Integrated Risk Management Approach Research Articles

Research on Internal Control of Chinese Commercial Banks Based on Comprehensive Risk Management

The dynamic and complex nature of global financial markets has necessitated the evolution of internal control mechanisms within commercial banks, especially within the context of Chinese financial institutions which operate in a rapidly changing economic environment. This study delves into the intricacies of internal control systems in Chinese commercial banks, scrutinizing their effectiveness through the lens of comprehensive risk management practices. Employing a mixed-methods approach that combines quantitative data analysis with qualitative case studies, this research examines the extent to which these banks have integrated risk management into their internal control frameworks. The analysis focuses on financial, operational, compliance, and strategic risks, providing a holistic view of the internal control landscape. Key findings reveal that while many Chinese commercial banks have made significant strides in embedding risk management principles into their internal controls, there remain notable inconsistencies and gaps, particularly in areas related to emerging financial technologies and regulatory compliance. Moreover, the study highlights the critical role of organizational culture and leadership in fostering an environment conducive to effective risk management. This research contributes to the existing body of knowledge by offering insights into the challenges and opportunities facing internal control systems in Chinese commercial banks. It underscores the necessity of adopting an integrated risk management approach to enhance resilience and competitiveness. Furthermore, the findings have practical implications for policymakers, regulators, and banking professionals, suggesting pathways for strengthening the internal control mechanisms to mitigate risks and capitalize on opportunities in the evolving financial landscape.

Ensuring operational resilience in Japan: The rise of new regulations and their implications

In 2022, regulators around the world began to take steps to instil greater operational resilience throughout the financial services sector to deal with unforeseen systemic risks. Regulations vary from region to region, but they all mandate an integrated risk management approach that combines multiple aspects of operational risk into a single framework, identifies crucial business services and identifies how to respond in the face of a system failure with enterprise-wide agreement. Financial institutions need urgent and significant assistance in transforming their risk capabilities, as many regulators are calling for enhanced processes and systems by 2025. Many financial institutions are realising that a higher level of collaboration is needed across the enterprise to meet regulatory requirements. Financial institutions need to improve both enterprise-level visibility into risk and compliance activities and enterprise-level crisis response capabilities. This paper analyses the latest developments and provides implications through its primary research in the Japanese market.

Strengthening an integrated risk management approach to counter terrorism: Incorporating security, game theory, and economic diversification

This paper looks at the in-depth investigation into improving risk management tactics against terrorism using a multifaceted strategy that incorporates security measures, game theory concepts, and economic diversity. The goal of the study is to provide a comprehensive and strong framework that tackles both immediate security issues and long-term viable counterterrorism strategies in Nigeria. To find vulnerabilities and anticipate future threats, the integration of security measures include improving intelligence collecting, international cooperation, and border restrictions. By incorporating game theory ideas, it is possible to analyse the tactical exchanges between security forces and terrorists, providing insights into how the opposition makes decisions and allowing for the deployment of preventive measures. The use of the two-person zero sum game, the prisoner’s dilemma which depicts the Nash Equilibrium named after the Nobel Laureate economist John Nash were used in explaining how the various terrorists attack can be curbed. Different strategies were also applied so as to enable one understand how the terrorists think, possibly attack their victims and also how their network works. The study discovered that the terrorists attack mainly the communities that produce agricultural products in commercial quantities which affects the agricultural economic diversification. The study also highlights the importance of economic diversification as a key element in mitigating terrorism's underlying causes. By encouraging economic expansion and development in fragile and volatile areas, this study also promotes economic growth, discouraging the extremist ideologies and strengthening local communities in Nigeria as a whole.

