Risk Management Function Research Articles

Risk Management in Health Management

The study of this paper investigates the crucial function of risk management in healthcare administration. It centers around the different sorts of dangers in medical services and their motivation on quiet security, care quality, and authoritative execution. The use of technology, the importance of risk management, risk consideration and mitigation strategies, and the challenges faced by healthcare organizations are all examined in this section. It keeps up by underlining the situation with fostering a gamble mindfulness in regard to effectively accomplishing chances and working on understanding results in the troublesome medical services setting.

Minimise model risk management oversight for cyber security solutions

Adoption of artificial intelligence (AI) and machine learning (ML)-powered cyber security tools and models by financial institutions has received considerable attention in the model risk management community. In parallel, developing trustworthy AI that is more explainable, fair, robust, private and transparent has also received considerable research and regulatory attention. Appropriate governing of cyber security models is inevitable. The prevailing thought at present is to have the model risk management function to oversee the development, implementation and use of such cyber security tools and models. This study first demonstrates two primary challenges of executing this oversight and then offers a few practical suggestions to ensure a reasonable application.

The Role of the Internal Auditor in Strengthening the Governance of Economic Organizations Using the Three Lines of Defense Model

Purpose: This paper aims to investigate the impact of the three lines of defense (TLOD) in strengthening corporate governance in industrial companies in the Sultanate of Oman. Methodology: A questionnaire was used to collect data from industrial companies in the Sultanate of Oman. A total of 300 questionnaires were distributed; for the 159 valid questionnaires used for analysis, PLS-SEM was used in the data analysis. Results: The results showed a significant impact of the three variables (commitment of operational management to legal, regulatory, and ethical requirements; risk management, compliance, and quality functions; and the role of assertive internal auditing according to the third line of defense model) in strengthening corporate governance. Practical implications: The study indicates that the TLOD model plays a more decisive role in determining the strengthening of corporate governance, and therefore, the results of the study can help industrial companies to understand the role of the TLOD model in strengthening control procedures, risk management, and governance. Originality/value: The study constitutes a management strategy that assists organizations in diagnosing the degree of corporate compliance with the TLOD and identifying weaknesses in their procedures.

The market reaction to operational risk events in the energy sector

AbstractDespite the growing importance of operational risk, little is known about the impact of operational losses on the stock prices of energy firms. We fill this void by examining the market reaction of energy firms to a unique international sample of 452 operational loss events announced between 1996 and 2021, constructed using the SAS OpRisk Global Data database. Our results reveal negative and significant abnormal returns following the announcement of operational losses, while further analysis shows that results vary with event and/or announcing firm characteristics. Our evidence can help inform multiple stakeholders in the energy industry in the pricing, asset allocation, and risk management functions, as well as help regulators design effective mechanisms to mitigate the impact of operational losses on the economy and society.

Enhancing the Competency Development Program for New Recruits: A Case Study at Internal Audit & Risk Management Function

The pandemic created unsettling vulnerability as organization accelerated the shift to digital operations. One bright spot is that asset misappropriation, while still a top category of fraud, was down in the last 24 months perhaps due to more employees working remotely, with limited access to company assets. At the same time, remote working increased risks beyond just digital security. Hence, it is important to have effective internal controls to identify and prevent any kind of fraud. The increasing need for recruiting strong internal audit and risk management functions especially in public company is due to several factors, including increased regulatory scrutiny, greater stakeholder demands for transparency and accountability, and the growing complexity of business operations. With the increasing number of public companies, there is a greater need for effective internal controls and risk management systems to ensure financial reporting accuracy, prevent fraud, and meet regulatory requirements. Internal audit and risk management improve governance, decision-making, and identify risks for organizations. Strong functions require adequate manpower, trained personnel, and resources for effective performance. Group Audit and Risk Management (GARM) in one of public company, working on Internal Audit and Risk Management (IARM). To ensure GARM fulfils its responsibilities as a corporate center, they define Key Performance Indicators (KPIs) that are reviewed semi-annually by the Board of Directors (BOD). Unfortunately, one of the KPIs related to advisory and supporting roles, namely supporting the fulfilment of Group IARM manpower requirements, has not been met since 2013. The purpose of this study is to identify the root cause of the decrease in new recruit manpower fulfilment requests from Internal Audit and Risk Management functions in subsidiaries company and enhance the existing competency program in order to increase participation from Internal Audit and Risk Management functions. Using design thinking method and conducting in depth interview author may determine framework to enhance the programs that are more relevant to the competency needs.

