Risk Management Policies Research Articles

The Relationship Between BOD Ethical Commitment and Risk Management and Internal Control System with the Performance of Shariah-Compliant Companies

Shariah companies need to maintain good performance to ensure the sustainability of companies. Shariah companies operate based on Islamic moral foundations, specifically in terms of their accountability and transparency which are considered as key values that need to be considered when conducting their business operations. However, corruption cases can affect the performance of Shariah companies. Studies have shown that Shariah-compliant companies are underperforming as compared to their conventional counterparts. Therefore, the objective of this study is to examine whether BOD ethical commitment (corporate ethics values, action to promote ethics, code of ethics and whistleblowing policy) and risk management and internal control system (content, implementation, role, objective, framework and separation section) will affect the performance of Shariah companies. Data was collected from the 2019 annual reports of 60 Shariah manufacturing companies. Data was analysed using Smart Partial Least Square. The study found BOD Ethical Commitment (whistleblowing policy) and Risk Management and Internal Control System (separation of risk management and internal control) have a significant relationship with performance. The study implies that shariah-compliant companies should focus on the disclosure of whistleblowing policy and separation of risk management and internal control system in their annual reports for them to improve their performance as disclosure of this information, will help to improve the confidence of the market to invest in them

Risk Management, Capital Budgeting, and Capital Structure Policy for Insurers and Reinsurers

Risk Management, Capital Budgeting, and Capital Structure Policy for Insurers and Reinsurers

Understanding the urban structure of the Algerian cities using emerging data: Case study of Algiers

Despite the identification of urban structure and urban centers being crucial for effective policy making (transport policies, urban risk management policies etc) there is a serious lack of studies covering developing countries' urban structure changes, especially north African cities. This is mainly due to the unavailability of the necessary data for urban structure identification. In this contribution we investigate the polycentric development in the Algerian capital, Algiers, using innovative data resources such as LandScanTM High Resolution Global Population Dataset and the POI approach, and spatial statistics. The findings suggest that the structure of Algiers is indeed developing into a polycentric city. The emerging data helped us overcome a serious methodological problem and objectively identify the city structure for better planning.

Ubezpieczenie jako metoda zarządzania ryzykiem w procesie realizacji inwestycji budowlanej

Przedmiot badań: Przedmiotem badań jest ryzyko występujące podczas prowadzenia inwestycji budowlanej oraz rola ubezpieczeń jako sposobu ograniczenia się przed skutkami jego realizacji.
 Cel badawczy: Głównymi celami artykułu są: ocena ubezpieczenia jako metody zarządzania ryzykiem przez polskie przedsiębiorstwa, identyfikacja kluczowych ryzyk zagrażających realizacji inwestycji na każdym etapie procesu budowlanego oraz przedstawienie najważniejszych produktów oferowanych przez ubezpieczycieli dla inwestorów i podmiotów z branży budowlanej oraz weryfikacja ich zakresu pod kątem pokrycia ryzyk związanych z przedsięwzięciem budowlanym.
 Metoda badawcza: Artykuł powstał na bazie studiów literaturowych, analizy danych statystycznych i dostępnych wyników badań ankietowych, analizy i porównania treści Ogólnych Warunków Ubezpieczenia odnoszących się do produktów dostępnych na polskim rynku ubezpieczeniowym, wzorców umownych udostępnianych przez Zleceniodawców w ramach postępowań przetargowych dotyczących realizacji inwestycji budowlanych, a także w oparciu o własne wieloletnie doświadczenia zawodowe jako osoby pełniącej czynności brokera ubezpieczeniowego, obserwację rynku ubezpieczeniowego oraz zachowań klientów.
 Wnioski: W trakcie realizacji badań potwierdzono, że coraz więcej przedsiębiorców jest świadomych rosnącego ryzyka prowadzenia działalności gospodarczej, wdraża politykę zarządzania ryzykiem w swoich firmach, której istotnym elementem jest ubezpieczenie. Udowodniono też, że realizacja inwestycji budowlanej jest procesem złożonym, obarczonym na każdym etapie wysokim ryzykiem jej niepowodzenia o zróżnicowanym charakterze i wymaga od inwestora podjęcia wielu działań mających na celu właściwe zabezpieczenie się na wypadek wystąpienia szkody. Ubezpieczenie stanowi ważny element strategii zarządzania ryzykiem inwestycji budowlanej, szczególnie na etapie projektowania i realizacji prac. W związku z problemami, z jakimi boryka się aktualnie sektor budowlany, należy pamiętać o waloryzacji wartości kontraktów budowlanych i zwiększaniu sum ubezpieczenia, gdyż przy szybko rosnących cenach materiałów budowlanych i robocizny w tym sektorze wiele budów może być obecnie niedoubezpieczonych, co w przypadku szkody będzie skutkować ograniczeniem wypłaty odszkodowania.

