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Asset and Risk Management: Risk Oriented Finance by Louis Esch, Robert Kieffer, Thierry Lopez
asset allocation, Brownian motion, business continuity plan, business process, capital asset pricing model, computer age, corporate governance, discrete time, diversified portfolio, implied volatility, index fund, interest rate derivative, iterative process, P = NP, p-value, random walk, risk/return, shareholder value, statistical model, stochastic process, transaction costs, value at risk, Wiener process, yield curve, zero-coupon bond
. • Optimal distribution of best practices. 14 Asset and Risk Management A calculation of the losses attributable to operational risk therefore provides a framework that allows the controls to be linked to performance measurement and shareholder value. That having been said, this approach to the mastery of operational risk must also allow insurance programmes to be rationalised (concept of risk transfer), in particular by integrating the business continuity plan or BCP into it. 18.104.22.168 The triptych: Operational risk – risk transfer – BCP See Figure 2.1. A. The origin, deﬁnition and objective of Business Continuity Planning A BCP is an organised set of provisions aimed at ensuring the survival of an organisation that has suffered a catastrophic event. The concept of BCP originated in the emergency computer recovery plans, which have now been extended to cover the human and material resources essential for ensuring continuity of a business’s activities.
In addition (sixth principle), banks should have policies, processes and procedures to control and/or mitigate material operational risks. Banks should periodically review their risk limitation and control strategies and should adjust their operational risk proﬁle accordingly using appropriate strategies, in light of their overall risk appetite and proﬁle. The seventh principle states that banks should have in place contingency and business continuity plans to ensure their ability to operate on an ongoing basis and limit losses in the event of severe business disruption. Role of supervisors In the eighth principle banking supervisors should require that all banks, regardless of size, have an effective framework in place to identify, assess, monitor and control/mitigate material operational risks as part of an overall approach to risk management.
Examples of what an independent evaluation of operational risk by supervisors should review include the following: • The effectiveness of the bank’s risk management process and overall control environment with respect to operational risk; • The bank’s methods for monitoring and reporting its operational risk proﬁle, including data on operational losses and other indicators of potential operational risk; • The bank’s procedures for the timely and effective resolution of operational risk events and vulnerabilities; • The bank’s process of internal controls, reviews and audit to ensure the integrity of the overall operational risk management process; • The effectiveness of the bank’s operational risk mitigation efforts, such as the use of insurance; • The quality and comprehensiveness of the bank’s disaster recovery and business continuity plans; and The Regulatory Context 9 • The bank’s process for assessing overall capital adequacy for operational risk in relation to its risk proﬁle and, if appropriate, its internal capital targets. Role of disclosure Banks should make sufﬁcient public disclosure to allow market participants to assess their approach to operational risk management. 1.3 ACCOUNTING STANDARDS The ﬁnancial crisis that started in some Asian countries in 1998 and subsequently spread to other locations in the world revealed a need for reliable and transparent ﬁnancial reporting, so that investors and regulators could take decisions with a full knowledge of the facts. 1.3.1 Standard-setting organisations10 Generally speaking, three main standard-setting organisations are recognised in the ﬁeld of accounting: • The IASB (International Accounting Standards Board), dealt with below in 1.3.2. • The IFAC (International Federation of Accountants). • The FASB (Financial Accounting Standards Board).
Private Island: Why Britain Now Belongs to Someone Else by James Meek
Affordable Care Act / Obamacare, Berlin Wall, business continuity plan, call centre, clean water, Deng Xiaoping, Etonian, HESCO bastion, housing crisis, illegal immigration, Martin Wolf, medical bankruptcy, Mikhail Gorbachev, post-industrial society, pre–internet, price mechanism, risk tolerance, road to serfdom, Ronald Reagan, Skype, sovereign wealth fund, Washington Consensus, working poor
We try to educate [Severn Trent] about what we are here to provide and we made clear to them that we are not here to provide millimetre-accurate warnings at Mythe. We issued a severe flood warning, which includes them, and we expect them to take action. After the 2000 flood, when Severn Trent came close to taking action, there’s a requirement for them to have a business continuity plan.’ What Perry meant by ‘business continuity plan’ was an alternative to Mythe if Mythe failed. But Severn Trent didn’t have one. Not until 9.41 p.m. on Saturday night, almost sixteen hours after the severe flood warning, did the company alert Gloucestershire’s fire and rescue service to the danger to the waterworks. By that time it was too late. Niall Hall, who was on duty in the Environment Agency’s control room on Saturday night, remembers getting a phone call from the fire brigade saying ‘Mythe’s going to go under.’