The visualization method of environmental risk assessment for metal cultural relics in museums based on Quick Response code

How to quantitatively evaluate and characterize the risk of the preservation environment of cultural relics in museums is an important research topic in the preventive protection of movable cultural relics. According to the current existing risk analysis methods for cultural heritage protection, this paper investigates the impact models of time, space and environmental factors on the degradation process or the atmospheric corrosion of metal culture relics in museums for typical application scenarios such as repository houses, exhibitions and transportation. Based on the museum air environment quality and reactivity monitoring data, a grading strategy for the preservation of the metal cultural relics in museums is proposed, and a visual environmental risk assessment method based on QR code (Quick Response code), Visual-ERAM (Visualization Environment Risk Assessment method), is established. This study can provide an intuitive and convenient tool for the risk assessment and early warning functions of the environmental risk management of metal cultural relics in museums.

Enhancing Financial Market Analysis and Prediction with Emotion Corpora and News Co-Occurrence Network

This study employs an improved natural language processing algorithm to analyze over 500,000 financial news articles from sixteen major sources across 12 sectors, with the top 10 companies in each sector. The analysis identifies shifting economic activity based on emotional news sentiment and develops a news co-occurrence network to show relationships between companies even across sectors. This study created an improved corpus and algorithm to identify emotions in financial news. The improved method identified 18 additional emotions beyond what was previously analyzed. The researchers labeled financial terms from Investopedia to validate the categorization performance of the new method. Using the improved algorithm, we analyzed how emotions in financial news relate to market movement of pairs of companies. We found a moderate correlation (above 60%) between emotion sentiment and market movement. To validate this finding, we further checked the correlation coefficients between sentiment alone, and found that consumer discretionary, consumer staples, financials, industrials, and technology sectors showed similar trends. Our findings suggest that emotional sentiment analysis provide valuable insights for financial market analysis and prediction. The technical analysis framework developed in this study can be integrated into a larger investment strategy, enabling organizations to identify potential opportunities and develop informed strategies. The insights derived from the co-occurrence model may be leveraged by companies to strengthen their risk management functions, making it an asset within a comprehensive investment strategy.

Uncertainty indices and stock market volatility predictability during the global pandemic: evidence from G7 countries

ABSTRACT This article attempts to examine the predictability of a significant number of uncertainty indices for the G7 stock market volatility based on a Heterogeneous AutoRegressive Realized Volatility (HARRV) model and a combination forecast framework during the global pandemic COVID-19. We include in our analysis the Infectious Disease Equity Market Volatility (IDEMV), the VIX, the Economic Policy Uncertainty (EPU), the Equity Market Volatility (EMV), the Geopolitical risk (GPR) as well as the crude oil futures’ realized volatility. Out-of-sample evidence shows that models incorporating all uncertainty indices improve forecasting performance for most stock markets’ volatility during a long out-of-sample period and also during the coronavirus period. The results are robust using an alternative volatility model, an alternative realized measure and a recursive window analysis. The predictability of the uncertainty indices is also evaluated through risk management and portfolio loss functions and results suggest that the LASSO combination and a HARRV model including all indices are the most profitable for all stock markets during the global pandemic.

Problems of methodological support in the bank risk management

Subject. The methodological base of credit institutions adapted to the digital banking system conditions positively affects the modern bank risk management. It contributes to the improvement of risk assessment methods and interaction of subjects of bank risk management according to the specifics of business processes and innovative technologies being introduced. Objectives. The study aims to analyze the key factors affecting the methodological integrity of banks, explore the organization of the risk management system in Russian and Kyrgyz banks, investigate the current risks faced by credit institutions through methods for identifying the problems of their methodological support. Methods. The study rests on general scientific methods, like analysis, synthesis, induction, deduction, and generalization. Results. I established the importance and necessity of developing a high-quality theoretical platform by commercial banks, offered my own formulation of innovation risks, i.e. the risk of duplication of risk management function and the risk of using outdated legislative documents. The paper highlights practical methods of identifying problems while ensuring methodological integrity used by banks in the innovation risk management framework. Conclusions. The findings may help enhance the risk management system in credit institutions. If applied, the considered methods will improve the work of departments involved in local regulatory framework updating, risk management and internal control services. In the process of managing modern bank risks, the integration of the methodological base into strategic planning structure, effective distribution of functional responsibilities of departments, and organization of the rule-making process play a significant role.

