Project controlling and risk management in German machine and plant engineering industry

Tutkielman tavoitteena on määritellä projektikontrolloinnin ja - riskijohtamisen roolit ja toiminnot saksalaisissa kone- ja tehdassuunnitteluteollisuusyrityksissä. Tämä on kvalitatiivinen tutkielma, jossa käytetään voimakkaasti kuvailevia metodeita. Materiaali tutkimuksen empiiriseen osaan kerättiin kyselykaavakkeen avulla. Kyselykaavakkeiden tulokset käsiteltiin Microsoft Office Access- ohjelmalla ja analysoitiin Microsoft Office Excel- ohjelmalla ja Pivot table- työkalun avulla. Tutkimustulokset osoittavat, että asianmukaisessa projektikontrollointi- ja riskijohtamismetodien käytössä ja käyttötiheydessä esiintyy puutteita saksalaisissa kone- ja tehdassuunnitteluteollisuusyrityksissä. Tehostamalla ja keskittymällä enemmän projektikontrollointi- ja riskijohtamismetodeihin ja prosesseihin sekä projektien että yritysten suorituskyky paranisi.

Biotransformation and endocrine disruptive effects of contaminants in ringed seals - implications for monitoring and risk assessment

Marine mammals are exposed to persistent organic pollutants (POPs), which may be biotransformed to metabolites some of which are highly toxic. Both POPs and their metabolites may lead to adverse health effects, which have been studied using various biomarkers. Changes in endocrine homeostasis have been suggested to be sensitive biomarkers for contaminant-related effects. The overall objective of this doctoral thesis was to investigate biotransformation capacity of POPs and their potential endocrine disruptive effects in two contrasting ringed seal populations from the low contaminated Svalbard area and from the highly contaminated Baltic Sea. Biotransformation capacity was studied by determining the relationships between congener-specific patterns and concentrations of polychlorinated biphenyls (PCBs), organochlorine pesticides (OCPs), polybrominated diphenyl ethers (PBDEs) and their hydroxyl (OH)- and/or methylsulfonyl (MeSO₂)-metabolites, and catalytic activities of hepatic xenobiotic-metabolizing phase I and II enzymes. The results suggest that the biotransformation of PCBs, PBDEs and toxaphenes in ringed seals depends on the congener-specific halogen-substitution pattern. Biotransformation products detected in the seals included OH-PCBs, MeSO₂-PCBs and –DDE, pentachlorophenol, 4-OHheptachlorostyrene, and to a minor extent OH-PBDEs. The effects of life history state (moulting and fasting) on contaminant status and potential biomarkers for endocrine disruption, including hormone and vitamin homeostasis, were investigated in the low contaminated ringed seal population from Svalbard. Moulting/fasting status strongly affected thyroid, vitamin A and calcitriol homeostasis, body condition and concentrations of POPs and their OH-metabolites. In contrast, moulting/fasting status was not associated with variations in vitamin E levels. Endocrine disruptive effects on multiple endpoints were investigated in the two contrasting ringed seal populations. The results suggest that thyroid, vitamin A and calcitriol homeostasis may be affected by the exposure of contaminants and/or their metabolites in the Baltic ringed seals. Complex and non-linear relationships were observed between the contaminant levels and the endocrine variables. Positive relationships between circulating free and total thyroid hormone concentration ratios and OH-PCBs suggest that OH-PCBs may mediate the disruption of thyroid hormone transport in plasma. Species differences in thyroid and bone-related effects of contaminants were studied in ringed and grey seals from low contaminated references areas and from the highly contaminated Baltic Sea. The results indicate that these two species living at the same environment approximately at the same trophic level respond in a very different way to contaminant exposure. The results of this thesis suggest that the health status of the Baltic ringed seals has still improved during the last decade. PCB and DDE levels have decreased in these seals and the contaminant-related effects are different today than a decade ago. The health of the Baltic ringed seals is still suggested to be affected by the contaminant exposure. At the present level of the contaminant exposure the Baltic ringed seals seem to be at a zone where their body is able to compensate for the contaminant-mediated endocrine disruption. Based on the results of this thesis, several recommendations that could be applied on monitoring and assessing risk for contaminant effects are provided. Circulating OH-metabolites should be included in monitoring and risk assessment programs due to their high toxic potential. It should be noted that endogenous variables may have complex and highly variable responses to contaminant exposure including non-linear responses. These relationships may be further confounded by life history status. Therefore, it is highly recommended that when using variables related to endocrine homeostasis to investigate/monitor or assess the risk of contaminant effects in seals, the life history status of the animal should be carefully taken into consideration. This applies especially when using thyroid, vitamin A or calcitriolrelated parameters during moulting/fasting period. Extrapolations between species for assessing risk for contaminant effects in phocid seals should be avoided.

