A Collaborative Multi‐criteria Decision Making Technique for Risk Factor Prioritization

Organizations are a collection of individuals, and often a disastrous organizational accident involves contributions from several technical/environmental factors and actors throughout the system over time. This paper illustrates the efficiency of a new collaborative decision making technique that could assist a group of executive decision makers in identifying, analyzing, evaluating and prioritizing significant organizational system risks. The results from the collaborative technique when applied to real world risk intensive situations, such as aviation safety risk management, are compared with those obtained by using existing notable techniques. For the case examples shown, the number of expert judgments is reduced by up to 80%. Advantages and limitations of the proposed modeling approach for collaborative decision making are discussed.     

The mistreatment of public service workers: identifying key risk and protective factors

This paper investigates the dynamics of worker mistreatment in a new public management (NPM) environment. It explores the combination of organizational and individual risk and protective factors. It reveals that the cumulative effects of organizational and individual factors radically increase the likelihood of mistreatment. Implications of these findings are outlined.     

Analysing the risks of individual and collective intentionality

The risk assessment of complex systems often seems to neglect the way in which intentions, collective and individual, are central to our explanations of how risk arises in such systems. Contradictions among the intentions of different actors, for example, are typically an important part of our understanding of how organizations break down. Moreover, risk assessment practice pays little attention to the reflexive problem of how intentions for the risk assessment itself can themselves become problematic. This study was an attempt to develop a framework to support reasoning about intentionality, both individual and collective, during risk assessment. The framework broadly follows a process of 1) identifying the main social objects in a system, 2) asking what are the collective intentions for these objects in terms of the functions that are conferred on them, 3) asking what obligations and powers these create, and 4) asking what risks of organizational dysfunction can then arise. The approach was applied in a case study of aviation ramp operations. Its main value is as a formative rather than a summative kind of analysis.     

High‐risk Technology,Legitimacy and Science: The U.S. Search for Energy Policy Consensus

Since the 1980s, a growing body of social scientific research has focused on the organizational character of the institutions that are responsible for the management and functioning of high‐risk technological systems. While there are differences among the social theories of risks that have developed on both sides of the Atlantic, much of the work offers warnings that are relevant to public policy. The warnings have largely been ignored in recent U.S. policy decisions, as illustrated most clearly by the U.S. Energy Act of 2005, which largely overlooks important questions regarding the environmental and technological risks of the technologies favored by the Act. Sociological work suggests that the scientific systems that have been instrumental in the legitimization process of high‐risk technological options of energy, more broadly, should be examined in connection with the societal institutions having responsibility for transparency, safety, and environmental protection.     

Optimal Insurance With Costly Internal Capital

We introduce costly internal capital into a standard insurance model, in which a risk‐averse policyholder buys insurance from a risk‐neutral insurer with limited liability. The unique optimal contract and internal capital lead to a strictly positive probability for insurer default. Some risks are uninsurable in that the insurer chooses not to provide insurance against such risks. An increase in the cost of capital may lead to a higher optimal amount of internal capital. The results extend to multiple policyholders in a symmetric setting. Our extension of the classical model to include costly internal capital provides a fruitful approach to many real world insurance markets.     

Risk and risk management in management accounting and control

Recent world events, most notably the global financial crisis, have refocused and intensified interest on risk and the nature of systems that operate to manage risk. One area that has received relatively little attention is the interrelation between risk, risk management and management accounting and control practices. This editorial provides an introduction to the special issue of the journal on “Risk and Risk Management in Management Accounting and Control”. It argues that risk and the way it is managed has become a feature of organizational life in both the public and private sectors. By changing organizational practices risk management can facilitate and legitimise certain ways of organizing. It has the potential to change lines of responsibility and accountability in organizations, representing a particular way of governing individuals and activities. The argument is further made that risk management has moved away from being an issue of narrow concern to finance (value at risk, derivatives, etc.) or accountants (financial statement disclosure, etc.) to an issue about management control and therefore a key area in which management accountants need to engage. This editorial also highlights the potential side-effects of risk management, including issues around trust and accountability, but also the focus on secondary or defensive risk management and the rise of reputation risk.     

