Real options and multinational investments : an empirical study of risk, performance and organisational awareness

DUE TO COPYRIGHT RESTRICTIONS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY AND INFORMATION SERVICES WITH PRIOR ARRANGEMENT This thesis is a cross-disciplinary study of the empirical impact of real options theory in the fields of decision sciences and performance management. Borrowing from the economics, strategy and operations research literature, the research examines the risk and performance implications of real options in firms’ strategic investments and multinational operations. An emphasis is placed on the flexibility potential and competitive advantage of multinational corporations to explore the extent to which real options analysis can be classified as best practice in management research. Using a combination of qualitative and quantitative techniques the evidence suggests that, if real options are explored and exploited appropriately, real options management can result in superior performance for multinational companies. The qualitative findings give an overview of the practical advantages and disadvantages of real options and the statistical results reveal that firms which have developed a high awareness of their real options are, as predicted by the theory, able to reduce their downside risk and increase profits through flexibility, organisational slack and multinationality. Although real options awareness does not systematically guarantee higher returns from operations, supplementary findings indicate that firms with evidence of significant investments in the acquisition of real options knowledge tend to outperform competitors which are unaware of their real options. There are three contributions of this research. First, it extends the real options and capacity planning literature to path-dependent contingent-claims analysis to underline the benefits of average type options in capacity allocation. Second, it is thought to be the first to explicitly examine the performance effects of real options on a sample of firms which have developed partial capabilities in real options analysis suggesting that real options diffusion can be key to value creation. Third, it builds a new decision-aiding framework to facilitate the use of real options in projects appraisal and strategic planning.

Calendar effects and the pricing of risk:the UK evidence

For some time there has been a puzzle surrounding the seasonal behaviour of stock returns. This paper demonstrates that there is an asymmetric relationship between risk and return across the different months of the year. The paper finds that systematic risk is only priced during the months of January, April and July. Variance risk and firm size are priced during several months of the year including January. An analysis of the relative behaviour of size based securities reveals that firm capitalization makes a valuable contribution to the magnitude of risk premiums.

Knowledge engineering for mental-health risk assessment and decision support

Mental-health risk assessment practice in the UK is mainly paper-based, with little standardisation in the tools that are used across the Services. The tools that are available tend to rely on minimal sets of items and unsophisticated scoring methods to identify at-risk individuals. This means the reasoning by which an outcome has been determined remains uncertain. Consequently, there is little provision for: including the patient as an active party in the assessment process, identifying underlying causes of risk, and eecting shared decision-making. This thesis develops a tool-chain for the formulation and deployment of a computerised clinical decision support system for mental-health risk assessment. The resultant tool, GRiST, will be based on consensual domain expert knowledge that will be validated as part of the research, and will incorporate a proven psychological model of classication for risk computation. GRiST will have an ambitious remit of being a platform that can be used over the Internet, by both the clinician and the layperson, in multiple settings, and in the assessment of patients with varying demographics. Flexibility will therefore be a guiding principle in the development of the platform, to the extent that GRiST will present an assessment environment that is tailored to the circumstances in which it nds itself. XML and XSLT will be the key technologies that help deliver this exibility.

Premature cardiovascular events and mortality in south Asians with type 2 diabetes in the United Kingdom Asian Diabetes Study - effect of ethnicity on risk

Background/Aim - People of south Asian origin have an excessive risk of morbidity and mortality from cardiovascular disease. We examined the effect of ethnicity on known risk factors and analysed the risk of cardiovascular events and mortality in UK south Asian and white Europeans patients with type 2 diabetes over a 2 year period. Methods - A total of 1486 south Asian (SA) and 492 white European (WE) subjects with type 2 diabetes were recruited from 25 general practices in Coventry and Birmingham, UK. Baseline data included clinical history, anthropometry and measurements of traditional risk factors – blood pressure, total cholesterol, HbA1c. Multiple linear regression models were used to examine ethnicity differences in individual risk factors. Ten-year cardiovascular risk was estimated using the Framingham and UKPDS equations. All subjects were followed up for 2 years. Cardiovascular events (CVD) and mortality between the two groups were compared. Findings - Significant differences were noted in risk profiles between both groups. After adjustment for clustering and confounding a significant ethnicity effect remained only for higher HbA1c (0.50 [0.22 to 0.77]; P?=?0.0004) and lower HDL (-0.09 [-0.17 to -0.01]; P?=?0.0266). Baseline CVD history was predictive of CVD events during follow-up for SA (P?and short period of follow-up are key limitations. Longer follow-up is required to see if the observed differences between the ethnic groups persist. Conclusion - South Asian patients with type 2 diabetes in the UK have a higher cardiovascular risk and present with cardiovascular events at a significantly younger age than white Europeans. Enhanced and ethnicity specific targets and effective treatments are needed if these inequalities are to be reduced.