Integralni pristup upravljanju geohazardima na području kontakta fliša i krša

Na kontaktu flišne stijenske mase i vapnenaca, unutar područja središnje i sjeverne Istre te zaleđa Kvarnera evidentirani su brojni geohazardni događaji, a najznačajniji od njih su pojave nestabilnosti. U radu je dan pregled značajki područja istraživanja ključnih za pojavu ovog tipa geohazarda. Napravljen je pregled recentnih nestabilnosti i njihovih posljedica kako bi se pokazala motivacija za istraživanje, a i potreba za razvojem cjelovitog sustava upravljanja postojećim problemom. Kroz istraživanje je razvijen koncept integralnog pristupa upravljanju geohazardima, a predloženi okvir mogao bi se kroz različite mehanizme integrirati u sadašnji način funkcioniranja i smanjenje posljedica za postojeće elemente rizika. Predloženi pristup zahtijeva opsežne i mnogobrojne analize, ali određeni elementi mogli bi se implementirati bez većih zahtjeva.

What Does It Really Look Like to Properly Address a "Human Error Problem" in Biopharma? The Human Performance Blue-Sky Description That Will Help Improve Industry Performance.

A clear picture of what Human Performance success looks like is now available from BioPhorum, where members of the Human Performance workstream have defined a blue-sky for the industry. This blue-sky document is both a guide and an assessment tool, which includes warning flags that help to identify significant obstacles in the way of effective human performance integration with operations that must be addressed. The effort to improve reliable operations within biopharma using elements of human performance borrowed from other industries have experienced uneven results and slow progress across the last seven years and has been bogged down for multiple significant reasons. These include a mental model that persists within the industry where workers are assumed to be the problem that needs fixing, the mistaken belief that Lean/Operational Excellence is a cure-all and nearly equivalent to human performance, neglecting the need to fundamentally rethink why and how investigations are performed, and truly underestimating the time, effort, strength of sponsor support, and strategy needed to change how work is designed, executed, and then later learned from.LAY ABSTRACT: Human Performance is an integrated risk management approach to improving systems, that includes human factors and systems safety, that leads to higher reliability and enhanced operational resilience. A clear picture of what Human Performance looks like in biopharma is available from the BioPhorum, where members of the Human Performance workstream have defined a blue-sky for the industry. This blue-sky document is both a guide and an assessment tool that will help to identify the steps to effective human performance integration with operations. The effort to improve reliable operations within biopharma using elements of human performance borrowed from other industries has experienced uneven results and slow progress across the last seven years and has been bogged down for multiple significant reasons. These include a mental model that persists within the industry where workers are assumed to be the problem that needs fixing, the mistaken belief that Lean practices (intended to improve productivity & efficiency) is a cure-all and nearly equivalent to human performance, neglecting the need to fundamentally rethink why and how investigations are performed, and truly underestimating the time, effort, strength of sponsor support needed to change how work is designed, executed, and then later learned from.

Funding defined benefit pension schemes: an integrated risk management approach

This abstract relates to the following paper: Cowling, C. A., Fisher, H. J., Powe, K. J., Sheth, J. P. and Wright, M. M. (2019) Funding defined benefit pension schemes: An integrated risk management approach. British Actuarial Journal, Cambridge University Press, 24. doi: 10.1017/S135732171800034X .

Funding Defined Benefit pension schemes: an integrated risk management approach

Abstract The last 12 years have seen the evolution of a new funding regime under the supervision of the Pensions Regulator. Over this period, there has been significant turbulence in financial markets, including record low interest rates. This paper takes a critical look at the development of funding approaches and methodologies over this period. It analyses the Pensions Regulator guidance and how scheme specific actuarial methods have emerged since the move away from the Minimum Funding Requirement in 2001 and the introduction of the Scheme Specific Funding Requirements in 2005. It asks whether these new methodologies have been successful from the perspective of members, trustees, employers and shareholders. At a time when actuarial valuation methodologies have faced considerable criticism, this paper aims to propose a pension funding methodology which is fit for purpose and also reflects the latest guidance from the Pensions Regulator on integrated risk management.

