Credit risk mitigation that can be applied by commercial banks in assessing the lending decision /credit risk when advances and equity investments are considered for BEE classified companies. / A research report presented to the Graduate School of Business Leadership, University of South Africa / The previous political dispensation limited black people’s participation in the South African economy. Poor credit records, lack of training, resulting in skills and capacity gaps further limited entry into the lending market. These aspects are considered the main limitations in obtaining finance for the Small, Medium and Micro Enterprises (SMMEs). This research report focuses on how credit risk can be mitigated by commercial banks in lending to Black Economic Empowerment (BEE) companies in the medium to large market. Exploratory research was conducted using various methods to achieve methodological triangulation. These methods consisted of a literature review, interviewing experts in the field and case studies. A qualitative research approach was followed. It was found that the lack of own contribution and security were still prevalent in the medium to large market, but the quality of management (little training and skills) was deemed not to be a limitation as suitable credit risk mitigants were identified. No credit risk mitigants were identified to mitigate poor credit records. It is postulated that by adopting and applying the identified credit risk mitigants, commercial banks can increase their success rate in lending to BEE companies. It will further assist in the transformation of black people and compliance with the Financial Services Charter. It is recommended that a similar study be conducted in the agriculture, hunting, forestry and fishing industry. The reasons why BEE companies applications are declined could also be investigated. Further studies could also explore other external factors such as economical, legal and social that could have an influence on the funding of BEE companies.

Areas underlain by dolomite pose a risk for sinkhole and doline development and subsequently have serious implications towards the safe planning of towns. Research also indicates that almost all sinkholes and dolines formed on dolomitic areas were man-induced and may be contributed to a lack of informed decision making by town planners. Consequently, town-planning decisions must have a guiding plan to avoid unsuitable development on such areas. Such a guiding plan was identified as a Dolomite Risk Management Plan (DRMP). A DRMP has in recent years become a legal responsibility, to be implemented where development is taking place on areas underlain by dolomite according to SANS 1936 and the Geoscience Amendment Act, (16 of 2010). There however currently exists a need to determine to what extent a DRMP contributes to the town planning decisions making process. The aim of this study is to determine to what extent currently existing Dolomite Risk Management Plans contribute to a town planning decision-making process by means of the analysis of four case studies. Four case studies were assessed against a framework compiled through a literature study of all applicable legislation to determine to which extent each complies with the compulsory legislation in South Africa needed to guide safe and sustainable development. The study indicated that a need existed for a DRMP to guide town-planning decisions because it is people‟s constitutional right to be protected and to live in a safe environment. It was also concluded, through the random sampling and assessment of available results from four case studies against criteria from applicable legislation, that currently only 50% are capable of informing and guiding town planning decisions adequately. / M (Environmental Management), North-West University, Potchefstroom Campus, 2015

Areas underlain by dolomite pose a risk for sinkhole and doline development and subsequently have serious implications towards the safe planning of towns. Research also indicates that almost all sinkholes and dolines formed on dolomitic areas were man-induced and may be contributed to a lack of informed decision making by town planners. Consequently, town-planning decisions must have a guiding plan to avoid unsuitable development on such areas. Such a guiding plan was identified as a Dolomite Risk Management Plan (DRMP). A DRMP has in recent years become a legal responsibility, to be implemented where development is taking place on areas underlain by dolomite according to SANS 1936 and the Geoscience Amendment Act, (16 of 2010). There however currently exists a need to determine to what extent a DRMP contributes to the town planning decisions making process. The aim of this study is to determine to what extent currently existing Dolomite Risk Management Plans contribute to a town planning decision-making process by means of the analysis of four case studies. Four case studies were assessed against a framework compiled through a literature study of all applicable legislation to determine to which extent each complies with the compulsory legislation in South Africa needed to guide safe and sustainable development. The study indicated that a need existed for a DRMP to guide town-planning decisions because it is people‟s constitutional right to be protected and to live in a safe environment. It was also concluded, through the random sampling and assessment of available results from four case studies against criteria from applicable legislation, that currently only 50% are capable of informing and guiding town planning decisions adequately. / M (Environmental Management), North-West University, Potchefstroom Campus, 2015

