Implicit discount rates and fisheries management : is there a relationship?

Fishers are faced with multiple risks, including unpredictability of future catch rates, prices and costs. While the latter are largely beyond the control of fisheries managers, effective fisheries management should reduce uncertainty about future catches. Different management instruments are likely to have different impacts on the risk perception of fishers, and this should manifest itself in their implicit discount rate. Assuming licence and quota values represent the net present value of the flow of expected future profits, then a proxy for the implicit discount rate of vessels in a fishery can be derived by the ratio of the average level of profits to the average licence/quota value. From this, an indication of the risk perception can be derived, assuming higher discount rates reflect higher levels of systematic risk. In this paper, we apply the capital asset pricing model (CAPM) to determine the risk premium implicit in the discount rates for a range of Australian fisheries, and compare this with the set of management instruments in place. We test the assumption that rights based management instruments lower perceptions of risk in fisheries. We find little evidence to support this assumption. although the analysis was based on only limited data.

The effectiveness of traffic policing in reducing traffic crashes

Many governments throughout the world rely heavily on traffic law enforcement programs to modify driver behaviour and enhance road safety. There are two related functions of traffic law enforcement, apprehension and deterrence, and these are achieved through three processes: the establishment of traffic laws, the policing of those laws, and the application of penalties and sanctions to offenders. Traffic policing programs can vary by visibility (overt or covert) and deployment methods (scheduled and non-scheduled), while sanctions can serve to constrain, deter or reform offending behaviour. This chapter will review the effectiveness of traffic law enforcement strategies from the perspective of a range of high-risk, illegal driving behaviours including drink/drug driving, speeding, seat belt use and red light running. Additionally, this chapter discusses how traffic police are increasingly using technology to enforce traffic laws and thus reduce crashes. The chapter concludes that effective traffic policing involves a range of both overt and covert operations and includes a mix of automatic and more traditional manual enforcement methods. It is important to increase both the perceived and actual risk of detection by ensuring that traffic law enforcement operations are sufficiently intensive, unpredictable in nature and conducted as widely as possible across the road network. A key means of maintaining the unpredictability of operations is through the random deployment of enforcement and/or the random checking of drivers. The impact of traffic enforcement is also heightened when it is supported by public education campaigns. In the future, technological improvements will allow the use of more innovative enforcement strategies. Finally, further research is needed to continue the development of traffic policing approaches and address emerging road safety issues.

Forecasting volatility and correlation : the role of option implied measures

Forecasts of volatility and correlation are important inputs into many practical financial problems. Broadly speaking, there are two ways of generating forecasts of these variables. Firstly, time-series models apply a statistical weighting scheme to historical measurements of the variable of interest. The alternative methodology extracts forecasts from the market traded value of option contracts. An efficient options market should be able to produce superior forecasts as it utilises a larger information set of not only historical information but also the market equilibrium expectation of options market participants. While much research has been conducted into the relative merits of these approaches, this thesis extends the literature along several lines through three empirical studies. Firstly, it is demonstrated that there exist statistically significant benefits to taking the volatility risk premium into account for the implied volatility for the purposes of univariate volatility forecasting. Secondly, high-frequency option implied measures are shown to lead to superior forecasts of the intraday stochastic component of intraday volatility and that these then lead on to superior forecasts of intraday total volatility. Finally, the use of realised and option implied measures of equicorrelation are shown to dominate measures based on daily returns.

Estimating the parameters of stochastic volatility models using option price data

This article describes a maximum likelihood method for estimating the parameters of the standard square-root stochastic volatility model and a variant of the model that includes jumps in equity prices. The model is fitted to data on the S&P 500 Index and the prices of vanilla options written on the index, for the period 1990 to 2011. The method is able to estimate both the parameters of the physical measure (associated with the index) and the parameters of the risk-neutral measure (associated with the options), including the volatility and jump risk premia. The estimation is implemented using a particle filter whose efficacy is demonstrated under simulation. The computational load of this estimation method, which previously has been prohibitive, is managed by the effective use of parallel computing using graphics processing units (GPUs). The empirical results indicate that the parameters of the models are reliably estimated and consistent with values reported in previous work. In particular, both the volatility risk premium and the jump risk premium are found to be significant.