Factors Affecting the Sustainable Development of Commercial Banks in Vietnam

This study aimed to investigate key factors influencing the long-term development of commercial banks using a survey of 450 bank managers and structural equation modelling (SEM). The results revealed five aspects influencing sustainable development: Economic, social, environmental, sustainable goods, and digital banking. Based on the research findings, the author advocated for a national environmental and social policy framework that required corporate organizations to establish environmental and social risk management policies based on a national policy framework for sustainability. Risk management strategies and methods should be implemented in internal operations and risk management in lending to consumers and business partners. Finally, boosting economic soundness, efficiency, and sustainability through growing own capital capacity, asset quality, effective management, and non-credit income. Keywords: Bank, commercial, development, policy, sustainable JEL Codes: A13, P34, Q01.

Economic security of industrial companies in conditions of energy transition

Effective management of industrial companies in the conditions of modern challenges contributes to the achievement of tactical and strategic goals of technological development of enterprises. In the theory and practice of industrial economics, a special place is given to environmental management, which includes operational environmental management, investment environmental management, risk management, etc. The concentration of efforts in a certain direction depends on the specifics of the activities of the subjects and the problems that they are facing. In this regard, the system of ensuring the economic security of industrial companies that faces the need to solve the tasks of a planned energy transition is of particular importance. Industrial companies of the energy sector of the world economy were selected as the object of the study. As measures to ensure economic security, the article considers a unique risk management policy, including strategic planning, systematization and risk assessment, as well as managerial control over financial, economic, scientific and technological types of risk. The study revealed that over the past five years, industrial companies have been thoroughly approaching the development of an environmental strategy. The authors identify trends in the technological transformation of the global energy complex, which determine promising areas of technological integration for the development of carbon-neutral energy. The most important direction is the development and implementation of innovations that improve environmental safety, including new technologies for the production of pure hydrogen from natural gas and recycling processes. The conducted research made it possible to identify the scientific and institutional prerequisites for risk management of technological integration and to link them with tools for ensuring economic security.

The preferences of farmers and non-farming citizens for farm catastrophic risk management policy alternatives

Abstract Economic risks for farmers have increased during recent years due to various factors such as more extreme climate conditions and the volatility of agricultural markets. We analysed the preferences of Finnish farmers and non-farming citizens concerning catastrophic risk management policies in agriculture based on a survey addressed to both groups. Respondents were asked to rank their preferences regarding who should bear the costs from various disasters occurring on farms. Farmers and non-farming citizens did not prefer a single cost bearer for all risks, but they generally preferred either society or farmers’ insurance to bear the costs. The results indicate that citizens generally accept public spending on agricultural risk management, either through some ex post disaster aid or through subsidised insurance. Farmers’ preferences were generally aligned with those of non-farmers.