This purpose of the research is to investigate the relationship between the implementation of an Enterprise Risk Management (ERM) and corporate governance within the public sector. Furthermore, the study focused on the role of internal audit in ERM implementation as well as the relationship between ERM and risk communication. Questionnaires designed to collect data were e-mailed to risk managers; internal auditors and senior managers. The survey confirmed a positive association between the implementation of an ERM framework and corporate governance as well as risk communication. The majority of respondents further confirmed that corporate governance concerns were the main driving force behind the implementation followed by the impact of HIV/AIDS on their respective organisations. Of those surveyed 38% confirmed that their ERM process is embedded and they have also created the position of chief risk officer or similar. However, it is important to note that the role of internal audit in ERM implementation is not fully integrated.

Operational risk has become an increasingly important topic within financial institutions of late, resulting in an increased spend by financial service organisations on operational risk management solutions. While this move is positive, evidence has shown that information technology implementations have tended to have low rates of success. Research highlighted that a series of defined critical success factors could reduce the risk of implementation failure. Investigations into the literature revealed that no critical success factors had been defined for the implementation of an operational risk management system. Through a literature study, a list of 29 critical success factors was identified. To confirm these factors, a questionnaire was developed. The questionnaire was distributed to an identified target audience within the South African financial services community. Reponses to the questionnaire revealed that 27 of the 29 critical success factors were deemed important and critical to the implementation of an operational risk management system. / Business Management / M. Com. (Business Management)

The purpose of this thesis is to demonstrate the need for enhanced accounting methodology for financial instruments which are traded in the global financial markets. The thesis proposes an accounting framework within which the value-at-risk of financial instruments can be disclosed in the financial statements of enterprises. The thesis considers accounting developments in recent years and analyses the latest proposals suggested by international accounting bodies. It furthermore contemplates the requirements of the Bank for International Settlements in terms of capital adequacy and value-at-risk requirements. In order to provide a meaningful analysis of the subject matter of financial instruments, the various market risks pertaining to the accounting of financial instruments are discussed and considered in terms of their application to the underlying bu. siness of the enterprise. - Extensive analysis is done of valuation techniques and the mathematical concepts of value-atrisk. In this regard the pioneering works of professor Philippe Jorion of the University of California is used to illustrate the application of value-at-risk. The objective of this comprehensive analysis of value-at-risk is to suggest a meaningful method to account for risk exposures in financial instruments and ensure greater transparency in terms of disclosure. In this regard the thesis follows the guidelines proposed by the International Accounting Standards Committee in terms of recognition (definitions}, measurement (valuation}, presentation (classification} and disclosure (terms, conditions and accounting policies} of financial instruments. Consideration is also given to global accounting harmonisation and a number of accounting concerns which are presently unresolved. In this regard certain hedge issues as well as the differences between accrual accounting and fair value accounting are considered. Disclosure requirements are analysed in detail, especially in respect of value-at-risk accounting. Finally, the thesis illustrates the significant growth of products and instruments in the financial markets and the severe financial impact it has in terms of global capital and global financial losses. / Financial Accounting / DCom (Applied Accountancy)

Die verkeerdelike posisionering van risikobestuur binne organisasies kan die rapporteringskanaal van die risikobestuurder beinvloed. Daar is ook merkbare verskille ten opsigte van risikobeheer aktiwiteite (bv. Sekuriteit en Beroepsgesondheid en-Veiligheid, ens.) Die term "risikobestuurder" word dikwels gebruik vir verskeie posbenamings, byvoorbeeld geboue- of fasilitiete bestuurder, en skep nie alleen verwarring nie, maar bevorder ook nie eenheidsdenke binne die organisasie nie. Risikobestuur het topbestuurstatus binne die organisasie, maar het ook sekere unieke probleme - soos vertragings in besluitnemings- en kommunikasieprosesse. Die oplossing le in die opgradering van die risikobestuurder se posvlak tot die van topbestuurslid waar risikobestuursaangeleenthede op hoer vlak aangespreek kan word. / Police Practice / M.A. (Polisiekunde)

