The aim of this study was to suggest ways to use enterprise risk management (ERM) effectively towards achieving strategic objectives at East London Industrial Development Zone. The results of the research will contribute to the set of tools which business can utilise in effective business planning and achieve sustainability of enterprises. Enterprise risk management provides stakeholders with reasonable assurance that management has taken due care in drawing up strategies aligned with their appetite for risk. The objective was to investigate the utilisation of Enterprise Risk Management at East London Industrial Development Zone. The literature review revealed shortcomings of the traditional risk management strategy. Examples of the shortcomings are its preoccupation with hazard risks and its disconnection with other functions in an organisation. ERM has emerged as the organisation wide approach to the handling of risk. Effectively integrated with strategy-setting and performance management, ERM strengthens opportunity-seeking behaviour by helping directors and managers develop the confidence that they truly understand the risks inherent in the organization’s strategy and have the capabilities in place to manage and monitor those risks. The assessment of risks after the strategy formulation process results in defective risk management. The result could be strategic objectives that are unrealistic and risk management that is just an appendage to performance management. The empirical study consisted of face-to-face interviews using semi-structured questionnaires. The respondents were Business Unit Managers at East London Industrial Development Zone who advised on current practice of ERM in the organization. The main findings of the empirical investigation revealed that ERM started with organisational survival in mind but ended up being a compliance activity. Also, ERM is under-resourced as there are no dedicated ERM financial and human resources. The organization’s unstructured and informal approach to ERM could place the strategic objectives at risk. Recommendations conclude the investigation and address the shortcomings and improvements that can be made to the utilisation of ERM within the organization. The recommendations are ensuring strong commitment towards ERM and widening the participation of all employees in ERM; developing an ERM road map; allocation of resources to ERM initiative; development of a business case for ERM; training of all managers and all employees on ERM; and focusing on low-hanging return, which may result in quicker realisation of the value added by ERM to the organization.

This thesis is concerned with the study of flood plains and the flood hazard in England and Wales. Flood plains form an important resource which is only successfully utilised by the reduction of the flood hazard. The extent of the flood hazard in a study area, the problem of assessing flood damage, and the perception of the flood hazard and adjustment to it, are all investigated in order to suggest ways in which floods may be reduced. The flood hazard is a widespread phenomenon affecting most parts of the study area of this dissertation which consists of the Severn, Wye and Usk catchments, and a group of catchments in Glamorgan. Most major settlements extend into flood risk areas, and require flood alleviation programmes. Flood damage assessment is found to be a major problem which adversely affects our ability to optimise flood plain resource use. The assessment of potential flood damages based directly upon actual damage data is found to be impracticable. Instead, standard flood damage information, based upon actual flood damage data, is developed for residences. This allows the computation of potential residential flood damage. The important problem of flood hazard adjustment is considered in a study of the preconditions of flood hazard perception and individual and community adjustment at study sites. The adjustment process is found to be conditioned by flood experience, spatial variations in the hazard, access to information and adjustment evaluation, whilst personality traits do not appear to be directly important. At the community level, unconventional combinations of adjustment are found to be of value, although low levels of public awareness of flood risk pose a serious problem. Flood hazard reduction can be improved in this country by explicit management of flood plains, by improved economic analyses, and by the application of behavioural principles.

No description available.

The purpose of the research undertaken in this thesis is twofold: a) to test the relationship between a security analyst's perception of risk based upon financial statement data and overall market return and b) to determine the relationship between the practitioners concept of risk and risk as outlined in the literature. The main data sources for the thesis were the Financial Post computer tape from which "accounting" measures of risk were derived and stock exchange price quotations from which "economic" or "traditional" risk measures were determined. "Accounting" measures of risk considered included the coefficient of variation, standard deviation and mean-absolute deviation of the earnings stream variables, net operating income, net income and net income plus depreciation. The "traditional" or "economic" measures computed were the standard deviation of return and the beta coefficient or volatility index. Arguments were then presented for the relevance of each measure in describing stock market risk. To determine any relationship among various risk measures, a correlation and sectoral analysis was undertaken. The correlation analysis indicated a significant relationship existed among certain "accounting" and "economic" risk measures and in general, this relationship was supported by the sectoral analyses. To indicate the relationship among the risk measures and overall return, a graphical analysis was undertaken. Mixed results were obtained in this analysis, with certain measures of risk displaying a more significant risk/return relationship than did others. Thus, it appears that there does exist some degree of association between "accounting" and "traditional" measures of risk as indicated by the analyses undertaken in this thesis. What the literature is measuring as risk could possibly then be a reflection of what the security analyst views as stock market risk. However, there may be other factors which play an important role in the practitioners formation of risk estimates, factors which are, as of yet, non-quantifiable. / Business, Sauder School of / Graduate

