An operational risk profile: the experience of British firms

This study provides an analysis of 163 operational loss events experienced by a variety of British firms over the period 1999–2008. 10 different hypotheses are tested to examine the distribution of loss severity and frequency with respect to business line, event type and corporate entity type. We also test hypotheses on the relation between loss severity and the decline in the market value of the announcing firm and whether or not the decline in market value is greater if the loss results from internal fraud. The results indicate that loss severity does not depend on firm size, that the decline in market value bears no stable relation to the loss amount and that they decline in market value relative to the loss amount is positively related to firm size.     

How does the stock market react to the announcement of green policies?

We investigate the impact of 19 announcements of environmental regulation on the equities listed on the Australian Stock Exchange over the period 2005–2011. Using a well-established event study methodology, we assess whether these announcements are value constructive or destructive for equity investors. Additionally, we estimate the change in systematic risk following the announcements. Our results show that the Australian market was particularly sensitive to the carbon pollution reduction scheme (CPRS) announcement. A cumulative abnormal return of −31% was recorded in the alternative energy sector after Australia submitted its target range to the Copenhagen Accord. We observe that a move towards a greener nation has a mixed effect on abnormal returns with apparent sector-by-sector differences. Green policies appear to affect the long-term systematic risk of industries, leading to the diamond risk phenomenon.     

Maintenance practices in Swedish industries: Survey results

The purpose of this paper is to investigate the maintenance practices that are used in Swedish industry. The study was performed by conducting a cross-sectional survey within Swedish firms that have at least 100 employees. The main results achieved from the study show that the role of maintenance is not highly recognised. There is a need to spend and invest more in maintenance, which is considered by the majority of Swedish industries as a necessary expense. Although about 13% of the maintenance department time is spent on planning maintenance tasks, nevertheless, about one third of the time is spent on unplanned tasks. There is a need for more adoption of maintenance concepts such as total productive maintenance (TPM) and reliability-centred maintenance (RCM). The lack or ineffectiveness of planning and scheduling can significantly restrict the maintenance department in achieving its objectives and can thus prevent the company from maximising business profits and offering competitive advantages.     

Operational Risk: A Survey

Operational risk has, in a relatively short period of time, risen from non‐recognition to prominence as the culprit for spectacular corporate collapses. This paper surveys the mushrooming literature on the subject, covering the definition, classification, characteristics, modeling and management of operational risk. It is concluded that operational risk is a controversial topic that will generate a significant amount of research in the years to come.     

islam and hayek

Can the Muslim world be integrated into the world economy? Dr Imad Ahmad, president of Imad-ad-Dean Inc. of Bethesda, Maryland, argues that the market economy is fully compatible with Islamic belief. Muslims believe in the rule of law.     

Covered interest parity: The untestable hypothesis

Although post Keynesian economists advocate the realistic bankers’ view of the forward exchange rate, neoclassical economists formulate (CIP) as a testable hypothesis. In reality, CIP represents a formula used by bankers to calculate the forward rates they quote to their customers. This article provides arguments for the post Keynesian view of the forward exchange rate and suggests that CIP is not a theory, that it is a microeconomic relation, and that it is a hedging rather than an arbitrage condition. An empirical illustration shows that deviations from CIP are observed whenever published data are used, but these deviations disappear when transaction data are used instead. It is concluded that CIP is an untestable hypothesis.