Thesis (DTech(Internal Auditing))-- Cape Peninsula University of Technology, 2012 / Risk, prevalent in all organisational activities influences the achievement or non-achievement of organisational goals. This necessitates the need for a structured process for effective risk management. Traditionally, risk management strategies were centred on insurance solutions, however due to changes in the business landscape, organisations moved towards an integrated, holistic strategy-focused risk discipline. Small and Micro Enterprise (SME) owner-managers are however largely ignorant about the risks faced by their enterprises. They still respond reactively to risk by utilising risk avoidance and risk transfer techniques. These non-structured approaches to risk impede on SME growth and success, limiting their role to providing employment, contributing to investment, and contributing to the economy as a whole. In this research study a SME risk architecture framework that can be used concurrently with corporate governance frameworks as well as the organisation’s performance measurement system is proposed resulting in a structured approach to managing SME risks. The proposed SME architecture framework consists of three interrelated components, namely:  SME risk consciousness, focusing on risk sources most commonly identified as obstacles to SME success and survival.  The SME risk management process that constitutes the steps SME owner-managers should follow in addressing risk sources.  The SME risk management framework providing owner-managers with a mechanism to deal with risks at all organisational levels through effective risk planning, risk implementation and risk evaluation processes.

M.Comm. / The aim of this study was to take a closer look at the modem financial institutions of the world and to determine what adverse conditions these companies face. Banks are some of the strongest organisations in a country, and the banking sector is a major employer. Yet, the risks faced by banks are enormous, and without the prudent and responsible management of these risks banks can find themselves in severe trouble. Recent situations in the South African banking sector underpin this, as several of the small banks in the country went into judicial management or were put out of business because they failed to meet their liquidity requirements. Risk management in banking is one of the most important tasks in the institution. Regardless of the division or type of operation, banks face certain risks. In this study, the researcher looked at the risks described in the literature as the main risks found in the banking environment. Solvency, liquidity, credit, price and operating risks are the risks most commonly discussed in the literature on banking risks. Although the five main risks constitute a serious threat to a bank each in its own right, each risk can be subdivided based on the likelihood of the risk materialising. The researcher therefore subdivided each major risk into subrisks. The question was then posed: Are there any similarities between these risks? The researcher developed a model whereby risks are categorised according to the attributes they have in common. The study classified the risks into the categories of market, credit and other risks. The objective in classifYing known banking risks is to assist the risk management team in a bank to manage similar risks in a similar way. Instead of focussing on each major risk and its multitude of subcategories individually, it is easier to manag~ a set of risks according to their similarities. Furthermore, the researcher wanted to determine which all the banking risks discussed would be universal in the danger they hold to any banking operation or any division operating within a bank. The question was posed: What are the classical risks in banking that would without a doubt lead to bank failure ifleft unmanaged? Liquidity, solvency and credit risks were the risks identified as critical in any banking operation and the risks that history has shown to be most detrimental to the future viability of any bank. Finally, the study looked at the management of these three classical risks from the perspective of determining policy and strategy. The study drew form literature, personal observation and the input of risk and bank management professionals to highlight some ofthe most important elements in credit, solvency and liquidity management.

Since the terrorist attacks on the World Trade Center, New York in September 2001, the focus on terrorism and the ability of society and organisations to withstand such incidents has sharpened considerably. At the same time, business continuity and dealing with crises have moved to the forefront of organisations' awareness, not least due to improved regulatory requirements and guidelines. However, this thesis contends that the current methodological framework for responding to terrorist incidents is flawed, resulting in the same issues becoming evident, over and over again. It is argued that an awareness and adoption of three key risk and crisis management methodologies: Fink's Crisis Management Methodology, Risk Communication and Isomorphic Learning, could improve the analysis of such incidents and hence better the response in future. Three significant terrorist attacks were analysed within the context of contemporary literature and two factors were found to be the main cause of difficulties in managing the response to each of the incidents: communication and an inability to achieve organisational learning. It was argued that part of the reason for this was that organisations did not consider a link between crisis and terrorist incident response management and that learning from past experiences did not go beyond the most superficial level in most instances. This thesis demonstrated how risk and crisis management methodologies could have addressed each of the issues that were identified in the case studies and clarified the contribution that they could make. Of primary importance was the recognition that events that may appear dissimilar are, on examination, frequently intrinsically similar and hence can provide valuable learning opportunities.