ISO 31000‐based integrated risk management process assessment model for IT organizations

AbstractGovernance, Risk management, and Compliance activities are key challenges faced by organizations. Process Models and Capability Process Assessments are governance instruments that can help organization in assessing and improving their processes. Several ISO standards propose process models for Management System Standards based on ISO 9001, ISO/IEC 20000‐1, and ISO/IEC 27001, and for project management with ISO 21500. The ISO 31000 standard provides guidance for Risk management with a process approach and systemic perspective. This paper presents an ISO 31000‐based Integrated Risk Management Process Assessment Model (PAM) for IT organizations enabling to integrate on an easy way several ISO process‐oriented standards which are often targeted by IT organizations. This PAM integrates risk management dimensions with ISO 9001, ISO 21500, ISO/IEC 20000‐1, and ISO/IEC 27001. It offers a centralized and integrated risk management approach which provides the basis to improve, coordinate, and interoperate risk management activities.

Economic impacts of storm surge and the cost-benefit analysis of a coastal spine as the surge mitigation strategy in Houston-Galveston area in the USA

Rapid population growth, urbanization, and concentration of valuable assets and strategic infrastructure in coastal regions make coastal inundation, flooding, and storm surge national problems for many countries, including the United States of America (USA). Enhancing coastal resilience is a complex problem and involves an integrated risk management approach, entailing both structural protection as well as other risk reduction strategies (e.g., building codes and ecosystem preservation). The former is an increasingly recognized mitigation option for densely populated areas and industrial hubs. Fully justifying benefits of costly flood defense structures is crucial, particularly when lack of funding and other institutional barriers make such projects easy targets for omission from or cuts to a budget. Justification usually requires a comprehensive cost-benefit analysis. This paper explores the economic feasibility of a coastal barrier, i.e., coastal spine, as a potential storm surge mitigation strategy to protect the Houston-Galveston metropolitan area of Texas, one of the most flood-prone and economically important regions in the USA. We provide an assessment of residential and chemical manufacturing plant and refinery exposure to multiple synthetic hurricane storm surge events by comparing losses with and without a coastal spine. While under all scenarios, benefits exceed engineering costs of a spine, our results indicate that the project feasibility largely hinges on accounting for industrial losses and resultant indirect and induced effects. As many regions and industrial hubs globally are designing adaptation and mitigation strategies to combat the consequences of extreme events, structural solution to surge mitigation maybe one of the few mitigation options for them. Unlike population and residential structures that can retreat and insure, these options are not viable for industrial plants that are resource-based. However, expertise and knowledge pertinent to surge barrier systems are relatively scarce as there are only handful of barriers around the world and they are all unique in engineering designs. As storm surge is becoming a threat for many coastal urban centers, one of the recommendations is to consolidate knowledge base and research across countries in order to foster knowledge exchange internationally. This will help identify concerns associated with existing barrier systems, pragmatic ways to improve them and will also aid the investment decision, engineering designs, and operational aspects of barriers in other parts of the world. Furthermore, forming regional research collaborations with developing countries at risk of storm surge and the sea level rise is vital to further facilitate knowledge spillover and exchange of expertise.

Guidelines to Aid Project Managers in Conceptualising and Implementing Risk Management in Building Projects

Risk management has become a critical issue as a result of globalisation and the continued quest for greater returns. Construction organisations most especially in developing countries, approach risk management in building construction projects by using a set of practices that are normally insufficient, produce poor results often, and turn profitable building construction projects into loosing ventures. An integrated risk management approach allows construction organisations to consistently deliver superior performance while proactively managing risk. To address this gap, this paper offers a consolidated risk management system for building projects and provides project managers with guidelines for its proper implementation. In addition to helping project managers in improving risk management capability in building projects, the guideline profiled in this paper may also be of use to practitioners in other project risk management settings.