БАНКОВСКИЕ РИСКИ, ВЗГЛЯД В БУДУЩЕЕ

The article discusses changes in banks in recent years in the field of risk management. The regulations that emerged as a result of the global financial crisis and the fines that were imposed in connection with it caused a wave of changes in risk management functions. They included more detailed and demanding capital, leverage, liquidity and financing requirements, as well as higher risk reporting standards. Attention is paid to non-financial risks as they have become more important as standards of compliance and behavior have become stricter. Emphasis is placed on Stress testing as one of the main tools of supervision, in parallel with an increase in expectations regarding banks’ statements about risk appetite. The final part of the article provides a forecast of how banks’ risk management functions will look in 2033, identifies structural trends that are likely to radically change the bank’s risk management in the future.

Risk management modeling for an industrial enterprise

Introduction. The paper examines the definitions of risk concept applied to an industrial enterprise and differentiates between risk and uncertainty. The paper also describes the functions of risk management which focus on instant decision making in terms of a clear action plan and measures aimed to limit the damages and control the enterprise’s budget.Purpose. The paperaims at exploring the key components of enterprise’s risk management, describing and documenting the functions of the system’s stakeholders.Materials and Methods. Theoretically and methodologically, the paper originates from the existing approaches to risk management for the companies, including an industrial enterprise. The approaches were analyzed to find the adequate purpose-oriented type of risk management for an enterprise –hierarchical. Results. The paper gives a scenario for risk management of an industrial enterprise (Center) in the event of a risk event involving third parties – system’s participants or Agents (an insurance company, waste disposal operator, repair company, bank). A target function of profit is constructed for each participant. Conclusion. The proposed multiagent risk management system for an industrial enterprise includes the enterprise’s cash flows aimed to mitigate the risk. Further research will outline the types of functions for profit and damage of each participant in the system to specify the performance and interaction between the Center and Agents.

Peran Moderasi Manajemen Risiko Perusahaan Terhadap Hubungan Antara Aktivitas Pendanaan Eksternal Dengan Manajemen Laba

This study examines the relationship between a company's external financing activity and earnings management and enterprise risk management as moderation variable. The sample of the study was 271 companies listed in the Bloomberg database in 2018. The results of this study show that: First, external financing activities of both debt and equity are positively associated with accrual earnings management and real activity earnings management. Second, enterprise risk management has a significant influence on the relationship between external funding activities and earnings management. The results of this study make a significant contribution to stakeholders to strength managers to augment the company's risk management functions in an effort to prevent earnings management practices.

Sustainable risk management practice in the organization: a Malaysian case study.

Businesses are becoming more conscious of operational risk management practices due to the COVID-19 pandemic. However, some firms practice risk management without fully comprehending how it might help them and their needs. As a result, companies that practice risk management without realizing it are being controlled by the discipline itself. The goal of this study is to look into the epistemic process of risk management practice in the workplace. This phenomenological study interviewed 39 risk management officers, executives, and employees. Data are thematically analyzed. This study discovered five epistemic processes of risk mapping using Foucault's governmentality paradigm. This phenomenological study, interestingly, revealed the black box of risk management practices, as well as the behavior of risk management officers, executives, and risk owners who preferred to monitor the compliance aspects of risk management practices rather than comprehend the capabilities of risk management that could be used within their strategic planning process. Unaware of this black box, organizational actors were blanketed by the organization's culture of fear, which created the impression that the authority was always watching every word said and every action taken. Practically, this study contributes an improved understanding of the real function of risk management that helps them justify the practice and reduce unnecessary fear. The paper concludes with limitations and research recommendations.