Global sourcing has become strategically important for all large capital projects in today’s world. This study identified that 11% to over 51% of the budget spent on large capital projects is absorbed by global sourcing. The complexity of global sourcing requires that a multifaceted due diligence scan of the market dynamics and stakeholder interfaces be conducted to ensure that key strategic elements of projects are well understood. There is evidence that when global sourcing risks and challenges are dealt with through a structured and integrated risk management plan, project cost, time and the right level of project quality can be successfully delivered. Furthermore, experience shows that project decisions that are made purely based on capital cost whilst failing to consider the life cycle cost of equipment in terms of capital expenditure to operational expenditure ratio for the life of the project, may prove counterproductive in the long run. This research study set out to investigate the integrated risk management framework necessary to ensure success in global sourcing for large capital projects. It looked at the impact of global sourcing for large capital projects and how pre-emptive risk management practices help to improve project performance. Global experiences and cumulative knowledge was captured from technical experts and project management teams who have handled large projects in various sectors. As a core focus, the research interrogated the most important criteria necessary to measure and ascertain the impact of non-risk adjusted global sourcing on large capital projects in terms of project time, cost and quality. A quantitative study design was adopted to identify the risk management rules for successful global sourcing and measure their impact. Data was collated from large capital projects in 40 countries, six continents through 89 respondents via an online survey tool authenticating the global perspective of this study. A resulting risk management model derived from the consolidated input seeks to introduce a new dimension to the body of project management knowledge related to the executing of large capital projects. / Dissertation (MBA)--University of Pretoria, 2013. / mngibs2014 / Gordon Institute of Business Science (GIBS) / MBA / Unrestricted

The thesis is composed of three essays on mergers and acquisitions: deal initiation and insider trading. Specifically, it tries to figure out the reasons and managers’ motivation concerning M&A deal initiation as well as analyze insiders’ trades in target and acquiring firms both before and after the takeover public announcement date. Chapter 2 shows that target versus bidder initiated deals differ in two main respects. First, target initiated deals have higher insider and CEO ownership that motivates the management to engage in the sale. Second, target initiated firms are more levered and seem to have higher growth options. This suggests that an important motivation behind the board’s decision to initiate a sale of their firm is to preserve growth options in a situation with potential financial distress. A complementary analysis shows larger differences between deal versus non-deal firms that remain publicly listed. In Chapter 3, we find that target insiders stop selling during 6 months immediately before the public announcement but do not stop selling in the early pre-announcement period. Moreover, we show that target insiders are stronger net buyers before the public announcement in informal sales, cash and financial deals. Furthermore, target insiders in stock deals do not stop selling even immediately before the public announcement, which supports the bidder overvaluation hypothesis. In addition, we find that target insiders change their trading patterns after the deal public announcement. Insiders are stronger net buyers in target initiated deals, formal auctions and cash deals. Chapter 4 shows that, overall, acquirer insiders decrease their purchases and sales to same extent during the 2 months immediately before the public announcement. Concerning deal characteristics, we show that acquirer insiders are stronger net buyers both before and after the announcement date in stock deals relatively to cash deals and in informal sales relatively to formal auctions. The two factors reinforcing each other. For informal sales, acquirer insiders are stronger net buyers in stock deals before the public announcement but change to cash deals after the public announcement.

The banking industry in South Africa is facing three main challenges, namely: continuous change, foreign competition, and increasing levels of risk. These problems flow mainly from cultural diversity, globalisation, and rapid technological development in systems and communication. Decreasing predictability stems to a great extent from a lack of foreknowledge of how globalisation will develop, and how it can influence the South African banking industry in general and holistic risk management (HRM) in particular. Management of the South African banking industry therefore need to rely on crucial intelligence and foreknowledge concerning events, trends and development of (HRM) that affect the profitability and future strategic viability of the whole South African banking industry. At the onset various concepts and processes were emphasised in this study, namely operational risk management, strategic risk management, the risk management culture in the banking industry, the role of risk management in the banking industry, the role of risk management process in the banking industry, corporate governance in the banking industry in South Africa. However, the main purpose of this study was to explore the need and the dynamics of managing risk in the banking industry in a holistic manner. To this end the development of, and trends in (HRM) as part of good corporate governance in the banking industry were researched and documented. The practical aspect of the study was firstly based on the definition and analysis of different categories of risk in the banking industry. The definition and analysis was done in order to cover a broader range of risks the banking industry is facing. Secondly the risk management culture in the banking industry was investigated. Thirdly the role of risk management in the banking industry was explored in detail. Fourthly the risk management process in the banking industry was investigated and explained. Fifthly the link between risk management and corporate governance was explored. Sixthly models developed by Kloman (2000), Lam (2003) and Regester and Larkin (2005) were used as a benchmark to develop a framework for the management of holistic risk in the banking industry. It was concluded that in view of the need in the South African banking industry for a structured means of managing risk holistically, and in view of HRM constituting such a process, there is relevance for the implementation of HRM in the four big banks of the South African banking industry. However, small and unlisted banks do not manage HRM as suggested by the HRM framework. In this regard a number of recommendations were made with respect to managing HRM proactively. A framework based on empirical research and earlier work by Kloman (2000), Lam (2003) and Regester and Larkin (2005) was furthermore suggested for the implementation of HRM in the South African banking industry in the belief that this framework, and the overall research reported in this study could be of theoretical as well as practical value for risk managers in the South African banking industry. / Dr. D. J. Theron (UJ) Dr. T. P. v/d Walt (ABSA)