In this thesis the rationales of corporate risk management, as well as the implementation of different risk management strategies and the use of risk management instruments in Croatian and Slovenian companies have been investigated. Based on arguments arising from the review of the literature, we have proposed several hypotheses. We have tested whether the decision to hedge or not, and the decision to hedge with derivatives made by Croatian and Slovenian non-financial companies, is a function of six factors – financial distress costs, agency costs, capital market imperfections and costly external financing, taxes, managerial utility maximisation and hedge substitutes. We have also tested the assumption that corporate risk management is more developed or has different rationales among Slovenian than among Croatian companies. On the basis of our research results, it could be concluded that the explored hedging rationales have little predictive power in explaining corporate risk management decisions both in Croatian and Slovenian companies. The evidence based on univariate and multivariate empirical relations between the decision to hedge or use derivatives in Croatian companies and the predicted theories of hedging fails to provide support for any of the tested hypotheses but one - capital market imperfections and costly external financing. The univariate analysis and multivariate regression conducted for Slovenian companies have revealed that there is no statistically significant explanatory variable for the decision to hedge; therefore we can conclude it is not dependent on any of the predicted theories of hedging. The decision to use derivatives, however, has been shown as dependent on the size of the company. The multivariate test has proven a positive relation between the use of derivatives and the size of Slovenian companies, which supports the informational and transactional scale economies argument that larger firms will be more likely to use derivatives. The analysis conducted to explore differences between risk management practices in Slovenian and Croatian companies has shown statistically significant evidence that Slovenian companies use all types of derivatives, especially structured derivatives, more intensively than Croatian companies. Additionally, Croatian companies use simple risk management instruments like natural hedging to a greater extent in comparison with Slovenian companies. These findings are consistent with our research prediction that Slovenian companies have more advanced risk management practices than Croatian companies.

The research presented in this thesis considers the question of whether individual-level risk preferences are consistent or inconsistent across decision domains. For example, do people make the same decisions with respect to work, health and finance? Some previous authors have suggested that risk preferences are inconsistent, e. g. Kahneman and Tversky (1979), while others have put forward the idea that people have generalised tendencies to take or avoid risks, e. g. Sitkin and Pablo (1992). The work of Sitkin and Pablo was drawn upon to develop hypotheses concerning the conceptualisation and construction of risk propensity. Risk propensity was operationalised as the degree of consistency of cross-domain risk preferences. It was proposed that a propensity to take or avoid risks is associated with whether individuals have consistent tendencies across different decision domains, that personality will be a key predictor of risk propensity, and that inconsistent cross-domain risk preferences will be associated with risk domain-specific cognitive and emotional aspects of decision making. A survey measure was developed to assess risk and decision preferences both across and within the domains of work, health and finance. Biographical and personality factors were also measured. The sample comprised 360 participants drawn from five sample groups chosen to capture a range of risk preferences. The results showed that risk propensity can be conceptualised and measured in terms of the consistency of cross-domain risk preferences. People who were consistent in their risk preferences were characterised by the personality traits of emotional stability, low extroversion, low openness and high agreeableness. Additionally, consistent risk preferences were associated with relative consistency of attention to situational information and perceived risk. The majority of participants, however, had different risk preferences in different domains, and showed variability in their decision preferences. The implications of the research for understanding risk propensity and risk management are discussed.

The dissertation consists of two essays on insurance markets and regulation. The first essay studies the timing of state-level tort reform enactments between 1971 and 2005. Using discrete time hazard models, we find the level of litigation activity---as measured by incurred liability insurance losses, the number of lawyers, and tort cases commenced---to be the most important and robust determinant of tort reform adoption. Political-institutional factors and regional effects---such as Republican control of the state government, single party control of the legislature and governorship, and a (relatively) conservative political ideology among a state’s Democrats---are also associated with quicker reform adoption. In the second essay, we identify the effect of public guarantees on market discipline by exploiting the rich variation in U.S. state guarantees of property-liability insurer obligations. We find government guarantees significantly reduce the sensitivity of premium growth to changes in financial strength ratings, and that this reduced sensitivity applies to both price and volume changes. The effects are concentrated among insurers rated A- or lower by A.M. Best, the leading financial strength rating agency in the insurance industry. For downgraded insurers, we find that premium growth in business not covered by state guarantees falls in relation to growth in its covered business, with the estimate of the difference being as high as 15% for A- rated insurers and 10% for insurers rated below A-.