A description of the events that preceeded an actual capital investment decision illustrates the importance of uncertainty in the decision process and provides a basis for developing criteria related to the needs of the decision maker in dealing with uncertainty. The sequence of events leading to the acceptance or rejection of a capital investment proposal is best characterized as a decision process in which uncertainty in the input information is reduced to a level consistent with the risk assuming preferences of the firm. The use of formal methods to relate economic benefits, uncertainty, and the risk assuming preferences of the firm within a single framework has been suggested and two methods, employing subjective probabilities as their distinguishing characteristic, are presented for analysis. The theory of subjective probability is found to gain acceptance only if specific assumptions are judged to be acceptable. A second set of assumptions also requires acceptance to justify utilization of the theory in any given practical situation. The analysis of the two methods, in relation to the criteria developed from the actual example, indicates that complete formalization cannot be attained in that no acceptable means of formally incorporating analysis of the risk assuming preferences of the firm is provided. The use of subjective probabilities serves only to formally combine economic benefits and uncertainty. Use of the resulting probability distributions must be based on an acceptance of the underlying assumptions of the theory and serve only as an aid to judgement. Any decision for the use of subjective probability distributions must rest with the individual decision maker. / Business, Sauder School of / Graduate

Although we live in a world of considerable uncertainty and chance, most capital investment decisions consider the element of risk only qualitatively, if at all. The believed risk should be an explicit and quantitative part of the normal excess present value or excess rate of return method of investment analysis. These risks are described by the subjective probability distribution of possible investment outcomes and the coefficient of variation of this distribution is a measure of the relative risk. At the same time, only incremental risk is relevant which depends upon the existing earnings risk as well as the project earnings risk and the coefficient of association between these streams. Risk bears on the investment valuation through the investor's attitude which is conditioned by his sense of economic wealth and his psychological reaction to the risk phenomenon. This felt risk can be quantified through the investor's trade-off between income and risk, or his utility of money function. This is then used to modify the uncertain expected income to an equivalent certain income which is then evaluated in the normal way. However, this is only feasible for individual investors or small groups of co-investors. For corporate investment decisions it is preferable to relate the risk to a variable rate of required return or market discount. This rate then enables the uncertain expected income to be evaluated directly In the usual manner. This method is applicable on any entity basis including the individual project which is the unit of investment decision. Here the venture has a unique risk with an appropriate capital structure and cost of capital funds. In fact, this method of evaluation depends upon the existence of a valuation function expressing the cost of corporate capital under risk. The cost of capital has been a difficult concept to define and measure while the aspect of risk has received little attention. Thus the rigorous Modigliani and Miller statement of the valuation of earnings under risk is highly significant. Here earnings risk is classified on the basis of equal coefficient of variation and perfect correlation. The use of debt capital creates financial risk but displays cost advantages under tax. However, leverage is restrained by an interest rate function which is related to financial risk and the uncertainty of creditor payments. Implicit in the formulation of this hypothesis is an investor loss aversion attitude which might be broadened into a risk aversion basis of valuation. The comprehensive hypothesis, with a point of minimum cost of capital, provides a strong theoretical position but is difficult to empirically validate. The valuation of after-tax earnings under variable risk can be inferred from the Modigliani and Miller hypothesis. From this can be derived a general expression for the marginal value of an investment under risk. This includes the special case, usually assumed, where the investment income is of equivalent risk and perfectly correlated to the existing corporate income. The method may be used to evaluate alternative financing arrangements and mutually exclusive projects as well as insurance proposals. This variable rate of discount or return concept provides a direct and intuitively appealing means of adding another dimension to the analysis of investment opportunities. Although there is need for theoretical development, empirical verification and organizational acceptance of this approach, it is perhaps a basis for improved corporate investment decisions under risk. / Business, Sauder School of / Graduate

This thesis presents a technique for analysing the relationships between the number of securities in a diversified portfolio and portfolio return and variance of return. It includes an analytical and descriptive presentation of the concepts and objectives of portfolio analysis in a theoretical framework. The material presented is used as a vehicle to introduce an empirical analysis of the portfolio selection process. For the empirical analysis a model is developed to simulate the selection process for the optimum portfolio. This is similar to that derived by using the quadratic programming technique of the Markowitz model. The utility function used for the selection of the optimal portfolio at each stage of diversification is of the form suggested by Farrar. The ex post data for the empirical analysis consists of ten samples of fifteen securities selected from the Financial Post Data Bank and only common stock is considered. The period covered is from 1959 to 1969 using annual data. The results derived show the form of the efficient portfolio frontier under varying degrees of aversion to risk. The optimum portfolio for either a mildly risk averse or an extremely risk averse investor should consist of approximately four to six securities under the assumptions of the model. / Business, Sauder School of / Graduate

