...and Risk Management The Global Financial Crisis and the Efficient Market Hypothesis: What Have We Learned? Contingent Capital vs. Contingent Reverse Convertibles for Banks and Insurance Companies International Insurance Society Roundtable on Risk Management After the Crisis 8 Ray Ball, University of Chicago 17 Christopher L. Culp, Compass Lexecon and University of Chicago 28 Panelists: Geoffrey Bell, Geoffrey Bell & Company; Nikolaus von Bomhard, Munich Re; Prem Watsa and Bijan Khosrowshahi, Fairfax Financial Holdings. Moderated by Brian Duperreault, MMC Lessons from the Financial Crisis on Risk and Capital Management: The Case of Insurance Companies 52 Neil A. Doherty, University of Pennsylvania’s Wharton School of Business, and Joan Lamm-Tennant, Guy Carpenter & Co. and the Wharton School The Theory and Practice of Corporate Risk Management 60 Henri Servaes and Ane Tamayo, London Business School, and Peter Tufano, Harvard Business School Measuring the Contributions of Brand to Shareholder Value (and How to Maintain or Increase Them) Creating Value Through Best-In-Class Capital Allocation 79 John Gerzema, Ed Lebar, and Anne Rivers, Young & Rubicam Brands 89 Marc Zenner, Tomer Berkovitz, and John H.S. Clark, J.P. Morgan Using Corporate Inflation Protected Securities to Hedge Interest Rate Risk 97 L. Dwayne Barney and Keith D. Harvey, Boise State University The Gain-Loss Spread: A New and Intuitive Measure of Risk Assessing...
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...Auditing and Ethical Practice Assessment item 1: Term 3, 2013 Understanding Companies and Their Business Risk Prepared by: Timothy Supandji Table of Contents EXECUTIVE SUMMARY 3 Factors in understanding company and business risk before accepting as New Client 4 Comparison of the Overall Financial Conditions of BHP Billiton Ltd and Rio Tinto Limited during the GFC 6 Explanation of risks associated with BHP and Rio Tinto Ltd during GFC 8 Managing Business Risk: BHP Billiton Ltd Vs Rio Tinto Limited 10 CONCLUSION 11 EXECUTIVE SUMMARY There are four purposes for this report. It attempts to provide description of what factors that the auditors need to consider in understanding a company and assessing business risk before attempting any audit work on a particular client. The second aim is to explain the comparison of financial conditions between BHP Billiton Ltd and Rio Tinto Limited during the Global Financial Crisis that occurred in 2007 to 2008. Further, the risk that is associated with BHP and RIO during the Global Financial Crisis will be explained. Finally, this report intends to explain of which company is better in handling and managing the business risk during the Global Financial Crisis. Factors in understanding company and business risk before accepting as New Client Generally speaking, at the time when there was a Global Financial Crisis, it has detrimental effect to the companies globally with downfall of share prices. Because of these results...
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...The DNA of the CFO A study of what makes a chief financial officer 2010 Our thanks to nearly 700 CFOs who participated in the study and, in particular, to those who shared their insights and personal experience of the role in a series of interviews: Giacomo Baizini CFO, Evraz Ben Noteboom CEO, Randstad Srikanth Balachander CFO, Bharti Airtel Caroline Raggett Managing Director, London financial officers’ practice, Russell Reynolds Associates Evelyn Bourke CFO, Friends Provident Stephen Carver Media and crisis management expert, Cranfield School of Management Ian Dyson (formerly) CFO, Marks & Spencer Luigi Ferraris CFO, Enel Andy Halford CFO, Vodafone Simon Henry CFO, Royal Dutch Shell René Hooft Graafland CFO, Heineken Juha Laaksonen CFO, Fortum Patrick Regan CFO, Aviva Simon Ridley FD, Standard Bank Hans-Peter Ring CFO, EADS Sue Round Head of Investments, Ecclesiastical Robin J Stalker CFO, Adidas Firoz Tarapore CFO, Dubai Aerospace Enterprise Tim Tookey CFO, Lloyds Banking Group Rob Murray CFO, Coca-Cola Hellenic B Document title Additional text In this report Executive summary 2 Contributing to strategy 4 A broader business role 6 Core competencies remain key Future focus on stakeholder communication 10 12 and 18 The CFO’s contribution 14 Staging post or career destination? 20 A toolkit for the aspiring CFO 22 Demographics 26 What makes a CFO 28 ...