Flood risk information, actual floods and property values: A quasi-experimental analysis

Hedonic property price analysis tells us that property prices can be affected by natural hazards such as floods. This paper examines the impact of flood-related variables (among other factors) on property values, and examines the effect of the release of flood risk map information on property values by comparing the impact with the effect of an actual flood incidence. An examination of the temporal variation of flood impacts on property values is also made. The study is the first of its kind where the impact of the release of flood risk map information to the public is compared with an actual flood incident. In this study, we adopt a spatial quasi-experimental analysis using the release of flood risk maps by Brisbane City Council in Queensland, Australia, in 2009 and the actual floods of 2011. The results suggest that property buyers are more responsive to the actual incidence of floods than to the disclosure of information to the public on the risk of floods.

Investment decision-making under risk (reliability) and uncertainty for infrastructure asset management

Risks and uncertainties are inevitable in engineering projects and infrastructure investments. Decisions about investment in infrastructure such as for maintenance, rehabilitation and construction works can pose risks, and may generate significant impacts on social, cultural, environmental and other related issues. This report presents the results of a literature review of current practice in identifying, quantifying and managing risks and predicting impacts as part of the planning and assessment process for infrastructure investment proposals. In assessing proposals for investment in infrastructure, it is necessary to consider social, cultural and environmental risks and impacts to the overall community, as well as financial risks to the investor. The report defines and explains the concept of risk and uncertainty, and describes the three main methodology approaches to the analysis of risk and uncertainty in investment planning for infrastructure, viz examining a range of scenarios or options, sensitivity analysis, and a statistical probability approach, listed here in order of increasing merit and complexity. Forecasts of costs, benefits and community impacts of infrastructure are recognised as central aspects of developing and assessing investment proposals. Increasingly complex modelling techniques are being used for investment evaluation. The literature review identified forecasting errors as the major cause of risk. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. For risks that cannot be readily quantified, assessment techniques commonly include classification or rating systems for likelihood and consequence. The report outlines the system used by the Australian Defence Organisation and in the Australian Standard on risk management. After each risk is identified and quantified or rated, consideration can be given to reducing the risk, and managing any remaining risk as part of the scope of the project. The literature review identified use of risk mapping techniques by a North American chemical company and by the Australian Defence Organisation. This literature review has enabled a risk assessment strategy to be developed, and will underpin an examination of the feasibility of developing a risk assessment capability using a probability approach.

