Commentary on 3 papers on the role of capital regulation in bank supervision

This paper was presented at the conference "Financial services at the crossroads: capital regulation in the twenty-first century" as part of session 6, "The role of capital regulation in bank supervision." The conference, held at the Federal Reserve Bank of New York on February 26-27, 1998, was designed to encourage a consensus between the public and private sectors on an agenda for capital regulation in the new century.Bank capital ; Bank supervision

The challenges of risk management in diversified financial companies

In recent years, financial institutions and their supervisors have placed increased emphasis on the importance of measuring and managing risk on a firmwide basis—a coordinated process referred to as consolidated risk management. Although the benefits of this type of risk management are widely acknowledged, few if any financial firms have fully developed systems in place today, suggesting that significant obstacles have led them to manage risk in a more segmented fashion. In this article, the authors examine the economic rationale behind consolidated risk management. Their goal is to detail some of the key issues that supervisors and practitioners have confronted in assessing and developing consolidated risk management systems. In doing so, the authors clarify why implementing consolidated risk management involves significant conceptual and practical difficulties. They also suggest areas in which additional research could help resolve some of these difficulties.Risk management ; Financial institutions ; Bank supervision

International linkages among equities markets and the October 1987 market break

Stock market ; Stock - Prices ; International finance ; International trade

The economics of securitization

Securities ; Asset-backed financing

Cultural ecosystem services in protected areas: understanding bundles, trade-Offs, and synergies

The concept of ecosystem services (ES) provides a potentially useful tool for decision-making in natural area management. Provisioning and regulating ES often occur in "bundles" that are cohesive because of coprovisioning or codependence. We asked whether individual preferences for cultural benefits also define service bundles. Data from a large survey of visitor preferences (n = 3,131 respondents) from all 19 South African National Parks indicated five bundles of cultural ecosystem services: (1) "natural history," (2) "recreation," (3) "sense of place," (4) "safari experiences," and (5) "outdoor lifestyle." Tradeoffs and synergies between bundles of services depended on the ecosystem providing them and on alignment between demand for services and the supply of particular service bundles in specific ecosystems. Our results show that identifying demand for multiple services can both help us to understand why people visit and value protected areas, and better inform the management choices that influence service provision

The relevance of spatial variation in ecotourism attributes for the economic sustainability of protected areas

In contemporary society, protected areas are increasingly expected to justify their existence through the services that they provide to society. Protected areas offer many important cultural services, but appraisal of these nonmaterial benefits has generally proven difficult and most studies have focused on single case studies. Data on tourist numbers across multiple camps and protected areas provide a tractable and previously unexploited case study for better understanding the economic sustainability of cultural service provision and the relevance of potentially confounding variables (e.g., location and infrastructure) for park sustainability. We used redundancy analysis and linear models to relate a 5-yr monthly data set (2007–2012) of tourist numbers and tourism-derived income in all camps in South African national parks to a set of largely GIS-derived, determinant attributes that captured key elements of location, biodiversity, infrastructure, and accommodation cost at a camp level. Our analysis suggests that the degree to which cultural services can be converted into revenue for conservation is strongly contingent on infrastructure, location, and the business model that the park adopts. When considered alone, ecological attributes explained 14.2% and 3% of day and overnight visitation rates, respectively. In contrast, models that considered ecosystems in combination with other elements could explain 53% and 67% of variation. Linear models confirmed the existence of complex interactions between groups of variables and highlighted individual covariates that affected visitation rates. Significant variables included ecological features that provided aesthetic services, number of water bodies, elevation, available units, unit costs, and distance to the coast, airports, and other national parks. Taken in context our results suggest that it may be simpler than expected to make predictions about the potential future economic viability of protected areas under alternative models of management, illustrate how ecological variables may represent the “supply” side in cultural services, and highlight the complex interplay between ecological and built infrastructure. Encouragingly, this in turn suggests that relatively small, targeted investments in infrastructure could lead to disproportionate increases in tourist visitation rates and hence in increased revenue for conservation

Pathogens, disease, and the social-ecological resilience of protected areas

It is extremely important for biodiversity conservation that protected areas are resilient to a range of potential future perturbations. One of the least studied influences on protected area resilience is that of disease. We argue that wildlife disease (1) is a social-ecological problem that must be approached from an interdisciplinary perspective; (2) has the potential to lead to changes in the identity of protected areas, possibly transforming them; and (3) interacts with conservation both directly (via impacts on wild animals, livestock, and people) and indirectly (via the public, conservation management, and veterinary responses). We use southern African protected areas as a case study to test a framework for exploring the connections between conservation, endemic disease, and social-ecological resilience. We first define a set of criteria for the social-ecological identity of protected areas. We then use these criteria to explore the potential impacts of selected diseases (foot-and-mouth disease, anthrax, malaria, rabies, rift valley fever, trypanosomiasis, and canine distemper) on protected area resilience. Although endemic diseases may have a number of direct impacts on both wild animals and domestic animals and people, the indirect pathways by which diseases influence social-ecological resilience also emerge as potentially important. The majority of endemic pathogens found in protected areas do not kill large numbers of wild animals or infect many people, and may even play valuable ecological roles; but occasional disease outbreaks and mortalities can have a large impact on public perceptions and disease management, potentially making protected areas unviable in one or more of their stated aims. Neighboring landowners also have a significant impact on park management decisions. The indirect effects triggered by disease in the human social and economic components of protected areas and surrounding landscapes may ultimately have a greater influence on protected area resilience than the direct ecological perturbations caused by disease

Tracking socioeconomic vulnerability using network analysis: insights from an avian influenza outbreak in an ostrich production network

BACKGROUND: The focus of management in many complex systems is shifting towards facilitation, adaptation, building resilience, and reducing vulnerability. Resilience management requires the development and application of general heuristics and methods for tracking changes in both resilience and vulnerability. We explored the emergence of vulnerability in the South African domestic ostrich industry, an animal production system which typically involves 3-4 movements of each bird during its lifetime. This system has experienced several disease outbreaks, and the aim of this study was to investigate whether these movements have contributed to the vulnerability of this system to large disease outbreaks. METHODOLOGY/PRINCIPAL FINDINGS: The ostrich production system requires numerous movements of birds between different farm types associated with growth (i.e. Hatchery to juvenile rearing farm to adult rearing farm). We used 5 years of movement records between 2005 and 2011 prior to an outbreak of Highly Pathogenic Avian Influenza (H5N2). These data were analyzed using a network analysis in which the farms were represented as nodes and the movements of birds as links. We tested the hypothesis that increasing economic efficiency in the domestic ostrich industry in South Africa made the system more vulnerable to outbreak of Highly Pathogenic Avian Influenza (H5N2). Our results indicated that as time progressed, the network became increasingly vulnerable to pathogen outbreaks. The farms that became infected during the outbreak displayed network qualities, such as significantly higher connectivity and centrality, which predisposed them to be more vulnerable to disease outbreak. Conclusions/Significance Taken in the context of previous research, our results provide strong support for the application of network analysis to track vulnerability, while also providing useful practical implications for system monitoring and management