ОЦЕНКА СИСТЕМЫ УПРАВЛЕНИЯ ФИНАНСОВЫМИ РИСКАМИ В ЭЛЕКТРОЭНЕРГЕТИЧЕСКИХ КОМПАНИЯХ

The purpose of the study is to assess the financial risk management system in organizations in the electric power industry, which allows to determine its most important components, to identify industry-specific risk management features, to establish risk factors and to propose a set of measures to reduce the negative impact of risks on the financial stability of electric power companies. Research methods - generalization and analysis of the scientific basis and practical experience in risk management in the electric power industry; a systematic approach and epistemological principle in assessing the risk management policy, the features of the functioning of management structures, the establishment of risk factors and a set of measures to manage risks in companies in the energy sector. As a result, it was found that the financial risk management system in the organizations of the electric power industry operates within the framework of the overall risk management system. An assessment of the multi-level hierarchical structure of risk management and its powers is given. A grouping of risks specific to electric power companies is made, which includes a group of financial risks, specific risk factors are identified, and measures to compensate them are proposed.

Інтеграція ризик-менеджменту в систему управління якістю торговельного підприємства

The article is aimed at studying the features of the risk-oriented approach in the context of the development of quality management systems as an instrument for management of trading enterprises to solve the problems of increasing their competitiveness, ensuring risk resistance and risk protection. The economic essence of risk as an integral element of the economic and financial activity of the enterprise, which in its manifestation poses a threat to the achievement of the established goals of this activity in conditions of uncertainty and lack of complete information at the time of making decisions on planning, management, coordination, control of the enterprise’s activities, is covered. The list of risks inherent in the activities of commercial enterprises is considered. The classification of risks depending on the type of trade object, group of goods, functional divisions of the trading enterprise and the subsystems has been improved, which allows to deepen research in this direction and objectively determine the areas in which the degree of risk corresponds to the characteristics of the activity. The content and sequence of the main stages of risk management in a trading enterprise are characterized. The article considers features of various approaches to risk management: adaptive, functional, system, process-oriented. It is argued that the lack of an integrated risk management policy of a trading enterprise aimed at implementing strategic development goals leads to: insufficient coordination of individual managerial decisions in this area of various functional services; low level of implementation and use of modern methods and tools for identification and assessment of risks; insufficient substantiation of risk management models in various operations of the trade and technological process; use of inefficient forms of control over the result of the chosen risk solution. A conception of implementing the risk management in the quality management system of a trading enterprise, implemented in accordance with ISO 9001: 2015, is proposed. This conception will provide integrated management of material, financial, information, service flows in business processes between the functional areas of procurement, transportation, warehousing, production, implementation in the performance of management functions of analysis, planning, organization, coordination, motivation, control in compliance with the principles of consistency, efficiency, continuity, cyclicality, variateness, adaptability, mutual consistency, as well as the completeness of the functions of such management and the use of a unified approach to the mechanism of enterprise management. The normative-methodological base of risk management within the documented quality management system of the enterprise is considered.

RISK ANALYSIS OF A SOCIAL INVESTMENT PROJECT

"Social projects are characterized by a low level of income from implementation, but they have a very pronounced social return in favour of the welfare of the population of the region, city, district. However, such projects are also subject to risks, which level needs to be determined in order to take various corrective actions on projects. Such activities can be: conducting additional market research, choosing alternative areas for construction, choosing another contractor, etc. Also, for each project, several examinations are made, which are aimed at identifying risks based on the expert opinions of specialists, a number of indicators are calculated, one of which is budgetary and social efficiency. In the article, we will consider the main causes of project risks, types of risks, current methods for assessing the risks of social projects, and describe the boundaries of risks that affect the choice of risk management policy and monitoring system. consider The basic rules for identifying and assessing risks will be considered, as well as the rules for conducting economic appraisals of projects. Using the example of an investment social project, we will calculate indicators of sensitivity to changes in price, cost and sales volume, and also compile a matrix of profit changes under the influence of prices in relation to a certain level of risk. Keywords: social projects, project risks, risk level, causes of occurrence, efficiency assessment, indicators of sensitivity."