Entrepreneurship and family firms : a case study in growth and survival

Entrepreneurial marketing has gained popularity in both the entrepreneurship and marketing disciplines in recent times. The success of ventures that have pursued what are considered non-traditional marketing approaches has been attributed to entrepreneurial marketing practices. Despite the multitude of marketing concepts and models, there are prominent venture successes that do not conform to these and have thus been put in the ''entrepreneurial'' box. One only has to look to the ''Virgin'' model to put this in context. Branson has proven for example that not ''sticking to the knitting'' can work with the ways the Virgin portfolio has been diversified. Consequently, an entrepreneurial orientation is considered a desirable philosophy and has become prominent in such industries as airlines and information technology. Miles and Arnold (1991) found that entrepreneurial orientation is positively correlated to marketing orientation. They propose that entrepreneurial orientation is a strategic response by firms to turbulence in the environment. While many marketing successes are analysed in hindsight using traditional marketing concepts and strategies, there are those that challenge standard marketing textbook recommendations. Marketing strategy is often viewed as a process of targeting, segmenting and positioning (STP). Academics and consultants advocate this approach along with the marketing and business plans. The reality however is that a number of businesses do not practice these and pursue alternative approaches. Other schools of thought and business models have been developing to explain differences in orientation such as branding (Keller 2001), the service-dominant logic (Vargo and Lusch 2004) and effectuation logic (Sarasvathy 2001). This indicates that scholars are now looking to cognate fields to explain a given phenomenon beyond their own disciplines. Bucking this trend is a growing number of researchers working at the interface between entrepreneurship and marketing. There is now an emerging body of work dedicated to this interface, hence the development of entrepreneurial marketing as an alternative to the traditional approaches. Hills and Hultman (2008:3) define entrepreneurial marketing as ''a spirit, an orientation as well as a process of passionately pursuing opportunities and launching and growing ventures that create perceived customer value through relationships by employing innovativeness, creativity, selling, market immersion, networking and flexibility.'' Although it started as a special interest group, entrepreneurial marketing is now gaining recognition in mainstream entrepreneurship and marketing literature. For example new marketing textbooks now incorporate an entrepreneurial marketing focus (Grewal and Levy 2008). The purpose of this paper is to explore what entrepreneurial approaches are used by entrepreneurs and their impact on the success of marketing activities. Methodology/Key Propositions In order to investigate this, we employ two cases: 42Below, vodka producers from New Zealand and Penderyn Distillery, whisky distillers from Wales. The cases were chosen based on the following criteria. Firstly, both companies originate from small economies. Secondly, both make products (spirits) from locations that are not traditionally regarded as producers of their flagship products and thirdly, the two companies are different from each other in terms of their age. Penderyn is an old company established in 1882, whereas 42Below was founded only in 1999. Vodka has never been associated with New Zealand. By the same token, whisky has always been associated with Scotland and Ireland but never been with Wales. Both companies defied traditional stereotypes in marketing their flagship products and found international success. Using a comparative a case study approach, we use Covin and Slevin's (1989) set of items that purport to measure entrepreneurial orientation and apply a qualitative lens on the approaches of both companies. These are: 1. cultural emphases on innovation and R&D 2. high rate of new product introduction 3. bold, innovative product development 4. initiator proactive posture 5. first to introduce new technologies and products 6. competitive posture toward competitor 7. strong prolictivity for high risk, high return projects 8. environment requires boldness to achieve objectives 9. when faced with risk, adopts aggressive, bold posture. Results and Implications We find that both companies have employed entrepreneurial marketing approaches but with different intensities. While acknowledging that they are different from the norm, the specifics of their individual approaches are dissimilar. Both companies have positioned their products at the premium end of their product categories and have emphasised quality and awards in their communication strategies. 42Below has carved an image of irreverence and being non-conformist. They have unashamedly utilised viral marketing and entered international markets by training bartenders and hosting unconventional events. They use edgy language such as vodka university, vodka professors and vodka ambassadors. Penderyn Distillery has taken a more traditional approach to marketing its products and portraying romantic images of age-old tradition of distilling as key to their positioning. Both companies enjoy success as evidenced by industry awards and international acclaim.

Predicting behaviour to reduce stroke risk in at-risk populations : the role of beliefs

Aims: Changing behaviour to reduce stroke risk is a difficult prospect made particularly complex because of psychological factors. This study examined predictors of intentions and behaviours to reduce stroke risk in a sample of at-risk individuals, seeking to find how knowledge and health beliefs influenced both intention and actual behaviour to reduce stroke risk. Methods: A repeated measures design was used to assess behavioural intentions at time 1 (T1) and subsequent behaviour (T2). One hundred and twenty six respondents completed an online survey at T1, and behavioural follow-up data were collected from approximately 70 participants 1 month later. Predictors were stroke knowledge, demographic variables, and beliefs about stroke that were derived from an expanded health belief model. Dependent measures were: exercise and weight loss, and intention to engage in these behaviours to reduce stroke risk. Findings: Multiple hierarchical regression analyses showed that, for exercise and weight loss respectively, different health beliefs predicted intention to control stroke risk. The most important exercise-related health beliefs were benefits, susceptibility, and self-efficacy; for weight loss, the most important beliefs were barriers, and to a lesser degree, susceptibility and subjective norm. Conclusions: Health beliefs may play an important role in stroke prevention, particularly beliefs about susceptibility because these emerged for both behaviours. Stroke education and prevention programmes that selectively target the health beliefs relevant to specific behaviours may prove most efficacious.

