for traffic guarantee are proposed to optimize the risk allocation between a government and a concessionaire considering the perspective of lenders and the risk tolerances of the participants. In this study, the condition for the lender to provide the loan is that the default probability of the project does not exceed the acceptable maximum default probability of the lender. The proposed model uses risk weights to reflect the risk tolerances of government and the concessionaire and adopts a Gini coefficient for risk to describe the rationality of risk allocation. The application of the model to a highway project shows that a traffic guarantee with optimal thresholds effectively balances the project risks for both the government and concessionaire.