Advancing age and bleeding risk are the strongest barriers to anticoagulant prescription in atrial fibrillation

In clinical practice many patients with atrial fibrillation (AF) at high thromboembolic risk fail to receive adequate oral anticoagulation (OAC) [1]. The complex management of anticoagulant therapy [frequent international normalised ratio (INR) monitoring because of narrow therapeutic window, interaction with food and alcohol, concomitant medications and comorbities], the overestimation of bleeding risk and the underestimation of stroke risk, may partially explain physicians' reluctance to prescribe anticoagulation. In the current issue of Age and Ageing, Pugh and Mead [2] report a systematic review on physicians' attitudes concerning anticoagulant treatment among AF patients. Through surveys (questionnaire, clinical vignette and interview) on hypothetical case scenarios, they have identified the barriers to effective anticoagulant prescription, as follows: increasing age, bleeding risk or previous bleeding, fall risk, co-morbidities (e.g. chronic alcoholism or cognitive impairment) and lack of compliance. In particular, advanced age has been reported as the most striking reason for with-holding anticoagulation, while risk of falls and previous bleeding are also disproportionate barriers to warfarin prescription.

Managing the threat of terrorism in British travel and leisure organizations

Purpose - To study how the threats of terrorism are being handled by a variety of UK companies in the travel and leisure sector in the UK in the post 9/11 era. Design/methodology/approach - A review of the literature of risk management in a world that is perceived to be more risky as a result of the terrorist attacks on the US on 11 September 2001 (9/11) is presented. Describes the application of theories of organizational resilience and institutions to frame an understanding of how managers make sense of terrorism risk and comprehend uncertainty. Reports a qualitative analysis of themes in interviews conducted with 25 managers from 6 unnamed organizations in the aviation industry (3 organizations) and the UK travel and leisure industry (3 organizations), representing a catering supplier, an airport, an airline, a tour company, a convention centre, and an arts and entertainment centre. Findings - The results indicated that the three organizations in the aviation industry prioritize threats from terrorism, whilst the three organizations in the leisure and travel sector do not, suggesting that the managers in the travel and leisure industry apply a probabilistic type of thinking and believe the likelihood of terrorism to be low. Reports that they give precedence to economic concerns and numerous other threats to the industry. Concludes that managers fall prey to the 'ludic fallacy', which conceives all odds as being calculable and hence managers conceive the terrorism risk as low while also expecting institutional factors to pre-empt and control terrorism threats, a reaction which the authors believe to be rather complacent and dangerous. Originality/value - Contributes to the research literature on risk management by revealing the gap in the ability of existing management tools and methodologies to deal with current and uncertain threats facing organizations due to terrorism.

Before and after modelling:risk knowledge management is required

Risk and knowledge are two concepts and components of business management which have so far been studied almost independently. This is especially true where risk management is conceived mainly in financial terms, as, for example, in the banking sector. The banking sector has sophisticated methodologies for managing risk, such as mathematical risk modeling. However. the methodologies for analyzing risk do not explicitly include knowledge management for risk knowledge creation and risk knowledge transfer. Banks are affected by internal and external changes with the consequent accommodation to new business models new regulations and the competition of big players around the world. Thus, banks have different levels of risk appetite and policies in risk management. This paper takes into consideration that business models are changing and that management is looking across the organization to identify the influence of strategic planning, information systems theory, risk management and knowledge management. These disciplines can handle the risks affecting banking that arise from different areas, but only if they work together. This creates a need to view them in an integrated way. This article sees enterprise risk management as a specific application of knowledge in order to control deviation from strategic objectives, shareholders' values and stakeholders' relationships. Before and after a modeling process it necessary to find insights into how the application of knowledge management processes can improve the understanding of risk and the implementation of enterprise risk management. The article presents a propose methodology to contribute to providing a guide for developing risk modeling knowledge and a reduction of knowledge silos, in order to improve the quality and quantity of solutions related to risk inquiries across the organization.

Milk feeding, solid feeding, and obesity risk:a review of the relationships between early life feeding practices and later adiposity

Childhood obesity is a major health issue with associated ill-health consequences during childhood and into later adolescence and adulthood. Given that eating behaviors are formed during early childhood, it is important to evaluate the relationships between early life feeding practices and later child adiposity. This review describes and evaluates recent literature exploring associations between child weight and the mode of milk feeding, the age of introducing solid foods and caregivers’ solid feeding practices. There are many inconsistencies in the literature linking early life feeding to later obesity risk and discrepancies may be related to inconsistent definitions, or a lack of control for confounding variables. This review summarizes the literature in this area and identifies the need for large scale longitudinal studies to effectively explore how early life feeding experiences may interact with each other and with nutritional provision during later childhood to predict obesity risk.