Risk-assessment practices in the private rental sector : implications for low-income renters (Final Report)

This report focuses on risk-assessment practices in the private rental market, with particular consideration of their impact on low-income renters. It is based on the fieldwork undertaken in the second stage of the research process that followed completion of the Positioning Paper. The key research question this study addressed was: What are the various factors included in ‘risk-assessments’ by real estate agents in allocating ‘affordable’ tenancies? How are these risks quantified and managed? What are the key outcomes of their decision-making? The study builds on previous research demonstrating that a relatively large proportion of low-cost private rental accommodation is occupied by moderate- to high-income households (Wulff and Yates 2001; Seelig 2001; Yates et al. 2004). This is occurring in an environment where the private rental sector is now the de facto main provider of rental housing for lower-income households across Australia (Seelig et al. 2005) and where a number of factors are implicated in patterns of ‘income–rent mismatching’. These include ongoing shifts in public housing assistance; issues concerning eligibility for rent assistance; ‘supply’ factors, such as loss of low-cost rental stock through upgrading and/or transfer to owner-occupied housing; patterns of supply and demand driven largely by middle- to high-income owner-investors and renters; and patterns of housing need among low-income households for whom affordable housing is not appropriate. In formulating a way of approaching the analysis of ‘risk-assessment’ in rental housing management, this study has applied three sociological perspectives on risk: Beck’s (1992) formulation of risk society as entailing processes of ‘individualisation’; a socio-cultural perspective which emphasises the situated nature of perceptions of risk; and a perspective which has drawn attention to different modes of institutional governance of subjects, as ‘carriers of specific indicators of risk’. The private rental market was viewed as a social institution, and the research strategy was informed by ‘institutional ethnography’ as a method of enquiry. The study was based on interviews with property managers, real estate industry representatives, tenant advocates and community housing providers. The primary focus of inquiry was on ‘the moment of allocation’. Six local areas across metropolitan and regional Queensland, New South Wales, and South Australia were selected as case study localities. In terms of the main findings, it is evident that access to private rental housing is not just a matter of ‘supply and demand’. It is also about assessment of risk among applicants. Risk – perceived or actual – is thus a critical factor in deciding who gets housed, and how. Risk and its assessment matter in the context of housing provision and in the development of policy responses. The outcomes from this study also highlight a number of salient points: 1.There are two principal forms of risk associated with property management: financial risk and risk of litigation. 2. Certain tenant characteristics and/or circumstances – ability to pay and ability to care for the rented property – are the main factors focused on in assessing risk among applicants for rental housing. Signals of either ‘(in)ability to pay’ and/or ‘(in)ability to care for the property’ are almost always interpreted as markers of high levels of risk. 3. The processing of tenancy applications entails a complex and variable mix of formal and informal strategies of risk-assessment and allocation where sorting (out), ranking, discriminating and handing over characterise the process. 4. In the eyes of property managers, ‘suitable’ tenants can be conceptualised as those who are resourceful, reputable, competent, strategic and presentable. 5. Property managers clearly articulated concern about risks entailed in a number of characteristics or situations. Being on a low income was the principal and overarching factor which agents considered. Others included: - unemployment - ‘big’ families; sole parent families - domestic violence - marital breakdown - shift from home ownership to private rental - Aboriginality and specific ethnicities - physical incapacity - aspects of ‘presentation’. The financial vulnerability of applicants in these groups can be invoked, alongside expressed concerns about compromised capacities to manage income and/or ‘care for’ the property, as legitimate grounds for rejection or a lower ranking. 6. At the level of face-to-face interaction between the property manager and applicants, more intuitive assessments of risk based upon past experience or ‘gut feelings’ come into play. These judgements are interwoven with more systematic procedures of tenant selection. The findings suggest that considerable ‘risk’ is associated with low-income status, either directly or insofar as it is associated with other forms of perceived risk, and that such risks are likely to impede access to the professionally managed private rental market. Detailed analysis suggests that opportunities for access to housing by low-income householders also arise where, for example: - the ‘local experience’ of an agency and/or property manager works in favour of particular applicants - applicants can demonstrate available social support and financial guarantors - an applicant’s preference or need for longer-term rental is seen to provide a level of financial security for the landlord - applicants are prepared to agree to specific, more stringent conditions for inspection of properties and review of contracts - the particular circumstances and motivations of landlords lead them to consider a wider range of applicants - In particular circumstances, property managers are prepared to give special consideration to applicants who appear worthy, albeit ‘risky’. The strategic actions of demonstrating and documenting on the part of vulnerable (low-income) tenant applicants can improve their chances of being perceived as resourceful, capable and ‘savvy’. Such actions are significant because they help to persuade property managers not only that the applicant may have sufficient resources (personal and material) but that they accept that the onus is on themselves to show they are reputable, and that they have valued ‘competencies’ and understand ‘how the system works’. The parameters of the market do shape the processes of risk-assessment and, ultimately, the strategic relation of power between property manager and the tenant applicant. Low vacancy rates and limited supply of lower-cost rental stock, in all areas, mean that there are many more tenant applicants than available properties, creating a highly competitive environment for applicants. The fundamental problem of supply is an aspect of the market that severely limits the chances of access to appropriate and affordable housing for low-income rental housing applicants. There is recognition of the impact of this problem of supply. The study indicates three main directions for future focus in policy and program development: providing appropriate supports to tenants to access and sustain private rental housing, addressing issues of discrimination and privacy arising in the processes of selecting suitable tenants, and addressing problems of supply.