Stress testing and risk evaluation of new capacity payment algorithm proposed by Market Council

In the Russian Wholesale Market, electricity and capacity are traded separately. Capacity is a special good, the sale of which obliges suppliers to keep their generating equipment ready to produce the quantity of electricity indicated by the System Operator. The purpose of the formation of capacity trading was the maintenance of reliable and uninterrupted delivery of electricity in the wholesale market. The price of capacity reflects constant investments in construction, modernization and maintenance of power plants. So, the capacity sale creates favorable conditions to attract investments in the energy sector because it guarantees the investor that his investments will be returned.

Classification, comorbidity, heredity, and risk factors of female sexual dysfunctions

Female sexual dysfunctions, including desire, arousal, orgasm and pain problems, have been shown to be highly prevalent among women around the world. The etiology of these dysfunctions is unclear but associations with health, age, psychological problems, and relationship factors have been identified. Genetic effects explain individual variation in orgasm function to some extent but until now quantitative behavior genetic analyses have not been applied to other sexual functions. In addition, behavior genetics can be applied to exploring the cause of any observed comorbidity between the dysfunctions. Discovering more about the etiology of the dysfunctions may further improve the classification systems which are currently under intense debate. The aims of the present thesis were to evaluate the psychometric properties of a Finnish-language version of a commonly used questionnaire for measuring female sexual function, the Female Sexual Function Index (FSFI), in order to investigate prevalence, comorbidity, and classification, and to explore the balance of genetic and environmental factors in the etiology as well as the associations of a number of biopsychosocial factors with female sexual functions. Female sexual functions were studied through survey methods in a population based sample of Finnish twins and their female siblings. There were two waves of data collection. The first data collection targeted 5,000 female twins aged 33–43 years and the second 7,680 female twins aged 18–33 and their over 18–year-old female siblings (n = 3,983). There was no overlap between the data collections. The combined overall response rate for both data collections was 53% (n = 8,868), with a better response rate in the second (57%) compared to the first (45%). In order to measure female sexual function, the FSFI was used. It includes 19 items which measure female sexual function during the previous four weeks in six subdomains; desire, subjective arousal, lubrication, orgasm, sexual satisfaction, and pain. In line with earlier research in clinical populations, a six factor solution of the Finnish-language version of the FSFI received supported. The internal consistencies of the scales were good to excellent. Some questions about how to avoid overestimating the prevalence of extreme dysfunctions due to women being allocated the score of zero if they had had no sexual activity during the preceding four weeks were raised. The prevalence of female sexual dysfunctions per se ranged from 11% for lubrication dysfunction to 55% for desire dysfunction. The prevalence rates for sexual dysfunction with concomitant sexual distress, in other words, sexual disorders were notably lower ranging from 7% for lubrication disorder to 23% for desire disorder. The comorbidity between the dysfunctions was substantial most notably between arousal and lubrication dysfunction even if these two dysfunctions showed distinct patterns of associations with the other dysfunctions. Genetic influences on individual variation in the six subdomains of FSFI were modest but significant ranging from 3–11% for additive genetic effects and 5–18% for nonadditive genetic effects. The rest of the variation in sexual functions was explained by nonshared environmental influences. A correlated factor model, including additive and nonadditive genetic effects and nonshared environmental effects had the best fit. All in all, every correlation between the genetic factors was significant except between lubrication and pain. All correlations between the nonshared environment factors were significant showing that there is a substantial overlap in genetic and nonshared environmental influences between the dysfunctions. In general, psychological problems, poor satisfaction with the relationship, sexual distress, and poor partner compatibility were associated with more sexual dysfunctions. Age was confounded with relationship length but had over and above relationship length a negative effect on desire and sexual satisfaction and a positive effect on orgasm and pain functions. Alcohol consumption in general was associated with better desire, arousal, lubrication, and orgasm function. Women pregnant with their first child had fewer pain problems than nulliparous nonpregnant women. Multiparous pregnant women had more orgasm problems compared to multiparous nonpregnant women. Having children was associated with less orgasm and pain problems. The conclusions were that desire, subjective arousal, lubrication, orgasm, sexual satisfaction, and pain are separate entities that have distinct associations with a number of different biopsychosocial factors. However, there is also considerable comorbidity between the dysfunctions which are explained by overlap in additive genetic, nonadditive genetic and nonshared environmental influences. Sexual dysfunctions are highly prevalent and are not always associated with sexual distress and this relationship might be moderated by a good relationship and compatibility with partner. Regarding classification, the results supports separate diagnoses for subjective arousal and genital arousal as well as the inclusion of pain under sexual dysfunctions.