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...Risk Management Planning Carvella Bennett Everest University Risk management planning is the process of developing options and actions to enhance opportunities and reduce threats to project objectives. Risk management implementation is the process of executing risk management actions. Effective crisis response begins with effective decision-making. Good initial decisions can make even a catastrophe manageable; bad decisions can fatally exacerbate an otherwise small problem. In both cases, the window of opportunity for initial decision making is extremely small and closes rapidly. Once the moment for decision making has gone, it does not come back. Proper crisis response is about developing a range of emergency management options that can be exercised and that focus on what could happen, not what will happen. This is achieved through practice, and lots of it. It is no easy task getting a crisis management team together for the first time during an unfolding emergency. In all cases, the best crisis management results are delivered on-site and in the same time zone. However centralized a company may be, when it comes to crisis management, even local staffs need to sharpen their crisis management skills because ultimately, those are the ones that will be used when disaster first strikes. When actually organizing a live run-through of the crisis management plan, the scenario should ideally be one in which a business system is disabled. It is better to act this out in a real...
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...INTRODUCTION TO CAPITAL MARKETS What is investment banking? Investment banks act as intermediaries in capital markets, helping the matching of sellers and buyers of various securities and advising institutional investors, government and companies on their investment strategies, on their financing needs (helping them to raise money) and their acquisitions. Two main areas: (1) Securities or capital markets divisions: trading in the equity, fixed income ,FX and commodities markets and advising and intermediating for institutional investors in those markets. (2) Corporate Finance and public finance (often referred to as investment banking) advising corporations and governments on their financing needs, including the underwriting of securities, on their merger and acquisition activities, or on their restructuring. Securities and capital markets divisions Clients are usually * Institutional investors, corporates or public entities, not private clients; * Mutual funds asset managers; * Pension Fund asset managers; * The insurance companies; * Private Banks; * Hedge Funds; * The treasury departments of large banks or large companies. Capital markets divisions * Equity division: equity research, equity sales, equity trading on cash, flow derivatives and structured products * FIRC or FICC (Fixed Income, currencies and derivatives): * Fixed income cash products, interest and credit derivatives...
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...COMPANY: Long Term Capital Management OVERVIEW: The following Case Study addresses an amazing Company called “Long Term Capital Management” (LTCM). This is a fascinating story of big time business and the ignored impact of the omnipresent timeless, Ten Early Warning Signals. These Signals can be controlled and converted into profitable success or perilously ignored at the risk of losses and eventual failure. DATE PREPARED: July 4, 2007 CASE STUDY PREFACE During our three decades of “hands on” Business Survival Consulting” assignments we would constantly push to improve Client profitability. Profit Improvement in one form or another is, of course, the foundation of a successful turnaround. During this process we clarified and expanded upon three axioms that, to a greater or lesser degree, are generally unknown and/or certainly under utilized in the quest to improve corporate profitability in American Business. These three axioms are: AXIOM ONE: “Key People Know” Who knows a company better than the key people in a company? Nobody does! The collective knowledge of key personnel, if properly focused and channeled, can be an omnipotent Profit Improvement force for top management in their Profit Improvement efforts. AXIOM TWO: “Crisis Avoidance and/or Crisis Correction” constitutes the basic operating environment of most “for profit” companies. In its most simple approximation, 20% of Businesses are generally crisis free. The next 60% of Businesses are involved in a series of minor...
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...Managing Information Systems 2014-04-29 1 •Team 1 Approach • Inditex – Owners of the ‘Zara’ Franchise • Summary Overview • Fast Fashion – NOT Retailing • How ZARA / INDITEX works • Their system, organisation & focus points. • The QUESTION’s asked? What should ZARA do? • Should they do it? Why? • Value Chain & VRIN Analysis – (Inimitability is Key) • TOTAL Financial implications versus the Risk. • Diagnosis of Challenges & Recommendations. • People, Processes, Technology. • A Crisis of Coordination • Implementation strategy, communications and Stakeholder Management is KEY! • Summary 2 • ‘63 = House Coat Manufacturer, to Inditex in 2003 • Vertically Integrated Network (Production, DC’s, Retail) • €3.9billion Revenues, delivering €839.3m Op profits. • 1558 Hi-Profile OUTLETS. Stradivarius 10% Zara 34% Bershka 13% Oysho 4% • 8 successful Franchises, • ZARA 531 Stores = 34% - BUT, 75% Revenues • 85% of outlets in Europe, Spain 918. • Highly Profitable - Expanding Globally – FAST. • (Note – 2012 Accounts - €15.9b sales, €3.1b operating profits) Massimo Dutti 16% Kiddys Class 4% Pull & Bear 19% 3 • Fast Fashion Industry Overview • Moving designs from catwalk to store quickly, to capture current fashion trends. • In Store experience MUST be ‘trendy & interesting’ to drive regular visits. • Enables mainstream consumers to take advantage of current clothing styles at lower prices. • Brands Include, H&M, Zara, TopShop, Beneton, Gap Design...