Climate change and risk management policies in viticulture

In recent years, the adverse effects of climate change on agricultural productivity have been increasing dramatically. As a function of this situation, in many territorial contexts, productivity and profitability decrease due to uncontrollable events. In light of this situation, the entrepreneur should adopt strategies to decrease the risks of climate change and sustain agricultural productivity and farm profitability. The research used case studies of several wine-growing facilities of companies located in the Mediterranean area. The study estimated the losses of productivity and thus income due to climate change, which is occurring with increasing intensity. Subsequently, through the insurance model offered by the public operator with the European Agricultural Policy (CAP), it was analyzed that the adoption of climate change adaptation strategies, such as access to the insurance market, can reduce the risk of climate change and thus favor constancy of farm profitability. The empirical results revealed that the production of quality wines, the age of the entrepreneur, and the level of education are variables that favor access to the insurance market by wine-growing enterprises. On the other hand business income, especially of small enterprises, can be boosted by the adoption of these risk mitigation strategies. However, despite the positive benefits of adopting insurance policies, there is currently low adherence by enterprises. To improve farmers' ability to adapt to increasing climate change, insurance contracts should be promoted and competition between insurance companies should be fostered, which would guarantee a decrease in the cost of policies. This seems important for the overall sustainability of the wine sector and agriculture in general. • Climate change leads to productivity and profitability problems. • Insurance mitigates risk. • Climate change in viticulture can be mitigated by insurance.

The nexus between climate change risk and financial policy uncertainty

AbstractWe investigate the role of financial policy uncertainty in climate change risk. We use the financial policies uncertainty index to estimate its composite effectiveness on climate change. We test the financial development role from two perspectives covering the credit channel and market liquidation facilities for climate change. We also test the role of financial policy uncertainty through moderating channels of renewable energy production and financial development. Our sample comprises 42 developing economies from 1991 to 2020. We apply the fixed‐effects estimation, feasible generalized least squares (FGLS) method and bootstrap quantile to analyze the results. The empirical results reveal that financial policy uncertainty plays a significant role in climate change risk. We conclude that climate change risk management policies and financial policy uncertainties should be considered as key indicators of financial development.

Relating risk preferences and risk perceptions over different agricultural risk domains: Insights from Ethiopia

Households in developing countries are exposed to various shocks and risks, which leaves them vulnerable as they typically have limited resources to cope with them. Even though a large body of development literature has focused on the role of risk in rural livelihoods, the focus is often on single sources of risk and taking a unidimensional view on risk preference. This paper explores the diversity in risk perception and risk preferences of Ethiopian households by combining incentivized field experiments with detailed primary household survey data. We disentangle the relationship between risk perception and risk preferences using an innovative combination of time framing and instrumental variable estimation approaches. We find that our respondents are exposed to multiple past shocks and perceive multiple sources of future threats across different agricultural risk domains. Our respondents can be characterized as relatively risk-averse and loss-averse, and they also overweight unlikely extreme outcomes. We find a statistically significant association between the prospect theory risk preferences parameters—risk aversion, loss aversion, and probability weighting—and overall risk perception, domain-specific risk perceptions (except for the personal domain) and the impact dimension of future risk. Our findings make an important contribution to our understanding of farm households’ risk behavior, and can guide prioritizing development efforts to stimulate better informed and well-targeted risk management policy interventions.

Policy implementation for extreme hazard events in Caribbean Small Island Developing States: a case study – Trinidad and Tobago and Grenada