algorithmic trading, asset allocation, automated trading system, backtesting, Black Swan, Brownian motion, business continuity plan, compound rate of return, Elliott wave, endowment effect, fixed income, general-purpose programming language, index fund, Long Term Capital Management, loss aversion, p-value, paper trading, price discovery process, quantitative hedge fund, quantitative trading / quantitative ﬁnance, random walk, Ray Kurzweil, Renaissance Technologies, risk-adjusted returns, Sharpe ratio, short selling, statistical arbitrage, statistical model, systematic trading, transaction costs
In fast-moving markets, every millisecond counts, and an upgrade in your Internet connection speed may well pay for itself very quickly. (A T1 line can cost anywhere from $700 to $1,500, whereas a cable/DSL connection is usually under $50. A T1 line transmits information at 1.5Mbps, where bps means “bits per second,” about twice as fast as a cable/DSL connection.) Once you have finally tested your trading strategy and discover that it works in practice very well, it will be time to scale up the business and consider “business continuity planning” so that your trading strategy is resilient to common household disasters such as Internet outage, electricity outage, flooding, and so on. You can install your trading programs on a remote server located in a hosting company; in fact, you can even “collocate” your computers containing your trading programs at the hosting company. (Having your programs hosted or having your servers collocated will cost you P1: JYS c04 JWBK321-Chan September 24, 2008 Setting Up Your Business 13:53 Printer: Yet to come 77 anywhere from hundreds to over a thousand dollars a month.)
Albert Einstein, Apple's 1984 Super Bowl advert, barriers to entry, Bay Area Rapid Transit, business continuity plan, call centre, carbon footprint, Clayton Christensen, cloud computing, corporate social responsibility, crowdsourcing, iterative process, Maui Hawaii, Nicholas Carr, platform as a service, Silicon Valley, software as a service, Steve Ballmer, Steve Jobs
In addition, our real estate and facilities team began to take a more strategic approach to managing our growth in the real estate market, gradually transitioning us away from being overly concentrated in San Francisco and implementing cost-saving approaches, such as the ‘‘hoteling’’ of ofﬁce space, in which there are fewer work spaces than employees—a practical adaptation to the ﬂexible and highly mobile nature of the workforce. Finally, we began to focus on a broad assessment of enterprise risks and on measures to mitigate such risks, including the development of business continuity plans. This overall development of our corporate infrastructure has been one of the keys to our success and our ability to grow rapidly. Of course, all the changes did not necessarily happen naturally. Employees, especially those who had been here for some time, often wanted to do things the old way. As much as I love change, that even included me at times. For example, I was initially hesitant to include some of the tougher provisions in sales contracts.
How PowerPoint Makes You Stupid by Franck Frommer
Albert Einstein, business continuity plan, cuban missile crisis, dematerialisation, hypertext link, invention of writing, inventory management, invisible hand, Just-in-time delivery, knowledge worker, Marshall McLuhan, means of production, new economy, oil shock, Ronald Reagan, Silicon Valley, Steve Jobs, Steve Wozniak, union organizing
The easy integration into PowerPoint of images and graphs can considerably alter the quality of the information, its validity, or even its credibility, especially in fields that require the greatest precision. In the first months of 2009, the public health authorities of many Western countries began to broadcast warnings about a particularly virulent and threatening flu virus, H1N1. As a result, with the help of a press campaign, real anxiety gripped public opinion and spread to many institutions. Major international companies implemented business continuity plans (BCP), procedures enabling them to continue operations and to “provide the same service to their clients in case of a major disaster,” specifically an epidemic. At meetings of BCP committees in companies around the world, PowerPoint presentations proliferated, describing “new threats of infection,” “flu types,” “the flu pandemic,” “swine flu,” “Mexican flu,” and so on.12 The presentation analyzed here was given in companies during the first quarter of 2009 by a major French hospital establishment.