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...resources, financial resources); FM dealing with resource markets; • Integrative view: FM is the multidiscipline based on the integration of 3 disciplinairy management fields: Resource Management, Service Management, Hospitality Management. FM resources • • • • • • • Human resources Material resources Information resources Financial resources Market resources Production & Logistics resources Development resources (Innovation) FM andHospitality Management • The art of welcoming • The conditioning of behaviour • The conditioning of navigation 3 Strategic FM Challenges • What is the dominant orientation of your organization: enabling or making (facilitating or producing)? • Did your FM make the step from supporting to enabling (from reactive to pro-active)? • Did you make the next step in positioning FM: from facility management to enabling leadership (from marching along the choosen road to marking the shining path) The strategic choices • Facility or make • Example Health care • Take hospitals: – Healing patients – Or – Enabling medical professionals to execute medical interventions Context: what is the world around FM Social Economic: a New Economy Geo-Political: The world is not enough Geo-Political: shifting power positions Political-Administrative: relationship business vs. state • Turbulence by crisis • Changing Governance systems • Limited tenability of current models • • • • New Economy disintermediated prosumption multiformity networks/chains...
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...1. Introduction 2 Types of strategy Corporate strategy Diversification Vertical Integration Takeover Entry into new business segments Disinvestments Role of headquarter Competitive strategy Product strategy Advertising measures Price strategy Make of buy Innovation strategy Building up market entry barriers Usage of economies of scale Building up alliances Competitive advantages 1. Company 2. Competitor 3. Customer Unique Selling Proposition The unique feature of a product, which enables to have a competitive advantage over other providers. The marketing concept of the unique selling proposition facilitates the successful promotion of products. Highlighting of an outstanding product feature supports the company in positioning their products and helps to convince consumers of its benefits. Different ways of value of the headquarter 1. Stand-alone Influence Separate influence on the strategies and the performance of the particular business fields 2. Linkage Influence Creating synergies by taking advantages of existing relations between business fields 3. Central Functions and Services Avoidance of redundancies by providing cost-efficient centralised services 4. Corporate Development Design of the business portfolio through purchase, sale and restructuring of business fields Business design The totality of how a company selects its costumers, defines and differentiates its offerings, defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market,...
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...banking business vs. the Federal government staying out of the banking business * In 1830 when Andrew Jackson (the founder of the Democrat Party) was elected president. He terminated the fed government sponsored US Bank, and resolved the conflict. * The fed government basically stayed out of the banking business until the ’30s, when FDR took office, and the fed government intervened deeply into the ‘banking business,’ which was defined by the IRS, FDIC, Comptroller of the Currency, SEC (if public-owned), and State Bank Supervisors etc. * By defining what the ‘business of banking’s was the statutes, regulations, and enforcement personnel administering these laws, bankers were boxed into doing business as defined by state and federal governments. * Still In present day Banks are financial institutions that hold too much control over the economy and if they fail there are enormous consequences hence the need for government bailouts, in which government financial assistance is provided to banks or other financial institutions who appear to be on the brink of collapse. WHY THE NEED FOR REGULATORS * Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines. * To create transparency between banking institutions and the individuals and corporations with whom they conduct business. * To reduce the level of risk to which bank creditors are exposed to. * to reduce the risk of disruption...
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...Case Study Outlines Part One: A New Era Founding Performance P f Trading strategy Mutual Fund & Hedge Fund u ua u d edge u d Part Two: When Genius Failed Downturn: 1998 Russian Financial Crisis Chain Reaction In the end: Bailout & Characters Part Three: Enemies are ourselves Risk Measurement Diligence, Ethics and Honesty Dili Ethi dH t Part One: A NEW ERA Founding of LTCM LTCM was founded in 1994 by John Meriwether, the former vice‐ chairman and head of bond trading at Salomon Brothers t di tS l B th LTCM was a speculative hedge fund based in Greenwich, Connecticut that utilized absolute‐ h l d b l return trading strategies combined with high leverage. The fund's operation was designed to have extremely low overhead; trades were conducted through a partnership with Bear Stearns and hi i h B S d client relations were handled by Merrill Lynch. LTCM Partners John Meriwether Former vice chair and head of bond trading at Solomon Brothers; MBA, University of Chicago Leading scholar in finance; Prof. at Harvard Co-author of Black-Scholes model; Prof. at Stanford St f d Vice chairman of the Fed; Prof. at Harvard; Arbitrage g p at Salomon; former Harvard g group ; Prof. Arbitrage group at Salomon; former Harvard Prof. Arbitrage group at Salomon; Ph D MIT Ph.D. Arbitrage group at Salomon; Ph.D. MIT Bond trader B dt d Executive at Salomon Arbitrage group at Salomon; Master in Finance, LSE Robert C. Merton Myron Scholes David W. Mullins Eric Rosenfeld...