Applying data mining to assess crash risk on curves

The wide range of contributing factors and circumstances surrounding crashes on road curves suggest that no single intervention can prevent these crashes. This paper presents a novel methodology, based on data mining techniques, to identify contributing factors and the relationship between them. It identifies contributing factors that influence the risk of a crash. Incident records, described using free text, from a large insurance company were analysed with rough set theory. Rough set theory was used to discover dependencies among data, and reasons using the vague, uncertain and imprecise information that characterised the insurance dataset. The results show that male drivers, who are between 50 and 59 years old, driving during evening peak hours are involved with a collision, had a lowest crash risk. Drivers between 25 and 29 years old, driving from around midnight to 6 am and in a new car has the highest risk. The analysis of the most significant contributing factors on curves suggests that drivers with driving experience of 25 to 42 years, who are driving a new vehicle have the highest crash cost risk, characterised by the vehicle running off the road and hitting a tree. This research complements existing statistically based tools approach to analyse road crashes. Our data mining approach is supported with proven theory and will allow road safety practitioners to effectively understand the dependencies between contributing factors and the crash type with the view to designing tailored countermeasures.

Risk management in the Lusoponte concession : a case study of the two bridges in Lisbon, Portugal

The case study of Lusoponte illustrates the concession awarded by the Portuguese Government to finance, design, build and operate two bridges over the Tagus in Lisbon, Portugal. It includes an overview of the project's background and an analysis of the main risk categories stating both the actual risks encountered and the mitigation measures adopted. Throughout the project a great attention was given to whole life cycle costs, and gains in efficiency and cost control. Among the lessons that can be learned from both the public and private sector is that a complete risk management analysis must include not only the technical factors but also a realistic assessment of environmental and social risks. These were the risks that were somewhat overseen and that caused the main problems to the project's development.

Diversification and value-at-risk

A pervasive and puzzling feature of banks’ Value-at-Risk (VaR) is its abnormally high level, which leads to excessive regulatory capital. A possible explanation for the tendency of commercial banks to overstate their VaR is that they incompletely account for the diversification effect among broad risk categories (e.g., equity, interest rate, commodity, credit spread, and foreign exchange). By underestimating the diversification effect, bank’s proprietary VaR models produce overly prudent market risk assessments. In this paper, we examine empirically the validity of this hypothesis using actual VaR data from major US commercial banks. In contrast to the VaR diversification hypothesis, we find that US banks show no sign of systematic underestimation of the diversification effect. In particular, diversification effects used by banks is very close to (and quite often larger than) our empirical diversification estimates. A direct implication of this finding is that individual VaRs for each broad risk category, just like aggregate VaRs, are biased risk assessments.

The level and quality of Value-at-Risk disclosure by commercial banks

In this paper we study both the level of Value-at-Risk (VaR) disclosure and the accuracy of the disclosed VaR figures for a sample of US and international commercial banks. To measure the level of VaR disclosures, we develop a VaR Disclosure Index that captures many different facets of market risk disclosure. Using panel data over the period 1996–2005, we find an overall upward trend in the quantity of information released to the public. We also find that Historical Simulation is by far the most popular VaR method. We assess the accuracy of VaR figures by studying the number of VaR exceedances and whether actual daily VaRs contain information about the volatility of subsequent trading revenues. Unlike the level of VaR disclosure, the quality of VaR disclosure shows no sign of improvement over time. We find that VaR computed using Historical Simulation contains very little information about future volatility.

