M.Comm.

M.Comm. / Every modern-day company is faced with challenges on a daily basis to improve its performance. This challenge stretches further than the financial target that is received from the shareholders every year and boils right down to the day to day operations of a company. How does the company perform according to the market, does the company have a uniqueness that will allow for a competitive advantage, how can costs be reduced in order to create value in terms of shareholders and how to stay the blueprint company with its competitors seen as followers. The objective of this study is to determine the effect that financial risk management in terms of a cell captive insurance facility has on a company, especially the financial side and ultimately to provide a framework on the implementation of a cell captive insurance facility. A cell captive insurance facility stems from the self insurance principle and is tailored to a unique product offered by various insurance companies. It enables a company to insure its frequent losses at a lower premium than the insurance market and all surpluses resulting from the Captive can be regarded as profit to the owner of the captive or used to lower the following year's contribution. In order to obtain a Cell Captive's insurance facility, a company must purchase shares in an insurance company, known as a sponsor, and hereby receive certain insurance amenities. The captive that is now formed enables a company to insure all business related activities against possible risks with a further extension of the definition 'business related activities'. Due to the unlikely event to completely self insure, with regards to the cost implication and bearing the size of the captive in mind to cover all possible financial losses, an underwritten agreement between the cell captive owner and the sponsor insurance company should cater for all catastrophic risks which protects the captive from collapsing, due to a massive loss. With the creation of a cell captive insurance facility, the owner of the captive can extend on all its business related activities and offer insurance products to its employees and clients, with a reasonably reduce rate compared to the insurance market. The success of theses products can be so-good that the financial impact on the captive proofs the products to be self-reliant and even generates an income for the cell captive insurance facility. As a result of the objective to implement effective risk management via a cell captive insurance facility and to create profit by doing so, the results of the Vodacom Group was used in order to emphasize the successfulness of a cell captive insurance facility. Vodacom Group saved or rather refer to the term as "created" a net underwriting profit that amounts to R 3,385,275 in the first three months by using its Cell Captive Insurance Facility. Thats more than enough to prove the financial gain, but the company also benefited from the fact that it now has the ability to educate its managers and their management styles. The captive can no act as the focal point of the Group's risk management effort, by focusing the minds of senior management on the causes of claims and means to combat that.

A dissertation submitted to the Faculty of Science, University of the Witwatersrand, in fulfillment of the requirements for the degree of Master of Science, April 2013. / No abstract provided

by Ho Kwok Tao. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1987. / Bibliography: leaf 48.

by Yau Tak-Kin, Thomas. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1996. / Includes bibliographical references (leaves [52]). / ABSTRACT / TABLE OF CONTENT / Chapter I --- INTRODUCTION --- p.1 / Development of financial derivatives --- p.1 / Chracteristics of financial derivatives --- p.2 / Chapter II --- RISK ENCOUNTERED BY BUSINESS AND ITS MANAGEMENT --- p.3 / Chapter III --- SELECTED DERIVATIVE CASES --- p.7 / Proctor & Gamble --- p.7 / Orange County --- p.10 / Barings Bank plc --- p.12 / Chapter IV --- CLASSIFICATION OF RISK --- p.18 / Credit risk --- p.18 / Market risk --- p.19 / Liquidity risk --- p.19 / Operations risk --- p.20 / Legal risk --- p.20 / Chapter V --- THE RISK MANAGEMENT PROCESS --- p.21 / Risk measurement --- p.22 / Limiting risks --- p.24 / Reporting --- p.25 / Management evaluation and review --- p.26 / Chapter VI --- MANAGEMENT OF PARTICULAR RISK EXPOSURE --- p.28 / Credit risk --- p.28 / Market risk --- p.30 / Liquidity risk --- p.32 / Operations risk --- p.33 / Legal risk --- p.36 / Chapter VII --- MANAGEMENT'S ROLE IN RISK CONTROL --- p.38 / Role of the governing body or other authorizing body --- p.38 / Authorizing body --- p.38 / Written guidelines --- p.39 / Relevant considerations --- p.39 / Authorizing Guidelines --- p.39 / Scope of authorized activity --- p.40 / Guidelines on risk exposure --- p.40 / Role of management --- p.43 / Measurement of risk consistent with prescribed guidelines --- p.43 / Establishment of risk guideline for business units --- p.44 / Data collection and synthesis --- p.44 / Policies for valuation methodology --- p.44 / Frequency of mark to market --- p.45 / Valuation policy --- p.45 / Pricing verification procedures --- p.46 / Model verification procedures --- p.46 / Establish a process for identifying and managing deviations from risk guidelines --- p.46 / Other controls --- p.46 / Legal risk --- p.47 / Operational risk --- p.47 / Designate authority to commit on trades --- p.47 / Role of external audit functions --- p.48 / "Approve internal controls for documentation, adequacy of operational procedures and risk- reduction procedures" --- p.48 / Provide for an adequate level of professional expertise for risk monitoring and risk management --- p.48 / Chapter VIII --- CONCLUSION --- p.49 / REFERENCES