Adaptation to flood risk:the case of businesses in the UK

Despite Government investment in flood defence schemes, many properties remain at high risk of flooding. A substantial portion of these properties are business establishments. Flooding can create serious consequences for businesses, including damage to property and stocks, being out of business for a considerable period and ultimately business failure. Recent flood events such as those in 2007 and 2009 that affected many parts of the UK have helped to establish the true costs of flooding to businesses. This greater understanding of the risks to businesses has heightened the need for business owners to adapt their businesses to the threat of future flooding. Government policy has now shifted away from investment in engineered flood defences, towards encouraging the uptake of property level flood resistance and resilience measures by businesses. However, implementing such adaptation strategies remains a challenge due a range of reasons. A review of the current state of property level flood risk adaptation of UK businesses is presented, drawing from extant literature. Barriers that may hinder the uptake of property level adaptation by businesses are revealed and drivers that may enhance uptake and effectively overcome these barriers are also discussed. It is concluded that the professions from the construction sector have the potential to contribute towards the adaptation of business properties and thereby the flood resilience of businesses at risk of flooding.

International risk management:systems, internal control and corporate governance

This book is very practical in its international usefulness (because current risk practice and understanding is not equal across international boundaries). For example, an accountant in Belgium would want to know what the governance regulations are in that country and what the risk issues are that he/she needs to be aware of. This book covers the international aspect of risk management systems, risk and governance, and risk and accounting. In doing so the book covers topics such as: internal control and corporate governance; risk management systems; integrating risk into performance management systems; risk and audit; governance structures; risk management of pensions; pension scheme risks e.g. hedging derivatives, longevity bonds etc; risk reporting; and the role of the accountant in risk management. There are the case studies through out the book which illustrate by way of concrete practical examples the major themes contained in the book. The book includes highly topical areas such as the Sarbanes Oxley Act and pension risk management.

Investigating mental health risk assessment in primary care and the potential role of a structured decision support tool, GRiST

Aim: To explore current risk assessment processes in general practice and Improving Access to Psychological Therapies (IAPT) services, and to consider whether the Galatean Risk and Safety Tool (GRiST) can help support improved patient care. Background: Much has been written about risk assessment practice in secondary mental health care, but little is known about how it is undertaken at the beginning of patients' care pathways, within general practice and IAPT services. Methods: Interviews with eight general practice and eight IAPT clinicians from two primary care trusts in the West Midlands, UK, and eight service users from the same region. Interviews explored current practice and participants' views and experiences of mental health risk assessment. Two focus groups were also carried out, one with general practice and one with IAPT clinicians, to review interview findings and to elicit views about GRiST from a demonstration of its functionality. Data were analysed using thematic analysis. Findings Variable approaches to mental health risk assessment were observed. Clinicians were anxious that important risk information was being missed, and risk communication was undermined. Patients felt uninvolved in the process, and both clinicians and patients expressed anxiety about risk assessment skills. Clinicians were positive about the potential for GRiST to provide solutions to these problems. Conclusions: A more structured and systematic approach to risk assessment in general practice and IAPT services is needed, to ensure important risk information is captured and communicated across the care pathway. GRiST has the functionality to support this aspect of practice.

Disaster risk reduction infrastructure requirements for South-Western Bangladesh:perspectives of local communities

Purpose: Development of effective disaster risk reduction (DRR) strategies for communities at risk of being affected by natural disasters is considered essential, especially in the wake of devastating disaster events reported worldwide. As part of a wider research study investigating community perspectives on existing and potential strategies for enhancing resilience to natural disasters, community perspectives on infrastructure and structural protection requirements were investigated. The paper aims to discuss these issues. Design/methodology/approach: Patuakhali region in South-Western Bangladesh is a region significantly at risk of multiple natural hazards. In order to engage local communities and obtain their perspectives, focus group discussions were held with local community leaders and policy makers of at-risk communities in Patuakhali region, South-Western Bangladesh. Findings: Infrastructure and structural protection requirements highlighted included multi-purpose cyclone shelters, permanent embankments and improved transport infrastructure. Much of the discussions of focus group interviews were focused on cyclone shelters and embankments, suggesting their critical importance in reducing disaster risk and also dependence of coastal communities on those two measures. Originality/value: The research design adopted sought to answer the research questions raised and also to inform local policy makers on community perspectives. Local policy makers involved in DRR initiatives in the region were informed of community perspectives and requirements, thus contributing to community engagement in implementing DRR activities.