Risk Management For Sporting Events

Risk management is one of the primary responsibilities of event organizers, yet so often ignored or misunderstood, particularly by inexperienced planners, because, like my now-paranoid event-goers, one can’t envision what one has not been exposed to – they don’t know what they don’t know. This article will show you how and why risk management is a fundamental component of event management, and introduce you to the functions of risk management within the overall field of events management and the tools you may use to perform these functions effectively.

THE INFLUENCE OF RISK MANAGEMENT THEORIES ON THE USE OF DERIVATIVES IN THE ELECTRIC POWER INDUSTRY

The work explores crucial decisions on the use of the specific types of derivatives in the electricity price risk management by the member companies of the European Federation of Energy Traders (EFET). The survey has been motivated by volatile fuel prices on international markets and significant losses incurred due to the exposure of companies to such volatility. These trends are the reason why increasing attention is devoted to risk management in the energy sector. The work tests the validity of the assumptions relating to the justification of the risk management function and its impact on corporate value increase. It has been investigated if these theories, as well as the specific corporate characteristics, such as indebtedness, size, liquidity and investment value, influence the use of forwards, futures, options or swaps as tools designed to offset the risk of energy price changes. The findings of univariant and multivariant analyses have shown that the companies using forwards differ from the companies not using them due to their greater indebtedness and higher value of new investments. It can thus be concluded that the companies which are more engaged in capital investment and in this use higher amounts of bonded capital tend to use forwards to a greater extent. On the other hand, it is interesting to note the fact that the size of a company does not play a major role in the choice of this tool, which confirms that forwards are a risk protection tool in the broadest use among big and small companies alike. Likewise, it is indicative that the size of a company has proved to be an influential factor in the choice of futures, swaps and options as tools created to offset the risks of energy price changes.

Using digital capabilities for information processing in modern risk management

Aim. The presented study examines modern factors affecting the functioning of risk management, specify the requirements for information and services for retrieving and processing it to make effective management decisions aimed at minimizing or eliminating risks.Tasks. The authors specify the challenges of risk management in the context of economic instability to preserve existing positions and substantiate directions for development; determine the stages of further transformation of risk management corresponding to the strategic guidelines for the development of business structures and describe them with an emphasis on existing problems and the opportunities for solving them; investigate the nature of the increasing importance of information analysis within the framework of risk management and the necessity and possibility of attracting third-party organizations for this purpose; identify and describe changes taking place in risk management in the context of digital transformation, accompanied by changes in information analysis and the active promotion of related services by the IT sector.Methods. This study uses general scientific research methods (systems and logical approaches) and the methods of strategic and situational analysis to determine cause-and-effect relationships and describe the obtained results.Results. The authors propose an original concept substantiating the increasing importance of the joint work of business structures and their partners providing services for retrieving and processing information in the interests of risk management. Emphasis is placed on the need to protect commercial information and prevent its leakage. This concept makes allowance for current trends in the active development of the IT sector, the Internet economy, and economic security, including under economic sanctions. The proposed recommendations can serve as a basis for a comprehensive model that would make it possible to develop directions for improving the risk management system, substantiating the effective behavior of an entrepreneurial structure in the presence of economic and non-economic risks.Conclusions. The study proves that the development of a modern entrepreneurial structure increases the importance of the functioning risk management system. Factors that ensure the development of risk management and prevent it from functioning normally are identified. Based on this, recommendations for organizing effective management in this area of management activity are proposed.

The Role of Physics and Exchange in Financial Market

Econophysics attempts to discover ‘laws of physics’ in the financial markets and applies the methodology of physics and mathematics to provide new insights. This article deals with the role of physics in the financial markets. It also looks at the functions of Korea Exchange, especially, operating markets, clearing, and CCP risk management.

A technical solution to a professional problem: The risk management functions of prognosticators in the context of prognostication post-cardiac arrest.