The integration of risk management in major projects within the construction and oil and gas industries has never been more significant especially as these projects are becoming larger and more complex. The increased requirement for risk to be efficiently managed is also supported by the inflated amount of legislation in this area, mainly due to incidents like the Piper Alpha installation in 1988. Hence risk management is developing into a multifarious process which needs continual update throughout the project’s life. Even though the legislation has expanded, there is still no standardisation to which the firms are to perform risk management. Therefore, improvements to the techniques that are used are possible and necessary. Current methods are too conservative resulting in substantial costs and less understanding about the risks themselves. Therefore, more detailed risk management techniques are imperative. This thesis determines the five steps of risk management which are essential to achieve a controlled risk environment. The research involves an in-depth questionnaire canvassing the largest companies within the construction and the oil and gas industries in the UK, who are constantly involved with major projects. The questionnaire ascertains important information which will assist companies in selecting the most pertinent and successful techniques for each of the five steps. A case study from the oil industry is introduced and proposals are made to improve the quantitative risk analysis methodology. This, in turn, will aid the decision making process when confronted with technical risks and will ultimately produce a more controlled risk environment. In addition, valuable information will be gained due to a better understanding of the risks as well as maximising profits. A new risk analysis method is subsequently derived which is based on the use of the @RISK package. It is intended that the results of this thesis will be incorporated in future risk analyses.

This research explores the evolution of risk management practices, from traditional to enterprise risk management (ERM), in Iran's automotive industry. It also investigates the alignment of ERM and performance management, and their mutual impact. Academic and industry studies reveal that throughout recent decades there has been an increasing interest into ERM development and its alignment with performance management. However, despite the increase in ERM adoption over recent years, ERM is still in the early stages of implementation and requires further research and development. Moreover, a literature review revealed that the literature in respect of the alignment of ERM with performance management is limited and those existing are mostly of a visionary nature and lack practical implementation. Therefore, the gap identified through the literature review led to the development of a theoretical framework within this research, exploring the main organisational elements significant to the effective alignment of ERM and performance management and its implementation, which will provide practitioners and academics with practical guideline regarding such alignment. This research was completed through two empirical stages within the context of automotive industry. The primary data were collected and analysed through a mixed methods approach: 30 semi-structured interviewees were conducted with senior managers within the automotive industry (Qualitative). In the second stage, automotive industry professionals' responses were gathered from 101 survey questionnaires (Quantitative). The theoretical and empirical findings of this research confirm that in the recent decades, risk management has been evolving and transforming from its traditional approach to a strategic foundation, leading organisations towards competitive advantage and value creation. This research also indicates that aligning ERM with organisational performance management is critical in establishing a sustainable ERM and enhancing business performance over time. Based on the empirical findings of this research supported by theoretical findings, a lack of support from senior managers for effective ERM implementation and its alignment with performance management is considered as one of the significant challenges of sustainable ERM. In addition, a lack of ERM infrastructure and shareholders' poor understanding of ERM remains as challenging factors in aligning ERM with performance management. To the Researcher's best of knowledge, there is very limited literature into alignment of ERM and performance management in automotive industry. Therefore, this research's main contribution to the body of knowledge is the development of an effective framework for automotive industry, aligning ERM with organisational performance management, along with guidance for its implementation in practice. The key limitation associated with this research is that, due to complexity of ERM and its incorporation with other management functions and various organisational elements in the developed framework (Chapter 7, Section 7-1), it might be difficult somewhat to manage at the beginning of the framework adoption. It should be emphasised that the framework has been developed for those organisations that have a good understanding of ERM principles. So, this limitation might apply to those with inadequate knowledge of ERM. In addition, the developed aligning framework addresses the challenges and concerns of automotive industry organisations in aligning ERM with performance management. Applying this research in other sectors and industries provides the opportunity to investigate the potential changes and/or collaboration of certain elements of the framework based on the business area that the organisation operates in. The Researcher recommends further investigation into intangible organisational factors, such as how critical ERM culture could be effective in alignment of ERM with performance management. Moreover, the Researcher recommends that as ERM is growing quickly, future studies should continue to reveal and correlate new factors into the current framework. It is further recommended that future researchers could attempt to measure the benefits as well as the shortcomings associated with implementation of the aligning framework. This enables management with in organisations to improve the framework's advantage and to attempt to overcome its limitations.