Not-for-profits and risk accountability : insuring the third sector

Not for profit organisations face significant challenges in managing organisational risk. In this regard not-for-profits are not unique but they are distinguishable from their 'for-profit' counterparts in that they are less likely to have the resources to find sufficient risk management strategies and plans, are very vunerable to cyclical changes in the insurance market and are not usually in a position to pass on the costs of increased premiums to third parties such as consumers of their services. This article explores the nature and extent of risks faced by the not-for-profit sector; the appropriateness and scope of risk management to reduce and manage the likelihood and incidence of risk; and the types of insurance and options to cover risks that materialise. It concludes with a recommendation for a potential course of action.

Educational stress among Chinese adolescents : measurement, risk factors and associations with mental health

Academic pressure among adolescents is a major risk factor for poor mental health and suicide and other harmful behaviours. While this is a worldwide phenomenon, it appears to be especially pronounced in China and other East Asian countries. Despite a growing body of research into adolescent mental health in recent years, the multiple constructs within the ‘educational stress’ phenomenon have not been clearly articulated in Chinese contexts. Further, the individual, family, school and peer influencing factors for educational stress and its associations with adolescent mental health are not well understood. An in-depth investigation may provide important information for the ongoing educational reform in Mainland China with a special focus on students’ mental health and wellbeing. The primary goal of this study was to examine the relative contribution of educational stress to poor mental health, in comparison to other well-known individual, family, school and peer factors. Another important task was to identify significant risk factors for educational stress. In addition, due to the lack of a culturally suitable instrument for educational stress in this population, a new tool – the Educational Stress Scale for Adolescents (ESSA) was initially developed in this study and tested for reliability and validity. A self-administered questionnaire was used to collect information from convenient samples of secondary school students in Shandong, China. The pilot survey was conducted with 347 students (grades 8 and 11) to test the psychometric properties of the ESSA and other scales or questions in the questionnaire. Based on factor analysis and reliability and validity testing, the 16-item scale (the ESSA) with five factors showed adequate to good internal consistency, 2-week test-retest reliability, and satisfactory concurrent and predictive validity. Its factor structure was further demonstrated in the main survey with a confirmatory factor analysis illustrating a good fit of the proposed model based on a confirmatory factor analysis. The reliabilities of other scales and questions were also adequate to be used in this study. The main survey was subsequently conducted with a sample of 1627 secondary school (grades 7-12) students to examine the influencing factors of educational stress and its associations with mental health outcomes, including depression, happiness and suicidal behaviours. A wide range of individual, family, school and peer factors were found to have a significant association with the total ESSA and subscale scores. Most of the strong factors for academic stress were school or study-related, including rural school location, low school connectedness, perceived poor academic grades and frequent emotional conflicts with teachers and peers. Unexpectedly, family and parental factors, such as parental bonding, family connectedness and conflicts with parents were found to have little or no association with educational stress. Educational stress was the most predictive variable for depression, but was not strongly associated with happiness. It had a strong association with suicide ideation but not with suicide attempts. Among five subscales of the ESSA, ‘Study despondency’ score had the strongest associations with these mental health measures. Surprising, two subscales, ‘Self-expectation’ and ‘Worry about grades’ showed a protective effect on suicidal behaviours. An additional analysis revealed that although academic pressure was the most commonly reported reason for suicidal thinking, the occurrence of problems in peer relationships such as peer teasing and bullying, and romantic problems had a much stronger relationship with actual attempts. This study provides some insights into the nature and health implications of educational stress among Chinese adolescents. Findings in this study suggest that interventions on educational stress should focus on school environment and academic factors. Intervention programs focused on educational stress may have a high impact on the prevalence of common mental disorders such as depression. Efforts to increase perceived happiness however should cover a wider range of individual, family and school factors. The importance of healthy peer relationships should be adequately emphasised in suicide prevention. In addition, the newly developed scale (the ESSA) demonstrates sound psychometric properties and is expected to be used in future research into academic-related stress among secondary school adolescents.