The Evolution of Securities Lending and Risk Mitigation: A Finnish Market Case Study

Although securities lending is an important function of the financial markets, it has not received that much academic attention. This study examines the evolution of European securities lending and risk management with an emphasis on the development of collateral management, the function responsible for reducing credit risk. The effects of the recent financial instabilities are also considered. The evolution of the Finnish securities lending market is examined in more detail through a case-study. This study can be classified as a constructive qualitative case study. The initial practical knowledge comes from the author's own experience and additional insight and theoretical background is acquired through a literature review. The case study is based on research, semi-structured interviews and a brief analysis of numerical data. The main observation of this study was that securities lending is now recognized as more of an investment management discipline than an operational support function. The recent financial instabilities have resulted in an increased focus on risk and transparency. In securities lending this is directly reflected in collateral management guidelines and procedures. Collateral management has become increasingly technologically developed and automated. Collateral optimization initiatives have been started to make the process more efficient, liquid, and cost effective. Although securities lending is generally an OTC-market with no standard market place, centralized exchange-like models have been introduced. Finnish securities lending has now shifted towards the more common global OTC model. Although the Finnish securities lending industry has developed, and the main laws governing it (tax legislation) have changed, there is still need for development. There are still not many Finnish participants involved and due to legal issues most securities loans are collateralized with cash and not securities (e.g. government bonds).

Balancing creativity and risk intelligence in professional knowledge-intensive business services

The main strengths of professional knowledge-intensive business services (P-KIBS) are knowledge and creativity which needs to be fostered, maintained and supported. The process of managing P-KIBS companies deals with financial, operational and strategic risks. That is why it is reasonable to apply risk management techniques and frameworks in this context. A significant challenge hides in choosing reasonable ways of implementing risk management, which will not limit creative ability in organization, and furthermore will contribute to the process. This choice is related to a risk intelligent approach which becomes a justified way of finding the required balance. On a theoretical level the field of managing both creativity and risk intelligence as a balanced process remains understudied in particular within KIBS industry. For instance, there appears to be a wide range of separate models for innovation and risk management, but very little discussion in terms of trying to find the right balance between them. This study aims to shed light on the importance of well-managed combination of these concepts. The research purpose of the present study is to find out how the balance between creativity and risk intelligence can be managed in P-KIBS. The methodological approach utilized in the study is strictly conceptual without empirical aspects. The research purpose can be achieved through answering the following research supporting questions: 1. What are the characteristics and role of creativity as a component of innovation process in a P-KIBS company? 2. What are the characteristics and role of risk intelligence as an approach towards risk management process implementation in a P-KIBS company? 3. How can risk intelligence and creativity be balanced in P-KIBS? The main theoretical contribution of the study conceals in a proposed creativity and risk intelligence stage process framework. It is designed as an algorithm that can be applied on organizational canvas. It consists of several distinct stages specified by actors involved, their roles and implications. Additional stage-wise description provides detailed tasks for each of the enterprise levels, while combining strategies into one. The insights driven from the framework can be utilized by a vast range of specialists from strategists to risk managers, and from innovation managers to entrepreneurs. Any business that is designing and delivering knowledge service can potentially gain valuable thoughts and expand conceptual understanding from the present report. Risk intelligence in the current study is a unique way of emphasizing the role of creativity in professional knowledge-intensive industry and a worthy technique for making profound decisions towards risks.

