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.

Conclusions and future directions for sports events management scholarship

The book adopts a unique stakeholder perspective, structured around the groups and individuals who have an interest in and co-create sports events, including organising committees, promoters, sport organisations, spectators, community groups, sponsors, host governments, the media and NGOs. Each chapter addresses a specific stakeholder, defines that stakeholder and its relationships with sports events, describes the managerial requirements for a successful event, assesses current research and directions for future research, and outlines the normative dimensions of stakeholder engagement (such as sustainability and legacy)

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.