Governing coastal risks as a social process—Facilitating integrative risk management by enhanced multi-stakeholder collaboration

Scientific literature calls for a shift from exclusively technical towards enhanced social processes in risk management to cope with the challenges of increased complex governance regimes wherein different interests of contrasting institutions need to be considered, balanced and negotiated. However, practical implementation of this integrative perspective is still a major challenge – underlined amongst others by the recently published Sendai Framework for Disaster Risk Reduction 2015–2030.By proposing an Integrated Risk Management Approach (IRMA) we contribute to simplified conditions in the transfer from scientific debates into practical implementation. Looking in particular on coastal regions, IRMA focus the user’s view on the essential challenges in terms of enhanced multi-sectoral structures and improved social and flexible processes, as much as it gives advice on its methodical realization. Using our practical experiences in the trilateral Wadden Sea Region, we disclose IRMA’s contribution on enhanced consideration of historical framing, risk perceptions, risk awareness and enhanced multi-stakeholder participation. Multi-stakeholder participation, institutionalised in multi-stakeholder partnerships, makes an essential contribution towards enhanced collaborative processes between scientists, policy-makers and affected communities.

Improved Implicit Stochastic Optimization technique under drought conditions: the case study of Agri–Sinni water system

ABSTRACTIn this paper, a methodology is proposed to support water decisions by selecting and evaluating reservoir operating rules (OR) based on hydrological scenarios. The methodology includes optimization and simulation tools within an Implicit Stochastic Optimization (ISO) framework. The paper presents some improvements to the traditional ISO that overcome some limitations affecting previous works. Thanks to the collaboration with Regional Water Authorities in Southern Italy, the proposed methodology, called Modified Implicit Stochastic Optimization (MISO), has been tested in the Agri–Sinni water system. In a participatory and integrated risk management approach to drought events, the reservoir OR defined in the MISO approach based on correlations between releases, storages and inflows performed better than the actual OR in the Agri–Sinni water system and the OR from a simulation-alone procedure. In addition, the user can obtain a significant reduction of computational time by applying the MISO technique in a Grid computing approach.

An optimisation model for reservoir operation

A methodology for determining reservoir operating rules in a multi-reservoir water system using a linear programming model is presented. The methodology includes optimisation and simulation tools within an implicit stochastic optimisation framework. It aims to support water decisions in a participatory and integrated risk management approach to drought events by selecting and evaluating reservoir operating rules based on hydrological scenarios. A test case widely used in the literature is investigated to evaluate the performance of the proposed methodology. Plausible results are obtained, encouraging the possibility of applying linear programming in identifying reservoir rules, particularly under drought conditions.

AN APPLICATION CONCEPT OF THE FIBRE-OPTICAL TECHNOLOGY IN GEODETIC MONITORING OF ENGINEERING OBJECTS

Monitoring of structures and other different field objects undoubtedly belongs to the main issues of modern engineering. The use of technologies making it possible to implement structural monitoring makes it possible to build an integrated risk management approach combining instrumental solutions with geoinformation systems. In the studies of engineering structures, there is physical monitoring mainly used for examining the physical state of the object - so-called SHM ("Structural Health Monitoring"). However, very important role is also played by geodetic monitoring systems (GMS). The progress observed in the field of IT and automatics has opened new possibilities of using integrated systems on other, often large-scale objects. Based on the current state-of-the-art, the article presents the concept of integration approaches of physical and geodetic monitoring systems in order to develop useful guidelines for further construction of an expert risk management system.

Enterprise Risk Management and Its Effect on Firm Value in Turkey

Enterprise Risk Management (ERM)is an integrated risk management approach, which considers risks in the context of business strategy and manages them with a portfolio perspective through well defined risk responsibilities and strong risk monitoring processes. The purpose of this study is to examine the impact of ERM on firm value for 130 firms operating in the manufacturing industry and listed in Borsa Istanbul. For this purpose, we utilized panel regression models on financial data collected in the period 2008-2013. The dependent variable is Tobin’s Q, which is used as a proxy of firm value. The independent variable is ERM implementation, whereas the control variables are firm size, leverage ratios and profitability ratios. We tested the hypothesis that there is a relationship between ERM and firm value. Our findings suggest that there seems to be no statistically significant relationship between firm value and ERM. We also employed a survey to explore how firms implement ERM and to obtain information about motivation behind adoption of ERM, challenges of ERM implementation and effects of ERM adoption.

