347 research outputs found
DESIGNING OBJECT-ORIENTED REPRESENTATIONS FOR REASONING FROM FIRST-PRINCIPLES
Modeling expert knowledge using "situation-action" rules is not always feasible in knowledge
intensive domains involving volatile knowledge (e.g., trading). The explosive search
space involved in such domains and its dynamic nature make it extremely difficult to setup
a rule base and keep it accurate. An alternative approach suggests that in some domains
many of the rules expert use can be derived by reasoning from "first-principles". That approach
entails modeling experts' deep knowledge, and emulating reasoning processes with
deep knowledge that allow experts to derive many of the rules they use and justify them.
This paper discusses the design and implementation of an object-oriented representation
for the deep knowledge traders utilize in a business domain called hedging, which is knowledge
intensive and involves volatile knowledge. It illustrates how deep knowledge modeled
using that representation is used to support reasoning from first-principles. The paper also
analyzes features of that representation that we have found to be extremely beneficial in
the development of a knowledge-based system called INTELLIGENT-HEDGER. Based on
our experience we feel that, with minor modifications, this representation can be used in
other managerial domains involving financial reasoning.Information Systems Working Papers Serie
Primary Drivers of Software Maintenance Cost Studied Using Longitudinal Data
We examine the main drivers of software maintenance effort and cost. We use the âDistributed Cognitionâ framework to hypothesize about how âdiscovery workâ in maintenance is effected by two types of cost drivers: system attributes (size, complexity, age, etc.) and personnel attributes (number of maintainers, location dispersion, etc.). We test our hypotheses using archival data about over 5,000 maintenance projects carried out between 2009 and 2011 on 412 different operational systems in a large financial institution. We find that personnel attributes are significantly more influential than system attributes. In particular, a marginal change in personnel factors is associated with effort growing much faster than cost, indicating an escalating marginal cost of spreading maintenance work across more maintainers and site locations. We also find, counter to expectation, that two system attributes are negatively linked to maintenance effort and cost. Implications of these findings for research and practices are discussed
QUALITATIVE SYNTHESIS OF CONFIGURATIONS FOR TWO-TERMINAL SYSTEMS BASED ON DESIRED BEHAVIOR
In design, inferring structure from function is a combinatorial generate-and-test problem.
Existing methods use prestored domain-specific partial configurations to constrain
the generator. We have found that for certain types of economic and physical
systems consisting of two-terminal components connected in parallel, it is fruitful
to specify function in terms of desired behavior, and to identify sets of components
whose resultant behavior matches that desired behavior. In this paper, we present two
synthesis operators called stretch and steepen that operate on qualitatively specified
piecewise linear functions that characterize the behavior of components. We are currently
applying this model to the domain of financial hedging, where behaviors of the
components (stocks, bonds, options, etc.) are specified in terms of two-dimensional
piecewise linear relationships, and the goal is to synthesize these to produce a constrained
behavior in response to uncontrollable events.Information Systems Working Papers Serie
AN INTELLIGENT ASSISTANT FOR FINANCIAL HEDGING
Problems in Finance, particularly those involving risk assessment
and management, have been slow to yield to
expert systems technology for two reasons. First, expert
reasoning in such problems is often based on âfirst principles"
instead of âsituation-action" rules that characterize
most expert systems. Secondly, the knowledge involved,
such as that about financial instruments, is constantly
changing. This would make it extremely difficult
to keep a rule-base accurate. We have developed a representation
in the domain of financial hedging that has
the following characteristics. First, it allows for reasoning
qualitatively based on first principles using the fundamental
quantitative valuation models that characterize
each instrument. Secondly, it uses object oriented concepts
and inheritance to minimize the effort needed to
set up the knowledge base and keep it current. Thirdly,
it includes a calculus for derivation of qualitative knowledge
of "one-dimensional-order", which allows it to solve
problems where optimality constraints are qualitative.Information Systems Working Papers Serie
Linking Operational IT Failures to IT Control Weaknesses
Operational IT failures have significant negative effects on firms but little is known about their origins. Building on accounting research linking adverse operational events to SOX-disclosed control weaknesses (CWs) over financial reporting, we study the origins of IT failures in relation to IT-CWs. We use a sample of 212 operational IT failures where the confidentiality, integrity or availability of data assets and functional IT assets (hardware, networks, etc.) has been compromised. We find that IT failures are linked to a relatively small set of IT-CWs, where each IT failure type is linked to distinctly different IT-CWs. Moreover, IT failures more harmful to the firm are found to be associated with IT-CWs that are more sever and difficult to remediate
A Viable Approach for Measuring the Risk-Return Relationship of IT Investments
The importance of managing the risk-return balance of information technology (IT) investments has become clearer than ever. Yet, quantitative assessment of IT investment risk and return based on financial measures remains a major challenge. Recently scholars have used event study analysis to measure the value created via IT investment, by examining the abnormal changes in shareholder wealth around the time a specific IT investment is announced. The abnormal return on equity due to such an event is considered a good proxy for the economic value of that event. In the same spirit, this research proposes estimating several forms of IT investment risk, by combining event study analysis with the use of arbitrage pricing theory. In so doing, this research contributes towards the development of an integrated approach for quantifying the risk-return relationship for IT investment so that practitioners can make more informed investment decisions
Project Milestones for Managing Risk in Software Development Outsourcing: A Real Options Perspective
IS-Related Operational Risk: An Exploratory Analysis
Past research concerning information systems (IS) risk has mainly focused on development risk. However, the impact of any risk event that occurs once the system is operational can be far more extensive. Such events are due to what has been termed operational risk. Our research is concerned with operational risk that involves an IS â or IS-related operational risk â which has received little attention in the academic literature. Specifically, we seek to offer a comprehensive exploratory analysis of IS-related operational risk based on a database documenting hundreds of actual IS-related operational risk events. Our findings could help managers and researchers to achieve a better understanding of the risk exposure associated with operational ISs in their current business environment and with new information technology (IT) investments under consideration. This research could also assist organizations in achieving a higher level of strategic and economic alignment, through the use of a systematic IS risk management approach
An Event Study Analysis of the Economic Impact of IT Operational Risk and its Subcategories
Organizationsâ growing exposure to IT operational risk, or the risk of failures of operational IT systems, could translate into significant losses. Despite this, there are notable theoretical and empirical gaps in the literature on IT operational risk. We propose the âresource weaknessesâ framework, which extends the resource-based theory of the firm, as a theoretical lens for investigating IT operational risk and its impacts. We also theorize about and empirically examine the impact differences of two categories of IT operational failures: ones resulting in the disclosure, misuse, or destruction of data assets, and ones resulting in the loss of availability or the mis-operation of functional IT assets responsible for the handling of data assets. Whereas the former, data-related failures have had some coverage in the literature, little is known about the latter, function-related failures. We apply an event study analysis with a well-balanced data set of IT operational failure events that occurred in U.S. financial service firms over a 25-year period. We find that function-related events have a substantially larger negative wealth effect than data-related events, and that firm characteristics such as firm size and growth potential greatly influence the degree of wealth effect. We conclude with important implications for practice and research
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