Bank Income Diversification and its Impact on Profitability and Risk: Evidence from Nordic Markets

Financial industry has recently encountered many changes in the business environment. Increased regulation together with growing competition is forcing commercial banks to rethink their business models. In order to maintain profitability in the new environment, banks are focusing more into activities that yield noninterest income. This is a shift away from the traditional intermediation function of banks. This study aims to answer the question if the shift from traditional income yielding activities to more innovative noninterest activities is logical in terms of profitability and risk in Nordics. This study also aims to answer the question if diversification within the noninterest income categories has impact on profitability and risk and if there are certain categories of noninterest income that are better than others in terms of profitability and risk in Nordics. Results show that diversification between interest and noninterest activities and increase in the share of noninterest income have a negative impact on the risk adjusted returns and risk profile. Results also show that further diversification within the noninterest income categories has negative impact on risk adjusted profitability and risk while an increase of the share of commission and fee income category of total noninterest income has a positive impact on risk adjusted profitability and risk. Results are logical and in line with previous research (De Young & Roland, 2001; Stiroh, 2004). Results provide useful information to banks and help them better evaluate outcomes of different income diversification strategies.

Harmonization ofsignificant environmental aspects and their risk assessment in UPM paper and pulp mills

Työn tavoite onharmonisoida yhtenäiset rakenteet UPM:n paperi- ja sellutehtaiden merkittävilleympäristönäkökohdille sekä niiden ympäristöriskienhallintajärjestelmille. Näin saavutetaan yhteneväiset tavoitteet ja analysointikeinot yrityksen yksiköille. Harmonisointiprosessi on osa koko yrityksen ympäristöhallintajärjestelmän kehittämistä. Ja konsernin EMS -prosessi puolestaan konvergoi konsernin integroidun johtamisjärjestelmän kehitystä. Lisäksi työn tapaustutkimuksessa selvitettiin riskienhallintajärjestelmien integroitumispotentiaalia. Sen avulla saavutettaisiin paremmin suuren yrityksen synergia-etuja ja vuorovaikutteisuutta toimijoiden kesken, sekä parannettaisiin riskienhallintajärjestelmän mukautuvuutta ja käytettävyyttä. Työssä käsitellään kolmea esimerkkiä, joiden pohjalta tehdään esitys harmonisoiduille merkittäville ympäristönäkökohdille sekä riskienhallintajärjestelmien parametreille. Tutkimusongelmaa lähestytään haastattelujen, kirjallisuuden, yrityksen PWC:llä teettämän selvityksen sekä omien päätelmien avulla. Lisäksi työssä esitetään ympäristöhallintajärjestelmän tehokkuuden todentaminen ympäristösuorituskyvyn muuttujiin suhteutettuna. Pohjana jatkuvan kehityksen päämäärälle on organisaatio-oppiminen, niin yksittäisen työntekijän, tiimien kuin eri yksiköiden kesken. Se antaa sysäyksen aineettoman omaisuuden, kuten ympäristö-osaamisen, hyödyntämiseen parhaalla mahdollisella tavalla. Tärkeimpinä lopputuloksina työssä ovat ehdotukset harmonisoiduille merkittäville ympäristönäkökohdille sekä ympäristöriskienhallintajärjestelmän määritetyille komponenteille. Niitä ovat määritelmät ja skaalat riskien todennäköisyydelle, seurauksille sekä riskiluokille. Työn viimeisenä osana luodaan pohja tapaustutkimuksen avulla Rauman tehtaan jätevedenpuhdistamon kahden erilaisen riskienhallintajärjestelmän integroitumiselle.