Integrating risk management in IT settings from ISO standards and management systems perspectives

Organizational capabilities in companies, within IT settings, can be strengthened by a centralized and integrated risk management approach based on ISO standards. This paper analyses risk management activities throughout various selected ISO standards in order to provide the basis to improve, coordinate and interoperate risk management activities in IT settings for various purposes related to quality management, project management, IT service management and information security management. Taking as a basis the ISO 31000 international standard for risk management, a comparison is performed with the aim of identifying risk management related activities in the ISO high level structure for management system standards, ISO 9001, ISO 21500, ISO/IEC 20000-1 and ISO/IEC 27001. These standards are of high interest for practitioners in IT settings, benefitting from the integration of process-based activities, implementing mechanisms for linking IT and non-IT entities of their organization with risk management challenges to address. Integration vectors such as the understanding of the organisation and its context, risk-based thinking, leadership and commitment, process approach and PDCA structure are elicited.

Impact of lead time variability in supply chain risk management

In this article, we study the impact of lead time variability on the performance of supply chain risk management in the beer industry. The stakeholders considered are the empty aluminum can supplier, the brewery and the distributor. The stochastic lead time model developed is an extension of the previously developed base model (with deterministic lead time) under which commodity price risk and demand uncertainty are managed via an integrated risk management approach using operational methods and financial derivatives. Simulation-based optimization is used to model and analyze such a complex system. We find that lead time variability does not always deteriorate the supply chain performance. Only high levels of lead time variability are found to justify more the need for a coordinated supply chain. The findings also reveal the need for using different hedging strategies to manage products flows across the supply chain under stochastic lead time versus the deterministic case. Managerial insights for the supply chain studied are argued based on experimental design findings.

Quantifying the effectiveness of early warning systems for natural hazards

Abstract. Early warning systems (EWSs) are increasingly applied as preventive measures within an integrated risk management approach for natural hazards. At present, common standards and detailed guidelines for the evaluation of their effectiveness are lacking. To support decision-makers in the identification of optimal risk mitigation measures, a three-step framework approach for the evaluation of EWSs is presented. The effectiveness is calculated in function of the technical and the inherent reliability of the EWS. The framework is applicable to automated and non-automated EWSs and combinations thereof. To address the specifics and needs of a wide variety of EWS designs, a classification of EWSs is provided, which focuses on the degree of automations encountered in varying EWSs. The framework and its implementation are illustrated through a series of example applications of EWS in an alpine environment.

<b>What are Crucial Issues in Promoting an Integrated Approach for Flood Risk Management in Urban Areas? </b>

Flooding has become a serious issue in rapidly urbanizing countries. It is widely recognized that flood damages in urban areas can be decreased by taking an integrated risk management approach. This approach, however, has not been realized easily in major cities in Asia. The purpose of this paper is to examine the crucial issues in adopting the integrated approach to developing countries. It reviews Japanese experience and lessons of managing urban flood risks, and compares these lessons with situations in developing countries. It was found that establishing coordination mechanisms among a wide range of sectors is a crucial challenge. Furthermore, the paper proposes practical methods of promoting the integrated approach for urban flood risk management in developing countries.

Risk Governance and Performance of the Italian Banks: An Empirical Analysis

The paper investigates the relation between the adoption of good practices in risk management and the level of performance and riskiness of banks. In particular, we aim at understanding if the application of the Enterprise Risk Management approach to banks helps increasing their stability. We test the hypothesis that those banks using an integrated risk management approach have, ceteris paribus, a lower level of risk and a higher performance. Our analysis focuses on 21 Italian listed banking groups, in the time period 2005-2013. Our preliminary results show that the risk management function influences the risk and performance of the bank; however, it is not possible from our data to define an optimal model of risk governance.