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...Brooklyn College Bus 7240X- Fall, 2011 Prof. Charles H Columbus Midterm Exam- November, 7, 2011 1. What are the key considerations an MNE must address when entering a new geography and what are the new concerns for its Financial Management? Why go Global? The keys considerations are: first, an open marketplace which is the fundamental condition for value creation. Second, a strategic management which is the ability to see business opportunities and to design, develop, and execute a long term plan with the goal to create value. The last thing is the access to capital which is the capability of the MNE to access to affordable capital in order to finance the investments. The international financial management requires an understanding of cultural, historical, the institutional differences such as those affecting corporate governance, the FX risk, the political risk, and the financial instruments. It is good to go global because it generates significant benefits for all shareholders. The theory of comparative advantage provides a basis for explaining and justifying why it is good to go global. Going global can make everybody better off. 2. A corporation has many masters to serve. Who owns the Business? Contrast the two wealth maximization models and how it played into the Porsche/VW saga? Companies are created by individuals or small set of partners. The ownership of a company can go from a 100 percent privately own to 100 percent publicly traded and in between a mixer...
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...Capital Management: Wells Fargo vs. BoA. Bank Management and Financial Services Individual Assignment 2 Report of discussion about banking capital issuecompare 2 banks: Wells Fargo and Bank of America. Prepared by Phan Ngọc Mẫn Student code: FB00422 Class: FB0605. 1|Page Capital Management: Wells Fargo vs. BoA. Content Executive Summary----------------------------------------------------------------------------------3 I. Introduction-----------------------------------------------------------------------------------------------3 1. Theoretical Overview--------------------------------------------------------------------------------------3 a. Bank capital-------------------------------------------------------------------------------------------3 b. Capital Risk of banks---------------------------------------------------------------------------------4 c. Managing capital risk in commercial banks-------------------------------------------------------5 2. Banks’ Profile------------------------------------------------------------------------------------------6 a. Wells Fargo-----------------------------------------------------------------------------------------------6 b. Bank of America-----------------------------------------------------------------------------------------7 c. Differences in economic context-------------------------------------------------------------------7 II. Analysis and Findings-------------------------------------------------------------------------------------7...
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...Liquidity risk & Management-Basic Bank Course Title: Management of Financial Institution Course Code: F-637 Submitted to Tahmina Akter, Assistant Professor department of finance university of Dhaka Submitted by Md Abdullah-Al-Hasan,ID-13007. Md Rukonuzzaman, ID-20026. Ajanta Shukla Tanma,ID-21050 Moin Uddin, Id-20035 AHMED SHARIF, ID-19011. Introductory Part Letter of transmittal 17 August, 2013 Tahmina Akter, Assistant Professor Department of Finance Faculty of Business Studies University of Dhaka Subject: Submission of the Term Paper Dear Madam, We are pleased to present you this term paper titled “Liquidity risk and management-Basic Bank” as partial requirement of the Management of Financial Institution course. Working for this report has been an enlightening & informative experience. Your guideline has been followed in every aspect of preparing this report. With our limited knowledge in this field we have presented what we believed to be relevant and rational information. We have enjoyed working on this report and hope that our work will meet the level of your expectation. We will be always available for any further query. Yours sincerely, Md Abdullah-Al-Hasan,Id-13007. Md Rukonuzzaman, Id-20026. AJANTA SHUKLA TANMA,ID-21050 Moin Uddin, Id-2003 AHMED SHARIF, ID-19011. LETTER OF ACCEPTANCE This report is prepared during the relevant documents...
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...Stock Market Analysis: MANG 6221 Professor Dr. Marta Degl'Innocenti Assignment Length: 3,155 words (Excluding Endnote, Graph, Appendix and Reference) By Group Niagara Waterfall Thanat Pojkasemsin 25390422 Kanchana Leeratsatien 25088866 Leena Phaerakkakit 25712756 Synthia Manik 25665286 Jingwen Liu 25402323 Part A Introduction With the development of financial market, the technical analysis tools play an important role for the security evaluation. According to Penman (2010), investors estimate the stock future prices and trends by collecting and estimate the past prices and information. However, there are some conflict points on the momentum strategies performance, and it is a technical tool with multiple economy factors needs to be considered into. Why do momentum strategies exist? Refer to both behavioural and market-based argumentations. Momentum strategies are the stock analysis stool exists in the financial evaluation process, also in funds and currency investment. According to Chan, Jegadeesh, and Lakonishok J (1996) said, "it is a strategy that buying stocks in a high returns over the past three to twelve months, and selling those that had the poor returns over the same period." In the other words, the outperform stock will remain well...
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