Risk assessment tool for radical technologies – Case Technology A and Technology B

Työssä testataan radikaalien teknologioiden liiketoimintariskien evaluointityökalua. Työn teoreettinen tausta koostuu teknologia- ja innovaatioteorioista hyödyntäen myös resurssipohjaista yritysteoriaa täydennettynä evolutionäärisellä teorialla. Teoreettisessa osuudessa rakennetaan viitekehys, jolla liiketoimintariskejä voidaan arvioida ja muodostaa riskiprofiili. Liiketoimintariskien muuttujina ovat markkina-, teknologia- ja organisaatioriskit. Primäärisenä tietolähteenä käytettiin teema- ja strukturoituja haastatteluita. Ensimmäinen haastattelu käsitti evaluointityökalun käytettävyyttä ja riskienhallintaa yleensä. Loput haastattelut liittyivät teknologian A ja teknologian B liiketoimintariskien arvioimiseen. Tulokset osoittavat molemmat teknologiat sisältävän radikaaleille teknologioille ominaisia epävarmuustekijöitä. Riskiprofiilin hyödyllisyys liittyy liiketoimintariskien samanaikaiseen havaitsemiseen auttaen näin päätöksenteossa. Tärkeää evaluoinnissa on kiinnittää huomiota näkökulmaan, josta riskejä tarkastellaan riskiprofiilin validiteetin parantamiseksi.

Approaches to Supply Chain Risk Management: Identification, Analysis and Control

Supply chain risk management has emerged as an increasingly important issue in logistics as disruptions in the supply chain have become critical issues for many companies. The scientific literature on the subject is developing and in many respects the understanding of it is still in its infancy. Thus, there is a need for more information in order for scholars and practitioners to understand the causalities and interrelations that characterise the phenomenon. The aim of this dissertation is to narrow this gap by exploring key aspects of supply chain risk management through two maritime supply chains in the immediate region of the Gulf of Finland. The study contributes to the field in three different ways. Firstly, it facilitates the identification of risks on different levels of the supply chain through a systematic analysis of the processes and actors, and of the cognitive barriers that limit the actors’ visibility and their understanding of the operations and the risks involved. There is a clear need to increase collaboration and information exchange in order to improve visibility in the chain. Risk management should be a collaborative effort among the individual actors, aimed at obtaining a holistic picture. Secondly, the study contributes to the literature on risk analysis through the use of systemic frameworks that illustrate the causalities and linkages in the system, thereby making it easier to perceive the vulnerabilities. Thirdly, the study enhances current knowledge of risk control in identifying actor roles, risk visibility and risk controllability as being among the key factors determining risk-management effectiveness against supply-chain vulnerability. This dissertation is divided into two parts. The first part gives a general overview of the relevant literature, the research design and the conclusions of the study, and the second part comprises six research publications. Case-study methodology with systematic combining approach is used, where in-depth interviews, questionnaires and expert panel sessions are the main data collection methods. The study illustrates the current state of risk management in multimodal maritime supply chains, and develops frameworks for further analysis. The results imply that there are major differences between organizations in their ability to execute supply chain risk management. Further collaboration should be considered in order to facilitate the development of systematic and effective management processes.

Risk-return trade-off and autocorrelation

A trade-off between return and risk plays a central role in financial economics. The intertemporal capital asset pricing model (ICAPM) proposed by Merton (1973) provides a neoclassical theory for expected returns on risky assets. The model assumes that risk-averse investors (seeking to maximize their expected utility of lifetime consumption) demand compensation for bearing systematic market risk and the risk of unfavorable shifts in the investment opportunity set. Although the ICAPM postulates a positive relation between the conditional expected market return and its conditional variance, the empirical evidence on the sign of the risk-return trade-off is conflicting. In contrast, autocorrelation in stock returns is one of the most consistent and robust findings in empirical finance. While autocorrelation is often interpreted as a violation of market efficiency, it can also reflect factors such as market microstructure or time-varying risk premia. This doctoral thesis investigates a relation between the mixed risk-return trade-off results and autocorrelation in stock returns. The results suggest that, in the case of the US stock market, the relative contribution of the risk-return trade-off and autocorrelation in explaining the aggregate return fluctuates with volatility. This effect is then shown to be even more pronounced in the case of emerging stock markets. During high-volatility periods, expected returns can be described using rational (intertemporal) investors acting to maximize their expected utility. During lowvolatility periods, market-wide persistence in returns increases, leading to a failure of traditional equilibrium-model descriptions for expected returns. Consistent with this finding, traditional models yield conflicting evidence concerning the sign of the risk-return trade-off. The changing relevance of the risk-return trade-off and autocorrelation can be explained by heterogeneous agents or, more generally, by the inadequacy of the neoclassical view on asset pricing with unboundedly rational investors and perfect market efficiency. In the latter case, the empirical results imply that the neoclassical view is valid only under certain market conditions. This offers an economic explanation as to why it has been so difficult to detect a positive tradeoff between the conditional mean and variance of the aggregate stock return. The results highlight the importance, especially in the case of emerging stock markets, of noting both the risk-return trade-off and autocorrelation in applications that require estimates for expected returns.