Take the money and run: sovereign wealth funds and the demise of American prosperity by Eric Curt Anderson
asset allocation, banking crisis, Bretton Woods, business continuity plan, business intelligence, business process, collective bargaining, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, diversified portfolio, floating exchange rates, housing crisis, index fund, Kenneth Rogoff, open economy, passive investing, profit maximization, profit motive, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, sovereign wealth fund, the market place, The Wealth of Nations by Adam Smith, too big to fail, Vanguard fund
Principle: The sovereign wealth fund should have a framework that identiﬁes, assesses, and manages the risks of its operations • GAPP 22.1 Subprinciple: The risk-management framework should include reliable information and timely reporting systems, which should enable the adequate monitoring and management of relevant risks within acceptable parameters and levels, control and incentive mechanisms, codes of conduct, business continuity planning, and an independent audit function • GAPP 22.2 Subprinciple: The general approach to the sovereign wealth fund’s risk-management framework should be publicly disclosed • GAPP 23. Principle: The assets and investment performance (absolute and relative to benchmarks, if any) of the sovereign wealth fund should be measured and reported to the owner according to clearly deﬁned principles or standards • GAPP 24.
Cybersecurity: What Everyone Needs to Know by P. W. Singer, Allan Friedman
4chan, A Declaration of the Independence of Cyberspace, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, bitcoin, blood diamonds, borderless world, Brian Krebs, business continuity plan, Chelsea Manning, cloud computing, crowdsourcing, cuban missile crisis, data acquisition, Edward Snowden, energy security, failed state, Fall of the Berlin Wall, fault tolerance, global supply chain, Google Earth, Internet of things, invention of the telegraph, Julian Assange, Khan Academy, M-Pesa, mutually assured destruction, Network effects, packet switching, Peace of Westphalia, pre–internet, profit motive, RAND corporation, ransomware, RFC: Request For Comment, risk tolerance, rolodex, Silicon Valley, Skype, smart grid, Steve Jobs, Stuxnet, uranium enrichment, We are Anonymous. We are Legion, web application, WikiLeaks, zero day
We must maximize the probability that we can tolerate the direct effect of those intrusions, and that whatever damage is done by the intruder, the system can continue to do its job to the extent possible.” There are three elements behind the concept. One is the importance of building in “the intentional capacity to work under degraded conditions.” Beyond that, resilient systems must also recover quickly, and, finally, learn lessons to deal better with future threats. For decades, most major corporations have had business continuity plans for fires or natural disasters, while the electronics industry has measured what it thinks of as fault tolerance, and the communications industry has talked about reliability and redundancy in its operations. All of these fit into the idea of resilience, but most assume some natural disaster, accident, failure, or crisis rather than deliberate attack. This is where cybersecurity must go in a very different direction: if you are only thinking in terms of reliability, a network can be made resilient merely by creating redundancies.
Hot: Living Through the Next Fifty Years on Earth by Mark Hertsgaard
Berlin Wall, business continuity plan, carbon footprint, clean water, Climategate, Climatic Research Unit, corporate governance, cuban missile crisis, decarbonisation, defense in depth, en.wikipedia.org, Fall of the Berlin Wall, food miles, megacity, Mikhail Gorbachev, mutually assured destruction, peak oil, Port of Oakland, Ronald Reagan, Silicon Valley, smart grid, South China Sea, the built environment, transatlantic slave trade, transatlantic slave trade, transit-oriented development, University of East Anglia, urban planning
"I presented the case for adaptation, and in the question-and-answer period, one executive said, 'We're doing quite a lot on adaptation already.' I said, 'Oh, what's that?' He said, 'We're recycling, and we're looking at improving our energy efficiency.' I thought to myself, 'Oh, my, he really didn't get it at all. This is going to be a struggle.' "Most businesses aren't prepared for current extreme weather, much less what climate change is going to throw at them," Williams added. "They don't have business continuity plans for keeping their insurance in place, for making sure their records are backed up off-site regularly. What would the implications be of cutoffs of water and electricity supplies? Most businesses would go completely to pieces." Nevertheless, the British government, through UKCIP, is continuing to work the problem, trying to help business leaders realize that adaptation is in their own self-interest.