Yeung, Wing Chuen. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2004. / Includes bibliographical references (leaves 68-70). / Abstracts in English and Chinese. / Abstract --- p.i / Acknowledgement --- p.iii / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Background Study --- p.4 / Chapter 2.1 --- Liquidity Management --- p.4 / Chapter 2.2 --- Default Prediction Analysis --- p.7 / Chapter 2.3 --- The Merton Model --- p.10 / Chapter 3 --- Insolvency Model --- p.15 / Chapter 3.1 --- Insolvency Probability --- p.16 / Chapter 3.2 --- Factors Affecting Insolvency Probability --- p.19 / Chapter 3.3 --- Chapter Summary --- p.29 / Chapter 4 --- "Profitability, Liquidity and Insolvency" --- p.30 / Chapter 4.1 --- Profitability and Liquidity --- p.31 / Chapter 4.2 --- Modified Insolvency Probability --- p.34 / Chapter 4.3 --- Chapter Summary --- p.38 / Chapter 5 --- Decision on Optimal Liquidity Level --- p.39 / Chapter 5.1 --- Expected Loss in case of Insolvency --- p.40 / Chapter 5.2 --- Optimal Liquidity Level --- p.43 / Chapter 5.3 --- Numerical Example --- p.46 / Chapter 5.4 --- Chapter Summary --- p.49 / Chapter 6 --- Liquidity Strategies --- p.50 / Chapter 6.1 --- Liquidity Strategies --- p.51 / Chapter 6.2 --- Scenario Tests --- p.54 / Chapter 6.3 --- Chapter Summary --- p.59 / Chapter 7 --- Conclusions --- p.60 / Chapter A --- Fibonacci Algorithm --- p.62 / Chapter B --- Stimulation Results --- p.64 / Bibliography --- p.68

The ongoing shift from Defined Benefit (DB) pension plans to Defined Contribution (DC) pension plans in private sectors has transferred investment risk and longevity risk from pension providers to individuals. Professional advice on how to best generate retirement incomes from accumulated pension savings is therefore in great demand. A common solution is buying an immediate annuity; however the immediate annuity market has long been experiencing low demand. Another solution is following a safe drawdown rate during retirement; however this exposes retirees to the risk of outliving their pension savings. In recent years, behavioral factors have been successful in explaining individuals’ decision-making process, this thesis is therefore devoted to the investigation of the low demand of immediate annuities by considering behavioral models; and the use of annuity products in optimal decumulation strategy designs. This thesis has two major contributions. First, both Cumulative Prospect Theory (CPT) and Hyperbolic discount model can explain the low demand of immediate annuities and suggest that people would be willing to purchase deferred annuities. This has laid a research foundation for introducing and promoting the deferred annuity product. Second, we provide an optimal partial annuitisation strategy involving deferred annuities in a utility maximisation decumulation plan. In the proposed strategy the retirement period is divided into two stages: a stage where pensioners use their savings to cover their living expenses and a second stage where a payment stream from deferred annuities is available. This strategy effectively helps retirees manage the longevity risk at advanced ages and turns the drawdown plan from accumulated savings into an easier decision than before – because of a fixed rather than unknown drawdown period.

In finance the existence of corporate risk management is due to imperfections in financial markets. One of the main imperfections is associated with the cost of corporate risk that firms assume. Costly corporate risk creates a set of frictional costs and thereby decreases corporate value. Financial corporations manage their risk to reduce the expected value of frictional costs and enhance shareholders' value, and do so using a wide variety of tools. This dissertation primarily considers an insurance company as a special type of financial corporation leveraged by risky debt, and investigates the existence of risk management incentives in insurance in the presence of frictional costs such as financial distress costs and costs caused by the convexity of the corporate tax rate. Here one of the main tool of risk hedging is reinsurance, a classical tool for risk transfer in insurance, and this dissertation investigates demand for reinsurance in insurer value creation. Insurer risk management problems are also investigated here in a dynamic setting, where the main objective is to find optimal reinsurance and dividend payments under which the expected present value of future dividends is maximised. This dissertation also generalizes some classic actuarial results of reinsurance optimization under the mean-variance criterion. In this work optimal reinsurance is found endogenously for different reinsurance premium principle using standard methods of convex analysis. Finally this work considers an integrated market consisting of insureds, insurers and reinsurers, and studies the effect of the presence of reinsurance in this market on insurance price.