A performance analysis of conventional and fundamental exchange traded funds: ETFs and their risk-return characteristics in relation to building institutional investor’s passive portfolio

An exchange traded fund (ETF) is a financial instrument that tracks some predetermined index. Since their initial establishment in 1993, ETFs have grown in importance in the field of passive investing. The main reason for the growth of the ETF industry is that ETFs combine benefits of stock investing and mutual fund investing. Although ETFs resemble mutual funds in many ways, also many differences occur. In addition, ETFs not only differ from mutual funds but also differ among each other. ETFs can be divided into two categories, i.e. market capitalisation ETFs and fundamental (or strategic) ETFs, and further into subcategories depending on their fundament basis. ETFs are a useful tool for diversification especially for a long-term investor. Although the economic importance of ETFs has risen drastically during the past 25 years, the differences and risk-return characteristics of fundamental ETFs have yet been rather unstudied area. In effect, no previous research on market capitalisation and fundamental ETFs was found during the research process. For its part, this thesis seeks to fill this research gap. The studied data consist of 50 market capitalisation ETFs and 50 fundamental ETFs. The fundaments, on which the indices that the fundamental ETFs track, were not limited nor segregated into subsections. The two types of ETFs were studied at an aggregate level as two different research groups. The dataset ranges from June 2006 to December 2014 with 103 monthly observations. The data was gathered using Bloomberg Terminal. The analysis was conducted as an econometric performance analysis. In addition to other econometric measures, the methods that were used in the performance analysis included modified Value-at-Risk, modified Sharpe ratio and Treynor ratio. The results supported the hypothesis that passive market capitalisation ETFs outperform active fundamental ETFs in terms of risk-adjusted returns, though the difference is rather small. Nevertheless, when taking into account the higher overall trading costs of the fundamental ETFs, the underperformance gap widens. According to the research results, market capitalisation ETFs are a recommendable diversification instrument for a long-term investor. In addition to better risk-adjusted returns, passive ETFs are more transparent and the bases of their underlying indices are simpler than those of fundamental ETFs. ETFs are still a young financial innovation and hence data is scarcely available. On future research, it would be valuable to research the differences in risk-adjusted returns also between the subsections of fundamental ETFs.

Effects of bank supervision and regulation on bank risk

In the last few decades, banking has strongly internationalized and become more complex. Hence, bank supervision and regulation has taken global perspective, too. The most important international regulation are the Basel frameworks by the Basel committee on banking supervision. This study examines the effects of bank supervision and regulation, especially the Basel II, on bank risk and risk-taking. In order to separate and recognize the efficiency of these effects, the co-effects of many supervisory and regulatory tools together with other relevant factors must be taken into account. The focus of the study is on the effects of asymmetric information and banking procyclicality on the efficiency of the Basel II. This study tries to find an answer, if the Basel II, implemented in 2008, has decreased bank risk in banks of European Union member states. This study examines empirically, if the volatility on bank stock returns have changed after the implementation of the Basel II. Panel data consists of 62 bank stock returns, bank-specific variables, economic variables and variables concerning regulatory environment between 2003 and 2011. Fixed effects regression is used for panel data analysis. Results indicate that volatility on bank stock returns has increased after 2008 and the implementation of the Basel II. Result is statistically very significant and robustness has been verified in different model specifications. The result of this study contradicts with the goal of the Basel II about banking system stability. Banking procyclicality and wrong incentives for regulatory arbitrage under asymmetric information explained in theoretical part may explain this result. On the other hand, simultaneously with the implementation of the Basel II, the global financial crisis emerged and caused severe losses in banks and increased stock volatility. However, it is clear that supervision and regulation was unable to prevent the global financial crisis. After the financial crisis, supervision and regulation have been reformed globally. The main problems of the Basel II, examined in the theoretical part, have been recognized in order to prevent problems of procyclicality and wrong incentives in the future.