Three essays in risk management in financial institutions

The choice to adopt risk-sensitive measurement approaches for operational risks: the case of Advanced Measurement Approach under Basel II New Capital Accord This paper investigates the choice of the operational risk approach under Basel II requirements and whether the adoption of advanced risk measurement approaches allows banks to save capital. Among the three possible approaches for operational risk measurement, the Advanced Measurement Approach (AMA) is the most sophisticated and requires the use of historical loss data, the application of statistical tools, and the engagement of a highly qualified staff. Our results provide evidence that the adoption of AMA is contingent on the availability of bank resources and prior experience in risk-sensitive operational risk measurement practices. Moreover, banks that choose AMA exhibit low requirements for capital and, as a result might gain a competitive advantage compared to banks that opt for less sophisticated approaches. - Internal Risk Controls and their Impact on Bank Solvency Recent cases in financial sector showed the importance of risk management controls on risk taking and firm performance. Despite advances in the design and implementation of risk management mechanisms, there is little research on their impact on behavior and performance of firms. Based on data from a sample of 88 banks covering the period between 2004 and 2010, we provide evidence that internal risk controls impact the solvency of banks. In addition, our results show that the level of internal risk controls leads to a higher degree of solvency in banks with a major shareholder in contrast to widely-held banks. However, the relationship between internal risk controls and bank solvency is negatively affected by BHC growth strategies and external restrictions on bank activities, while the higher regulatory requirements for bank capital moderates positively this relationship. - The Impact of the Sophistication of Risk Measurement Approaches under Basel II on Bank Holding Companies Value Previous research showed the importance of external regulation on banks' behavior. Some inefficient standards may accentuate risk-taking in banks and provoke a financial crisis. Despite the growing literature on the potential effects of Basel II rules, there is little empirical research on the efficiency of risk-sensitive capital measurement approaches and their impact on bank profitability and market valuation. Based on data from a sample of 66 banks covering the period between 2008 and 2010, we provide evidence that prudential ratios computed under Basel II standards predict the value of banks. However, this relation is contingent on the degree of sophistication of risk measurement approaches that banks apply. Capital ratios are effective in predicting bank market valuation when banks adopt the advanced approaches to compute the value of their risk-weighted assets.

Potential impact of single-risk-factor versus total risk management for the prevention of cardiovascular events in Seychelles.

OBJECTIVE: To assess the prevalence of cardiovascular (CV) risk factors in Seychelles, a middle-income African country, and compare the cost-effectiveness of single-risk-factor management (treating individuals with arterial blood pressure >/= 140/90 mmHg and/or total serum cholesterol >/= 6.2 mmol/l) with that of management based on total CV risk (treating individuals with a total CV risk >/= 10% or >/= 20%).METHODS: CV risk factor prevalence and a CV risk prediction chart for Africa were used to estimate the 10-year risk of suffering a fatal or non-fatal CV event among individuals aged 40-64 years. These figures were used to compare single-risk-factor management with total risk management in terms of the number of people requiring treatment to avert one CV event and the number of events potentially averted over 10 years. Treatment for patients with high total CV risk (>/= 20%) was assumed to consist of a fixed-dose combination of several drugs (polypill). Cost analyses were limited to medication.FINDINGS: A total CV risk of >/= 10% and >/= 20% was found among 10.8% and 5.1% of individuals, respectively. With single-risk-factor management, 60% of adults would need to be treated and 157 cardiovascular events per 100 000 population would be averted per year, as opposed to 5% of adults and 92 events with total CV risk management. Management based on high total CV risk optimizes the balance between the number requiring treatment and the number of CV events averted.CONCLUSION: Total CV risk management is much more cost-effective than single-risk-factor management. These findings are relevant for all countries, but especially for those economically and demographically similar to Seychelles.

Information and risk management during the first trimester care for pregnant women: Some reflections about the ethical challenges and the legal framework in Switzerland. [L'information et la gestion des risques dans le suivi de la grossesse lors du 1er trimestre : quelques réflexions sur le défi éthique et le cadre légal en Suisse.]

