How to improve the risk cultures of financial institutions

Following the 2008 global financial crisis, official inquires, parliamentary reports, and the media frequently focused their attention on the flawed risk cultures of financial institutions. In their research, Michael Power, Simon Ashby, and Tommaso Palermo investigated how these risk cultures operate, evolve, and can be improved

Risk and peformance: Embedding risk management

A new report from ACCA (the Association of Chartered Certified Accountants) uncovers how board-level risk management activities vary in organisations as a result of internal and external factors. The report, Risk and performance: Embedding risk management, highlights common challenges and good practices to overcome risk management difficulties. The research was conducted by Professor Simon Ashby (Vlerick Business School), Professor Cormac Bryce (Cass Business School) and Professor Patrick Ring (Glasgow Caledonian University). The study combines findings from four in-depth case studies including interviews as well as a review of current academic literature. The insights were consolidated to create the ‘risk gearbox’, a conceptual model for embedding risk management in organisations. It shows how formal and informal risk management mechanisms combine to create ‘strategic thrust’ to support the board decisions on strategic risk taking and control. There are also a number of recommendations for organisations looking to improve the effectiveness of their risk management arrangements

Parallel implementation of an optimal two level additive Schwarz preconditioner for the 3-D finite element solution of elliptic partial differential equations

This paper presents a description of the extension and parallel implementation of a new two level additive Schwarz (AS) preconditioner for the solution of 3-D elliptic partial differential equations (PDEs). This preconditioner, introduced in Bank et al. (SIAM J. Sci. Comput. 2002; 23: 1818), is based upon the use of a novel form of overlap between the subdomains which makes use of a hierarchy of meshes: with just a single layer of overlapping elements at each level of the hierarchy. The generalization considered here is based upon the restricted AS approach reported in (SIAM J. Sci. Comput. 1999; 21: 792) and the parallel implementation is an extension of work in two dimensions (Concurrency Comput. Practice Experience 2001; 13: 327)

Hall conductivity as a topological invariant

The object of the present work is to study the quantum Hall effect through its symmetries and topological aspects. We consider the model of an electron moving in a two-dimensional lattice in the presence of applied in-plain electric field and perpendicular magnetic field. We refer to this as the two dimensional electric-magnetic Bloch problem (EMB). The Hall conductivity quatizations beyond the linear response approximation is analyzed.Comment: 6 page

Low Gain Avalanche Detectors (LGAD) for particle physics and synchrotron applications

A new avalanche silicon detector concept is introduced with a low gain in the region of ten, known as a Low Gain Avalanche Detector, LGAD. The detector's characteristics are simulated via a full process simulation to obtain the required doping profiles which demonstrate the desired operational characteristics of high breakdown voltage (500 V) and a gain of 10 at 200 V reverse bias for X-ray detection. The first low gain avalanche detectors fabricated by Micron Semiconductor Ltd are presented. The doping profiles of the multiplication junctions were measured with SIMS and reproduced by simulating the full fabrication process which enabled further development of the manufacturing process. The detectors are 300 μm thick p-type silicon with a resistivity of 8.5 kΩcm, which fully depletes at 116 V. The current characteristics are presented and demonstrate breakdown voltages in excess of 500 V and a current density of 40 to 100 nAcm−2 before breakdown measured at 20oC. The gain of the LGAD has been measured with a red laser (660 nm) and shown to be between 9 and 12 for an external bias voltage range from 150 V to 300 V

Explaining the corporate demand for risk management: financial and economic views

The purpose of this thesis is to review a number of academic perspectives on the practice of risk management in primarily widely-held (i.e. quoted) firms. In particular the currently dominant modern finance approach is criticised on the grounds that it offers an overly narrow view of corporate risk management behaviour. The core of the modern finance approach is that risk management is said to exist as a means to alleviate the adverse impact of various financial and capital market based agency and transactions costs that prevent the firm's stakeholders from achieving a Pareto efficient distribution of risk amongst themselves. However, in what follows it is argued that the presence of such agency or transactions costs do not provide a complete rationale for corporate risk management. Indeed fruitful research is already being done in the areas of organisational behaviour, sociology and psychology. Yet, what remains to be fully explored is the short run economic impact of risk management on a firm. In view of this a new economic framework for risk management is proposed based on the twin economic concepts of risk related "pure penalties" (which represent an unambiguous cost to a firm) and "technological nonlinearities" (which can affect the structure of a fine's revenue, cost and production functions). Both of these phenomena can have a significant effect on the expected profits of a firm. Moreover, it is demonstrated that there are numerous scenarios in which risk management may be used by an expected profit maximising firm

Parallel application of a novel domain decomposition preconditioner for the adaptive finite-element solution of three-dimensional convection-dominated PDEs

We describe and analyse the parallel implementation of a novel domain decomposition preconditioner for the fast iterative solution of linear systems of algebraic equations arising from the discretization of elliptic partial differential equations (PDEs) in three dimensions. In previous theoretical work, this preconditioner has been proved to be optimal for symmetric positive-definite (SPD) linear systems. In this paper, we provide details of our three-dimensional parallel implementation and demonstrate that the technique may be generalized to the solution of non-symmetric algebraic systems, such as those arising when convection-diffusion problems are discretized using either Galerkin or stabilized finite-element methods (FEMs). Furthermore, we illustrate the potential of the preconditioner for use within an adaptive finite-element framework by successfully solving convection-dominated problems on locally, rather than globally, refined meshes

The reputational effects of analysts' stock recommendations and credit ratings: evidence from operational risk announcements in the financial industry

This paper investigates whether more favorable stock recommendations and higher credit ratings serve as a reputational asset or reputational liability around reputation-damaging events. Analyzing the reputational effects of operational risk announcements incurred by financial institutions, we find that firms with a “Buy” stock recommendation or “Speculative Grade” credit rating are more likely to incur an equity-based reputational damage. In addition, firms with lower credit ratings incur a much more severe debt-based reputational damage. Moreover, credit ratings are more instrumental in mitigating the debt-based reputational damage caused by fraud incidents or incurred in non-banking activities. Furthermore, the misconduct of senior management could demolish the reputation of firms with less heterogeneous stock recommendations. Finally, credit ratings serve as an equity-based reputational asset in the short term but turn into an equity-based reputational liability in the long term. Overall, our analysis reveals that stock recommendations represent a reputational burden and credit ratings act as a reputational shield; however, the persistence and magnitude of such reputational effects are moderated by time and event characteristics

Knockout of ERK5 causes multiple defects in placental and embryonic development

BACKGROUD: ERK5 is a member of the mitogen activated protein kinase family activated by certain mitogenic or stressful stimuli in cells, but whose physiological role is largely unclear. RESULTS: To help determine the function of ERK5 we have used gene targeting to inactivate this gene in mice. Here we report that ERK5 knockout mice die at approximately E10.5. In situ hybridisation for ERK5, and its upstream activator MKK5, showed strong expression in the head and trunk of the embryo at this stage of development. Between E9.5 and E10.5, multiple developmental problems are seen in the ERK5-/- embryos, including an increase in apoptosis in the cephalic mesenchyme tissue, abnormalities in the hind gut, as well as problems in vascular remodelling, cardiac development and placental defects. CONCLUSION: Erk5 is essential for early embryonic development, and is required for normal development of the vascular system and cell survival