PurposeExtreme natural hazard events in the Caribbean continue to result in major adverse consequences. Studies of disaster experiences have identified operational deficiencies that limited the effectiveness of disaster management policies in live emergencies. This paper reports on a study of the implementation characteristics of specific public disaster risk reduction and response measures in two Caribbean Small Island Developing States (SIDS), Trinidad and Tobago and Grenada, which may impact the success of these measures. The purpose of this paper is to examine these characteristics and their potential impacts.Design/methodology/approachThe authors collected data on specific aspects of disaster risk management (DRM) policy implementation from policy documents and interviews with public DRM agencies. A sample of business entities also provided data on their interactions with public risk management measures. The data focussed on operational aspects of implementation to identify likely impacts on hazard event outcomes.FindingsThe study identifies implementation deficiencies that may hamper achievement of risk reduction objectives and limit the effectiveness of emergency response.Research limitations/implicationsThe findings may be instructive for other Caribbean SIDS which share similar economic and social characteristics, natural hazard exposures and potential catastrophic outcomes.Practical implicationsThe findings suggest tactical areas of focus to enhance the operationalisation of policy.Social implicationsImproved operational effectiveness will support the efforts of Caribbean SIDS to reduce the scale of adverse outcomes on people and property.Originality/valueThe findings of this study broaden the scope of Caribbean disaster studies to provide an insight into operational weaknesses that may be recognised and addressed prior to hazard events.

Integrating Ecosystem Health and Services for Assessing Ecological Risk and its Response to Typical Land-Use Patterns in the Eco-fragile Region, North China.

Changes in land-use patterns may increase the ecological risks faced by Eco-Fragile regions. It is vital for regional ecological restoration and management of Eco-Fragile regions to reasonably assess ecological risk and study its response to typical land-use patterns. Existing study on regional ecological risk largely ignored the internal representation of ecosystem health and ecosystem services to ecological risk, and also ignored the internal relationship between ecological risk and land use patterns. This study developed a regional ecological assessment model by describing the relationship between ecosystem health, ecosystem services and ecological risks. Among them, the ecosystem health assessment used the Net Primary Productivity, landscape index and ecosystem elasticity coefficient based on different land use patterns to build Vigor-Organization-Resilience (VOR) model, and the improved equivalent factor method was used to calculate the ecosystem service value. Taking the Fen River Basin (FRB), a typical Eco-Fragile region of the Loess Plateau, as a study region, spatial auto-correlation analysis was used to reveal the temporal and spatial changes and spatial clustering characteristics of regional ecological risk, and regression analysis was used to study the relationship between typical land use patterns and ecological risks, which was included in the consideration of ecological and environmental risk management strategies. The results show that the regions with high ecological risk are mainly distributed in the middle and southwest of the FRB; the regions with low ecological risk are mainly distributed in the north, east and west of the FRB. Both high-risk and low-risk areas show significant spatial clustering effects. The change of ecological risk in FRB is related to the land use patterns. The ecological risk is negatively related to the expansion of construction land and cultivated land at the county and patch scales. On this basis, the environmental management strategies at different scales are discussed. This study can helpful deepen the understanding of the impact of land use patterns on ecological risk, and can also provide important reference for regional ecological risk management and land use policies.

Measuring property flood resilience (PFR) in UK homes

PurposeDespite the present focus on improving the resilience of homes to flooding in UK flood risk management policy and strategy, a general measurement framework for determining levels of flood resilience in UK homes does not exist. In light of this, the aim of this study was to develop a means to evaluate the levels of resilience in flood-prone homes from the perspective of homeowners'.Design/methodology/approachA quantitative research methodology was employed, with empirical data obtained through a postal survey of homeowners who had experienced flooding. The responses received were then analysed using a combination of statistical techniques including agreement/reliability tests and multiple regression to develop a model of flood resilience.FindingsA predictive model was developed that allows the resilience of a property to be quantified and measured as perceived by homeowners. The findings indicate that the main factors found to influence the level of flood resilience were: property type (PT), presence of cellar/basement (C/B), property wall type (PWT), property ground floor type (PGFT), kitchen unit type (KU), flood experience (FE), flood source (FS) and flood risk level (FRL).Practical implicationsThe resulting model provides unique insights into resilience levels to the benefit of a range of stakeholders including policy makers (such as Defra/Environment Agency), Local Authority flood teams, property professionals, housing associations and homeowners. As a result, homeowners will be in a better position to determine which interventions should be prioritised to ensure better flood protection.Originality/valueThis is the first study of its kind to have rigorously quantified the level of flood resilience for individual homes. This study has quantified the effectiveness of individual resilience measures to derive the first reliable means to measure the overall levels of resilience at the individual property level. This is regarded as a significant contribution to the study of flood risk management through the quantification of resilience within individual UK homes, enabling the prioritisation of interventions and the overall monitoring of resilience.