The progress in prenatal medicine raises complex questions with respect to the physician-patient relationship. The physician needs to reconcile medical aspects, ethical principles as well as judicial norms. Already, during the first trimester, the physician has to put into practice the schedule combining for each individual pregnancy physical, laboratory and other appropriate exams. Physicians are under the obligation to inform in a clear and comprehensive way without creating unnecessary anxiety for their patients. Legal requirements include informed consent, the respect for the patient's right to self-determination, and compliance with the Swiss federal law on genetic testing, especially with its articles on prenatal screening and diagnosis. This article discusses the complexity of obstetrical practice when it comes to delivering adequate information within the scope of ethical and legal requirements in Switzerland. L'évolution de la médecine prénatale soulève des enjeux complexes dans la relation médecin-patient. Il s'agit de concilier à la fois les aspects médicaux, les principes éthiques et les normes juridiques. Dès le premier trimestre de la grossesse le médecin doit poser le cadre du suivi et des examens appropriés pour chaque grossesse. Son devoir est d'informer de manière claire et précise sans inquiéter inutilement, en respectant l'exigence légale d'un consentement éclairé et plus largement le droit de la patiente à l'autodétermination ainsi que le cadre de la loi fédérale suisse sur l'analyse génétique humaine dans le domaine du dépistage et du diagnostic prénatal. Cet article discute de la complexité de l'information et de l'application des principes éthiques et légaux dans la pratique obstétricale en Suisse.

Current cardiovascular risk management patterns with special focus on lipid lowering in daily practice in Switzerland.

Background: There may be a considerable gap between LDL cholesterol (LDL-C) and blood pressure (BP) goal values recommended by the guidelines and results achieved in daily practice. Design Prospective cross-sectional survey of cardiovascular disease risk profiles and management with focus on lipid lowering and BP lowering in clinical practice. Methods: In phase 1, the cardiovascular risk of patients with known lipid profile visiting their general practitioner was anonymously assessed in accordance to the PROCAM-score. In phase 2, high-risk patients who did not achieve LDL-C goal less than 2.6 mmol/l in phase 1 could be further documented. Results: Six hundred thirty-five general practitioners collected the data of 23 892 patients with known lipid profile. Forty percent were high-risk patients (diabetes mellitus or coronary heart disease or PROCAM-score >20%), compared with 27% estimated by the physicians. Goal attainment rate was almost double for BP than for LDL-C in high-risk patients (62 vs. 37%). Both goals were attained by 25%. LDL-C values in phase 1 and 2 were available for 3097 high-risk patients not at LDL-C goal in phase 1; 32% of patients achieved LDL-C goal of less than 2.6 mmol/l after a mean of 17 weeks. The most successful strategies for LDL-C reduction were implemented in only 22% of the high-risk patients. Conclusion: Although patients at high cardiovascular risk were treated more intensively than low or medium risk patients, the majority remained insufficiently controlled, which is an incentive for intensified medical education. Adequate implementation of Swiss and International guidelines would expectedly contribute to improved achievement of LDL-C and BP goal values in daily practice.

Explaining rapid transitions in the practice of flood risk management

This article draws on empirical material to reflect on what drives rapid change in flood risk management practice, reflecting wider interest in the way that scientific practices make risk landscapes and a specific focus on extreme events as drivers of rapid change. Such events are commonly referred to as a form of creative destruction, ones that reveal both the composition of socioenvironmental assemblages and provide a creative opportunity to remake those assemblages in alternate ways, therefore rapidly changing policy and practice. Drawing on wider thinking in complexity theory, we argue that what happens between events might be as, if not more, important than the events themselves. We use two empirical examples concerned with flood risk management practice: a rapid shift in the dominant technologies used to map flood risk in the United Kingdom and an experimental approach to public participation tested in two different locations, with dramatically different consequences. Both show that the state of the socioenvironmental assemblage in which the events take place matters as much as the magnitude of the events themselves. The periods between rapid changes are not simply periods of discursive consolidation but involve the ongoing mutation of such assemblages, which could either sensitize or desensitize them to rapid change. Understanding these intervening periods matters as much as the events themselves. If events matter, it is because of the ways in which they might bring into sharp focus the coding or framing of a socioenvironmental assemblage in policy or scientific practice irrespective of whether or not those events evolve the assemblage in subtle or more radical ways.

