LITIGATION RISK FOR AUDITORS AND THE RISK SOCIETY

The auditing industry has mounted a global campaign to reduce its liability. In Canada, it is attempting to change from a doctrine of joint and several liability to proportionate liability, to have the Federal government legislate a statutory cap on liability, or to have the Provincial governments approve the establishment of Limited Liability Partnerships. These initiatives are consistent with the proposals of the CPA firms in the US and the CA firms in the UK. This cross-national trend suggests that a global theory of society is needed to analyze the consequences of audit risk. This paper uses the “risk society” model proposed by Beck to understand why the audit industry focuses on reducing exposure to liability, rather than on improving the quality of audits. Beck's theory of “reflexive modernization” provides an analysis of the so-called “liability crisis” that attempts to overcome the institutional construction offered by the auditing industry. The paper recognizes that it is very difficult for observers outside of the large auditing firms to judge the real risks of audits and to develop alternative public policy options. Ideally, we should be able to evaluate litigation in a modern audit environment. However, the audit firms are not required to disclose sufficient information about their costs to determine the real impact. Meanwhile, professional groups are lobbying hard for changes that will reduce auditors risk without addressing the root causes of audit failures.     

ON THE LINKAGE BETWEEN FINANCIAL RISK TOLERANCE AND RISK AVERSION

We explore the linkage between financial risk tolerance (FRT) and risk aversion. To do this, we obtain FRT scores from a psychometrically validated survey and conduct a battery of online lottery choice experiments involving the same nonstudent participants. We contrast: real and hypothetical payoffs, low and high stakes, decisions involving gains and losses, and order effects. Our key finding is that the two approaches to analyzing decision making under uncertainty are strongly aligned. We present evidence that this is particularly the case for the female participants in our sample and when high‐stake gambles are employed.     

ON THE THEORETICAL RELATIONSHIP BETWEEN BUSINESS RISK AND SYSTEMATIC RISK

This article develops a theoretical relationship between systematic risk and business risk. It is an area that has not been substantially developed in the literature. Rubinstein (1973) and Lev (1974) both developed theoretical models of systematic risk allowing for stochastic demand. A model is derived that allows for prices, variable costs and demand to be simultaneously stochastic, utilizing the covariance of the product of random variables. The temporal stationarity of unlevered systematic risk is dependent upon the temporal stationarity of the theoretical structure derived. Insight is gained as to a potential source of the empirically observed temporal instability of levered systematic risk.     

RETHINKING RISK MANAGEMENT

This paper presents a theory of corporate risk management that attempts to go beyond the "variance-minimization" model that dominates most academic discussions of the subject. It argues that the primary goal of risk management is not to dampen swings in corporate cash flows or value, but rather to provide protection against the possibility of costly lower-tail outcomes –situations that would cause financial distress or make a company unable to carry out its investment strategy. (In the jargon of finance specialists, risk management can be viewed as the purchase of well-out-of-the-money put options designed to limit downside risk.)
By eliminating downside risk and reducing the expected costs of financial trouble, risk management can also help a company to achieve both its optimal capital structure and its optimal ownership structure. For, besides increasing corporate debt capacity, the reduction of downside risk also encourages larger equity stakes for managers by shielding their investments from "uncontrollables."
The paper also departs from standard finance theory in suggesting that some companies may have a comparative advantage in bearing certain financial market risks–an advantage that derives from information acquired through their normal business activities. Although such specialized information may lead some companies to take speculative positions in commodities or currencies, it is more likely to encourage "selective" hedging, a practice in which the risk manager's "view" of future price movements influences the percentage of the exposure that is hedged.
But, to the extent that such view-taking becomes an accepted part of a company's risk management program, it is important to evaluate managers' bets on a risk-adjusted basis and relative to the market. If risk managers want to behave like money managers, they should be evaluated like money managers.     

风险管理整合

风险管理整合是当今国际银行业风险控制的大趋势 风险管理整合（Risk Convergence）也称风险集中控制，是指以整合的形式构造更加协调、有效、精简的风险控制结构，实现对各类风险的综合管理和专业化集中控制。从全球范围看，风险管理整合开始于上世纪90年代中后期。一方面，随着市场波动性增强，     

信用风险对冲技术与我国商业银行的信用风险管理

信用风险过渡集中一直是摆在银行业面前的一大挑战.过去银行主要是运用风险分散的手段来降低资产组合的风险集中度.然而,单一的风险分散手段会导致银行业务小型化、运作成本增加和破坏银行的客户网络等弊端.90年代以后发展起来的信用风险对冲思想使这个难题得到部分解决.本文首先介绍了信用风险对冲技术的几个基本理论问题;在此基础上,重点探讨了信用风险对冲技术在我国商业银行运用的现实性;最后得出结论认为,信用风险对冲技术是一种对宏观环境、金融机构素质、监管机构水平要求很高的风险管理手段,完善以上各方面是该项技术为我国商业银行利用的前提条件.     

风控先行

随着全球金融一体化进程的加快,商业银行面临的经营风险日益复杂,风险管理不仅影响着商业银行的经营业绩,而且决定着商业银行的生死存亡.加入WTO后,中国银行业融入全球金融竞争的步伐也日益加快,如何应对全新的竞争形势,构筑全面风险管理新模式,提高对金融风险管理与控制的水平,是摆在中国银行业尤其是国有商业银行面前的一道急需解决的难题.     

ON THE NEGATIVE RISK PREMIUM FOR RISK ADJUSTED DISCOUNT RATES: A REPLY

This short paper shows that the results of Professor Booth's application of the Time State Preference framework to the negative risk premium problem are in fact consistent with the analysis presented in Berry and Dyson (1980). Professor Booth's criticisms of this earlier paper are thereby shown to be invalid. Some further comments are then offered about the phenomenon of negative risk premia.     

“安全导航”坐看风险管理

强化风险事件分类控制和分级管理，应严格落实“评定靠依据、发布讲时效、整改必到位、报告逐签批”的风险管理流程，构建全程化、立体化的管理模式。     

BOND BETA AND DEFAULT RISK

The purpose of this paper is to investigate the relationship between bond betas and default risk. Previous studies conclude that there is an apparent lack of a significant and direct relationship and offer various explanations. This paper illustrates that beta is influenced by offsetting or conflicting factors that cause the relationship to be ambiguous. Empirical evidence confirms the explanation.