Corporate turnaround, in comparison to financial distress, is not substantially researched either internationally or locally in South Africa. This study attempts to explore this area of research by developing models that identify financially distressed companies with a potential for turnaround. This analysis examines listed companies on both the JSE Securities Exchange ('JSE') and Alternative Exchange ('AltX') for the period 2007 to 2014 by using available data from iNet BFA. The financial distress model, Taffler's Z-score, is used to identify companies that fall within the sample. Multiple linear discriminant models with interaction variables are used as part of the process to derive the turnaround models. The first model shows that efficiency is a key driver for a successful turnaround. The second model reveals that JSE-listed companies are more likely to survive than AltX companies. This study contributes to the existing research by identifying significant factors for corporate turnaround and summarizing its findings in a practical manner.

During 2006, AAL adopted and implemented its first share repurchase program, which continued up until its suspension in 2008. While management stated that share repurchases would only be done in the interest of shareholders, the repurchase program was disastrous for shareholder value. Management also stated that share repurchases provide the firm with flexibility regarding its capital structure. We investigated the capital structure of AAL for the years 2004 to 2012 from an optimal capital structure perspective. Using a CAPM approach, we find no evidence that AAL targeted or implemented a capital structure, which could be considered optimal.

Includes bibliographical references / This paper provides an assessment of Africa's first "bad bank", the Asset Management Corporation of Nigeria (AMCON) and its role in resolving non-performing loans (NPLs) in the aftermath of the 2008 financial crisis. It is a case study that primarily investigates the effectiveness of AMCON in addressing the banking crisis in Nigeria based on evidence from different sources ranging from economic indicators to media reports and newspaper interviews. The establishment of AMCON in 2010 helped to resolve the non-performing loans crisis in Nigerian banks, through a transparent removal of toxic assets and by providing the affected banks with a fresh start, while eliciting a minimal moral hazard effect as far as financial institutions were concerned . Other African countries such as Ghana are now considering adopting a similar "bad bank" solution. However, the AMCON solution has been at a considerable cost to the Nigerian taxpayers as AMCON has been running at a huge loss, partly funded by the taxpayer through the government. Data analysed in the study cover the period from 2008 to 2013. The analysis showed that the AMCON solution was successful as the balance - sheet sanitization effort helped to neutralize many of the banking sector 's n on - performing loans, and spurred improvements in the sector's aggregate loan book quality with in its first two years . As at December 2012, AMCON had purchased more than 95% of the banking sector's NPLs, leaving the industry's NPLs at less than 5%. This offered banks a fresh start and the leeway to concentrate on building new and sustainable lending models. This outcome of this study supports prior empirical work which only examined bad banks in developed economies (the US A and Europe) and in the Asia Pacific. It should be noted that the "bad bank" concept is new to Africa and so there is very little empirical work on this topic. This study contributes to the discussion by its exposition on the overall positive trends in Nigeria's banking sector post - crisis and the impressive growth in bank credit , GDP and the equity market after the financial crisis.

SAPPI Limited ("SAPPI") is a company that was established in South Africa in the 1930's and has grown into a global player in the paper and pulp industry, as well as the chemical cellulose industry. Historical financing decisions made in the growth phases of the company's life cycle left it with the need to refinance debt obligations payable in the early 2010's. In order to meet these obligations, four callable bonds with high coupon rates denominated in Euro and US Dollar were issued in 2011 and 2012 below investment grade. This study examines the cost at which these high yield bonds were issued by SAPPI and discusses the potential reasoning behind the decisions made by SAPPI in the process to obtain further financing. Financing solutions within the South African market are discussed with the conclusion that the South African listed high yield corporate bond market was not adequate for SAPPI, given its credit rating being below investment grade and the value of funding required. In addition, SAPPI's exposure to foreign currencies through global operations made the Euro and US Dollar denominated bond issues favourable to the business. To illustrate the cost of the bonds issued in both Euro and US Dollar, the second part of this study consists of an analysis of the option‐adjusted spreads at which these bonds were issued. Our analysis involved taking into account the probability of the call provisions being exercised by SAPPI at the date of issue through a detailed application of the option‐adjusted spread methodology and the use of a recombining binomial lattice. Through a quantitative example of the process followed and a discussion of the spreads determined, we indicate the true cost at which finance was obtained by SAPPI for each bond issued. A brief discussion on the hedging decisions taken by SAPPI management on the issuance of the debt has also been included. Furthermore, the retrospective performance of the foreign exchange hedging decisions made have been assessed through movements in global financial markets from the time hedging decisions were enacted up until 30 September 2015.