La dette souveraine est un instrument puissant de la politique publique. Avec sa croissance rapide dans les pays développés, d'une part, et le changement fondamental de sa structure dans les pays en développement d'autre part, comprendre les déterminants du risque souverain est devenu un sujet de préoccupation majeur pour les chercheurs et les investisseurs. Cette thèse étudie les aspects du risque de défaut dans les économies avancées et émergentes. La partie théorique présente le risque de défaut souverain. Les principaux résultats montrent que le choix de la devise d'émission représente un aspect important du profil de risque de défaut d'un Etat.Dans la première, une analyse détaillée des défauts souverains en utilisant une nouvelle base de données qui inclut 100 pays observés sur la période 1996-2012 a été conduite. Les résultats montrent que la décision d'un gouvernement de faire défait diffère sensiblement selon la dénomination de la monnaie et du type des détenteurs de la dette publique. La seconde étude a permis d'apporter un nouvel éclairage sur le rating souverain. Elle démontre que les pays dont la dette est en grande partie - ou entièrement - libellée dans leur propre monnaie bénéficient d'un avantage considérable sur les pays qui émettent en devise étrangère. Dans la dernière section empirique, le prix de marché du risque souverain a été exploré. L'étude montre que les facteurs globaux influent sur la rémunération des investisseurs pour la tenue du risque souverain, mais pas le risque lui-même.Les principaux résultats impliquent que toute modélisation du risque de défaut souverain appelle à une distinction entre devise locale et devise étrangère. / Sovereign debt is a powerful instrument of the public policy. With its dramatic increase in the western economies, on the one hand, and the fundamental change of its structure in the emerging markets, on the other, understanding the determinants of the sovereign default risk has became a subject of major concern for both researchers and investors. This dissertation investigates aspects of sovereign default risk in advanced and emerging economies.The theoretical section explores the sovereign default risk. The main results show that the choice of the currency of issue represents an important aspect of the sovereign's risk profile.Three empirical studies have been conducted. In the first, a detailed analysis of the sovereign defaults using a new database which includes 100 countries observed over the period 1966-2012 has been conducted. The results show that sovereigns typically default under different economic and financial conditions depending on the bond's currency denomination and the investor's base.The key contribution of the second research is to assess the importance of the currency of issuance in the rating of sovereign debt. The study demonstrates that countries whose debt is largely - or entirely - denominated in their own currency enjoy a substantial advantage over government issuing debt in foreign currency.The last empirical section explores the market price ofs overeign risk. It arugues that the default probability on sovereign bonds is unrelated to global factors.The main results imply that any sovereign default risk modeling requires a distinction between local currency and foreign currency.

This thesis consists of two essays. Each essay addresses a research problem involving some aspects of uncertainty and financial economics. Essay 1 deals with the general question of whether classical results in risk aversion and portfolio choice based on expected utility hypothesis are robust with respect to recent works in nonlinear utility theories generalizing expected utility. We investigate the implications of an axiomatic generalization called weighted utility theory along with the weaker, but unaxiomatized linear Gateaux utility. We establish the equivalence among three definitions of individual global risk aversion, i.e., in terms of conditional certainty equivalent, mean preserving spread, and conditional risky-asset demand, without any differentiability assumptions about the preference functional. The only requirement is that the preference ordering be complete, transitive, consistent with first-degree stochastic dominance, and continuous in distribution. The equivalence between the first two definitions is also extended to a comparative context. We also identify the necessary and sufficient condition for the single risky asset to be a normal good to a weighted utility maximizer with concave lottery-specific utility functions. Unlike its expected utility counterpart, which depends only on the agent's initial wealth and preferences, this condition also depends on the characteristics of the risky asset. The second essay examines the role of a sequential competitive bidding process in the endogenous determination of interest rates and the corresponding allocation of loans and savings in a widely observed class of informal financial markets called the 'rotating credit association'. Optimal bidding strategies are obtained for individual agents with concave and time-additive utility functions. After deriving some comparative statics and efficiency implications of the individual optimal bidding strategy, we impose further restrictions, including risk neutrality, to obtain a tractable form of a Nash equilibrium bidding strategy. This yields, for each agent, an ex post borrowing, as well as lending, interest rate depending on the history of the realized winning bids, including the one for the period in which he won the auction. Weighted by the Nash equilibrium-induced probability of winning in each period, ex ante borrowing and lending interest rates result. / Business, Sauder School of / Graduate

The first two experiments examined the relationship between risk and trust behaviour in two field situations. The third experiment was a replication of Wright, Maggied, and Palmer (1975). A conceptualization of trust, which included the factors: disposition, risk assessment (level of risk and interpersonal variables), and behavioural intention was outlined. The subject group was composed of 240 female undergraduates enlisted on the premises of the main library at the University of Victoria, Canada. In the first two experiments, a between groups' trust behaviour was compared over conditions of low and high manipulated risk. In both experiments, trust behaviour, which was found to vary significantly over risk conditions, was compared with ratings of risk assessment and scores obtained on Rotter's Interpersonal Trust Scale (ITS). Preliminary indications are that trust behaviour is not significantly related to risk-taking as reflected by subjects' choice of prize for completing the experiment. The third experiment did not replicate the results of Wright, et al. (1975) and showed no relationship between the number and type of questions asked by high or low scorers on the ITS. / Arts, Faculty of / Psychology, Department of / Graduate