Developing Risk Management Policies for Healthcare Providers at Critical Care Units

Developing Risk Management Policies for Healthcare Providers at Critical Care Units

Corporate reputation and hedging activities

AbstractThis study examines whether corporate reputation affects derivative hedging. We posit that high‐reputation firms are more likely to engage in hedging due to greater reputation costs and/or their commitment to lower financial risks. We find that high‐reputation firms are more likely to engage in hedging, especially when their hedging efforts or effects are more observable to stakeholders. We also find that high‐reputation firms are less likely to disclose the notional values of hedging positions and that interest rate hedging by high‐reputation firms is detrimental to firm value. Our results shed light on the impact of reputational concerns on corporate risk management and disclosure policies.

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Abstract. Introduction. The activity of banks in foreign exchange markets, which consists in the management of assets and liabilities in foreign currency and in bank metals, is associated with currency risks (one of the elements of market risk), which arise in connection with the use of various currencies and bank metals during conducting banking operations. Risk means the uncertainty associated with the occurrence of any event or its consequences. The continuous functioning of the foreign exchange market is its main feature, which leads to the fact that a bank that has an open position in foreign currency is exposed to currency risk even when it is not working. Under such circumstances, the analysis and assessment of currency risks in the bank becomes very relevant, the results of which will ensure the creation of conditions for its stable and efficient functioning. Purpose. The purpose of the work is the analysis and assessment of the bank's currency risk. Results. The article examines the nature and types of currency risk, analyzes the structure and dynamics of currency assets and liabilities on various grounds. Also, the work identifies the risk of currency operations of JSC "Ukrsibbank" and draws relevant conclusions. Conclusions. The work draws the following conclusions: in the composition of foreign currency assets, a significant share of loans to legal entities is almost 33% and other currency assets - almost 62%, the lowest share is loans to individuals and funds in other banks; the dynamics of all currency assets is not uniform, there is a clear growth trend only in other currency assets, and only through them the bank increases currency assets in general; the largest share in the bank's monetary assets and liabilities is made up of US dollars and Euros; in terms of the number of currencies that the bank uses in foreign exchange operations, the currency portfolio is not diversified, which causes additional risk. Therefore, the bank's foreign exchange risk management policy can be assessed as positive, since banks, in contrast to risks, create reserves for assets from conversion into the reporting currency, in recent years have followed the norms of the foreign exchange position and used favorable trends in exchange rate changes in the formation of foreign currency assets and liabilities.

How corporate social responsibility mediates the relationship between corporate reputation and enterprise risk management: evidence from Spain

Enterprise risk management (ERM) systems lessen the probability of risks harming a firm’s reputation for a number of reasons. First, a high-quality ERM system makes it less likely a firm will suffer a risk-based reputational crisis. Second, ERM systems help companies to behave more responsibly towards all stakeholders, thereby ensuring firms meet stakeholders’ expectations. Third, when a crisis stemming from an uncontrollable risk occurs, a high-quality ERM system helps to reduce the negative impact on reputation because stakeholders will not attribute guilt to a firm which has acted responsibly in its risk management. In this research, we explore the link between corporate reputation and ERM systems together with the role played by corporate social responsibility (CSR) performance as a mediator. Our results support the notion that ERM system quality enhances CSR performance as well as corporate reputation. The results also confirm that ERM systems have a positive impact on corporate reputation via the mediating effect of CSR performance. Companies should therefore use risk management policies to bolster both their CSR and their reputation.