Cardiac arrest (CA) is a major cause of mortality and morbidity globally. Two-thirds of deaths among patients admitted to intensive care units following out-of-hospital CA are due to neurological injury, with most as a consequence of withdrawing life-sustaining treatment, following prognostication of unfavorable neurological outcome. Given the ramifications of prognosis for patient outcome, post-cardiac arrest (P-CA) guidelines stress the importance of minimizing the risk of falsely pessimistic predictions. Although prognosticator use is advocated to this end, 100% accurate prognosticators remain elusive, therefore prognostication P-CA remains pervaded by uncertainty and risk. Bioethical discourse notwithstanding, when located within a wider socio-cultural context, prognostication can be seen to present risk and uncertainty challenges of a professional nature. Such challenges do not, however, subvert the medical profession's moral and ethical prognostication obligation. We interpret prognosticator use as an attempt to manage professional risk presented by prognostication P-CA and demonstrate how through performing “risk work,” prognosticators serve professional functions, mediating tension between the professional duty to prognosticate, and risk presented. We draw on sociological analyses of risk and uncertainty, and the professions to explicate these (hitherto less enunciated) professional risk management functions of prognosticators. Accordingly, the use of prognosticators is conceived of as a professional response – a technical/scientific solution to the problem of professional risk, inherent within the P-CA prognostication process.

Relationship Marketing and Customer Purchase Decision of Insurance in Lagos State, Nigeria

The purchasing behavior of the nation’s insuring public determines the performance of the risk management and investment functions of insurance service, and its overall contribution to the development of the economy. In Nigeria, the contribution of insurance to the nation’s GDP is extremely low at 0.4% as majority of the population live without insurance protection. The low level of customer’s patronage may be attributed to inadequate application of relationship marketing factors. This study examined the influence of relationship marketing dimensions of customer awareness, customer trust, customer service quality, product innovation and customization, and customer satisfaction on customer purchase decision of Insurance in Lagos State, Nigeria. The study adopted a survey research design. The population of study consisted of 375,000 estimated consumers of insurance service in Lagos State, Nigeria. A sample size of 1,650 consumers were drawn from selected Local Government Areas of Lagos State through non-probability sampling technique. A questionnaire titled relationship marketing and market penetration of insurance was adapted and validated. The Cronbach’s Alpha coefficient for the constructs ranged between 0.76 and 0.90. A total of 1,650 copies of the questionnaire were administered, with a response rate of 80%. The data were analyzed using descriptive and inferential (multiple linear regression analysis) statistics. Findings revealed that relationship marketing had significant effect on customer purchase decision of Insurance (Adj. R2 = 0.420; F (5, 1306) = 190.773, p<0.05). Significant positive relationships were also found between some of the relationship marketing constructs and customer purchase decision of insurance. The study concluded that relationship marketing dimensions of customer awareness, customer trust, customer service quality, product innovation and customization, and customer satisfaction are significant predictors of customer purchase decision of insurance in Lagos State, Nigeria. Thus, to influence customer purchase decision of insurance, the adoption of relationship marketing is highly recommended. Keywords: Relationship Marketing, Customer Awareness, Customer Trust Customer Service Quality

Can we keep up with the machines? Stronger and faster artificial intelligence systems require robust risk management practices

No longer just an issue of isolated enterprise, regulatory or reputational risk for financial institutions, compliance failures are indicators of potential systemic deficiencies that can frustrate the mission and ethical goals of a firm. What is more, compliance failures may impede and compromise a financial institution's ability to deliver core financial products and investments. Recent advancements in data management and computing capacity have ushered in a wave of business technology solutions that rely on the power of artificial intelligence (AI) to transform vast quantities of data into useful business and risk management information. Financial institutions utilise these technologies to predict behaviour, make decisions, identify threats and meet regulatory requirements. An unintended consequence of the proliferation of Big Data and advanced analytics is the concomitant expansion of AI-driven models that tend to amplify social and economic biases. As AI-based technologies expand across compliance and risk management functions, they must be subject to rigorous examination and testing. Robust model governance must be a core component of every financial institution's overall risk management and corporate governance strategies. The extent of a financial institution's model governance must align with the extent and sophistication of its model use. This paper sets out the regulatory trends related to AI in compliance and risk management applications and the risks associated with inadequate data management, over-automation and other risk management oversight failures. The possible adverse outcomes are illustrated by means of a case study relating to the detection of money laundering associated with human trafficking. Recommendations for model risk management and model governance follow.