Prototype of a web-based participative decision support platform in natural hazards and risk management

This paper presents the current state and development of a prototype web-GIS (Geographic Information System) decision support platform intended for application in natural hazards and risk management, mainly for floods and landslides. This web platform uses open-source geospatial software and technologies, particularly the Boundless (formerly OpenGeo) framework and its client side software development kit (SDK). The main purpose of the platform is to assist the experts and stakeholders in the decision-making process for evaluation and selection of different risk management strategies through an interactive participation approach, integrating web-GIS interface with decision support tool based on a compromise programming approach. The access rights and functionality of the platform are varied depending on the roles and responsibilities of stakeholders in managing the risk. The application of the prototype platform is demonstrated based on an example case study site: Malborghetto Valbruna municipality of North-Eastern Italy where flash floods and landslides are frequent with major events having occurred in 2003. The preliminary feedback collected from the stakeholders in the region is discussed to understand the perspectives of stakeholders on the proposed prototype platform.

Impact of an intervention to control risk associated with patient transfer.

QUESTION UNDER STUDY: Hospitals transferring patients retain responsibility until admission to the new health care facility. We define safe transfer conditions, based on appropriate risk assessment, and evaluate the impact of this strategy as implemented at our institution. METHODS: An algorithm defining transfer categories according to destination, equipment monitoring, and medication was developed and tested prospectively over 6 months. Conformity with algorithm criteria was assessed for every transfer and transfer category. After introduction of a transfer coordination centre with transfer nurses, the algorithm was implemented and the same survey was carried out over 1 year. RESULTS: Over the whole study period, the number of transfers increased by 40%, chiefly by ambulance from the emergency department to other hospitals and private clinics. Transfers to rehabilitation centres and nursing homes were reassigned to conventional vehicles. The percentage of patients requiring equipment during transfer, such as an intravenous line, decreased from 34% to 15%, while oxygen or i.v. drug requirement remained stable. The percentage of transfers considered below theoretical safety decreased from 6% to 4%, while 20% of transfers were considered safer than necessary. A substantial number of planned transfers could be "downgraded" by mutual agreement to a lower degree of supervision, and the system was stable on a short-term basis. CONCLUSION: A coordinated transfer system based on an algorithm determining transfer categories, developed on the basis of simple but valid medical and nursing criteria, reduced unnecessary ambulance transfers and treatment during transfer, and increased adequate supervision.

Maps as risk mitigation tools. Adaptation of the Swiss hazard assessment and mapping methodology to a Moroccan site: Beni Mellal

Dans le contexte climatique actuel, les régions méditerranéennes connaissent une intensification des phénomènes hydrométéorologiques extrêmes. Au Maroc, le risque lié aux inondations est devenu problématique, les communautés étant vulnérables aux événements extrêmes. En effet, le développement économique et urbain rapide et mal maîtrisé augmente l'exposition aux phénomènes extrêmes. La Direction du Développement et de la Coopération suisse (DDC) s'implique activement dans la réduction des risques naturels au Maroc. La cartographie des dangers et son intégration dans l'aménagement du territoire représentent une méthode efficace afin de réduire la vulnérabilité spatiale. Ainsi, la DDC a mandaté ce projet d'adaptation de la méthode suisse de cartographie des dangers à un cas d'étude marocain (la ville de Beni Mellal, région de Tadla-Azilal, Maroc). La méthode suisse a été adaptée aux contraintes spécifiques du terrain (environnement semi-aride, morphologie de piémont) et au contexte de transfert de connaissances (caractéristiques socio-économiques et pratiques). Une carte des phénomènes d'inondations a été produite. Elle contient les témoins morphologiques et les éléments anthropiques pertinents pour le développement et l'aggravation des inondations. La modélisation de la relation pluie-débit pour des événements de référence, et le routage des hydrogrammes de crue ainsi obtenus ont permis d'estimer quantitativement l'aléa inondation. Des données obtenues sur le terrain (estimations de débit, extension de crues connues) ont permis de vérifier les résultats des modèles. Des cartes d'intensité et de probabilité ont été obtenues. Enfin, une carte indicative du danger d'inondation a été produite sur la base de la matrice suisse du danger qui croise l'intensité et la probabilité d'occurrence d'un événement pour obtenir des degrés de danger assignables au territoire étudié. En vue de l'implémentation des cartes de danger dans les documents de l'aménagement du territoire, nous nous intéressons au fonctionnement actuel de la gestion institutionnelle du risque à Beni Mellal, en étudiant le degré d'intégration de la gestion et la manière dont les connaissances sur les risques influencent le processus de gestion. L'analyse montre que la gestion est marquée par une logique de gestion hiérarchique et la priorité des mesures de protection par rapport aux mesures passives d'aménagement du territoire. Les connaissances sur le risque restent sectorielles, souvent déconnectées. L'innovation dans le domaine de la gestion du risque résulte de collaborations horizontales entre les acteurs ou avec des sources de connaissances externes (par exemple les universités). Des recommandations méthodologiques et institutionnelles issues de cette étude ont été adressées aux gestionnaires en vue de l'implémentation des cartes de danger. Plus que des outils de réduction du risque, les cartes de danger aident à transmettre des connaissances vers le public et contribuent ainsi à établir une culture du risque. - Severe rainfall events are thought to be occurring more frequently in semi-arid areas. In Morocco, flood hazard has become an important topic, notably as rapid economic development and high urbanization rates have increased the exposure of people and assets in hazard-prone areas. The Swiss Agency for Development and Cooperation (SADC) is active in natural hazard mitigation in Morocco. As hazard mapping for urban planning is thought to be a sound tool for vulnerability reduction, the SADC has financed a project aimed at adapting the Swiss approach for hazard assessment and mapping to the case of Morocco. In a knowledge transfer context, the Swiss method was adapted to the semi-arid environment, the specific piedmont morphology and to socio-economic constraints particular to the study site. Following the Swiss guidelines, a hydro-geomorphological map was established, containing all geomorphic elements related to known past floods. Next, rainfall / runoff modeling for reference events and hydraulic routing of the obtained hydrographs were carried out in order to assess hazard quantitatively. Field-collected discharge estimations and flood extent for known floods were used to verify the model results. Flood hazard intensity and probability maps were obtained. Finally, an indicative danger map as defined within the Swiss hazard assessment terminology was calculated using the Swiss hazard matrix that convolves flood intensity with its recurrence probability in order to assign flood danger degrees to the concerned territory. Danger maps become effective, as risk mitigation tools, when implemented in urban planning. We focus on how local authorities are involved in the risk management process and how knowledge about risk impacts the management. An institutional vulnerability "map" was established based on individual interviews held with the main institutional actors in flood management. Results show that flood hazard management is defined by uneven actions and relationships, it is based on top-down decision-making patterns, and focus is maintained on active mitigation measures. The institutional actors embody sectorial, often disconnected risk knowledge pools, whose relationships are dictated by the institutional hierarchy. Results show that innovation in the risk management process emerges when actors collaborate despite the established hierarchy or when they open to outer knowledge pools (e.g. the academia). Several methodological and institutional recommendations were addressed to risk management stakeholders in view of potential map implementation to planning. Hazard assessment and mapping is essential to an integrated risk management approach: more than a mitigation tool, danger maps represent tools that allow communicating on hazards and establishing a risk culture.

Critical review of cancer risk associated with angiotensin receptor blocker therapy.

The role of drugs in new cancer occurrence and cancer-related death is a major concern. Recently, a meta-analysis raised the possibility that angiotensin receptor blockers (ARBs) might have an adverse effect on patients. This generated a significant debate until the publication of two further meta-analyses, neither of which demonstrated an increased risk of new cancer occurrence or cancer-related death with the use of ARBs in patients with hypertension, heart failure, and/or nephropathy. This illustrates that the results of meta-analyses should be interpreted cautiously and critically as bias, such as selection bias, might lead to erroneous conclusions. Overall, the bulk of evidence today indicates that ARBs are not associated with increased cancer risk.