Framing risks in a safety‐critical and hazardous job: risk‐taking as responsibility in railway maintenance

In risk management research, risk‐taking is mostly treated as deviation that calls for improved risk communication. I argue, however, that risk‐taking should be seen as expressing a rationale of its own; thus, improving safety requires that this rationale be adequately understood and that the conditions that reproduce risk‐taking be changed. This argument is supported by an ethnography of railway maintenance in Sweden. Railway technicians are charged with maintaining the railway infrastructure to support safe and punctual trains, an assignment that exposes them to occupational hazards. The technicians' claim of occupational responsibility for transportation safety risks is framed by two notions in occupational discourse: first, the safety‐critical nature of their tasks, and second, the notion of service to the general public. Technician interdependence in achieving occupational safety requires mutual responsibility in the team. Technicians justify occupational risk‐taking, claiming it is sometimes needed to achieve production goals given the available time and resources and the manageability of the risks taken. Finally, I stress the need for technicians to change their frames of reference and for employers to assume responsibility for reducing the need for risk‐taking.     

Self-insurance and self-protection: A nonexpected utility analysis

This paper studies the comparative statics of self-insurance and self-protection for individuals with rank-dependent expected utility preferences. In particular, proportional wealth risks, background risk, and limited liability are considered. Limited liability has a major impact on self-insurance and self-protection. It can reverse seemingly robust comparative static results for the case of self-insurance and can eliminate some puzzling ambiguities for the case of self-protection.     

风险态度、合作行为与联保贷款契约:一个实验研究

本文应用实验室实验方法,研究了在不同贷款契约情况下,借款人风险态度等因素对合作水平(努力程度)的影响。研究发现:(1)联保贷款契约下参与者的努力水平之间存在正相关关系,且其努力水平显著高于个人责任契约下参与者的努力水平。说明联保贷款契约参与者存在较高的有条件合作行为;(2)在联保贷款契约下,风险喜好参与者的努力水平显著高于风险规避参与者。说明联保贷款契约对风险喜好参与者具有显著激励作用;(3)风险规避参与者的努力水平随实验期数增加而下降的速度比风险喜好参与者更快,风险规避参与者对联保贷款契约合作水平有较大危害。我们提出:小额贷款机构应当为风险喜好借款人提供联保贷款契约,并且避免风险规避的借款人与风险喜好的借款人组成联保贷款小组。对风险喜好借款人组成的联保贷款小组,联保贷款契约的期限可以较长。     

工伤保险之专业自保公司运用研究

工伤保险对于美国企业是一项很大的负担,专业自保公司是美国企业风险管理的创新性工具,为企业节省了巨额保费,并增加企业的价值。我国的工伤保险体制是社会保险与雇主责任保险相结合的保险体制,随着人们生活水平的提高、法律意识的增强、物价水平的上升,责任保险的经济赔偿金额将越来越高。我国企业建立专业自保公司承保超额的工伤保险,会增强大型企业的风险管理水平,并从真正意义上使工伤保险做到预防、补偿和康复相结合。     

Negligence,Ignorance and the Demand for Liability Insurance

This paper considers whether lack of information regarding risk exposures can lead to a demand for negligence liability insurance. We find that, under the uniform negligence rule, such as the “reasonable person” standard used to determine negligence in the U.S. and other countries, the value of information is positive and any demand for liability insurance must come from informed individuals. The necessary and sufficient condition is that good risks find it less costly to be negligent and purchase insurance.     

Financial Reporting Quality and Wage Differentials: Evidence from Worker-Level Data

We examine whether financial reporting quality affects worker wages using employer-employee matched data in the United States. We find that low financial reporting quality is associated with a compensating wage differential—that is, a risk premium—using three distinct approaches while controlling for worker characteristics by (1) regressing wages on firm-year–level and firm-level reporting quality, (2) documenting wage changes when workers switch firms, and (3) estimating a structural approach that separates reporting quality from performance-related volatility. We find evidence consistent with two channels: performance pay and turnover risk, where workers bear risks from noise in performance measurement and unemployment, respectively. To mitigate endogeneity concerns, we show that—after the accounting scandals in 2002 and after the announcements of an internal control weakness (ICW)—former Arthur Andersen clients and ICW firms pay wage premiums to employees, with magnitudes between 0.9% and 2.8% of annual wages.     

中国国有商业银行激励机制:一个新的非线性激励契约

我国传统的银行管理人激励方法是根据银行最终实现的收益决定对管理人的奖励,一般是线性的。本文通过对这种线性激励契约的剖析,发现由于银行管理人的有限责任以及企业软约束的存在,银行的预期收益与风险水平呈倒U字的二次关系,因此线性激励契约只会使管理人过度冒险,而无益于银行的预期收益。因此,本文构建了修正的资本资产定价模型,并在此基础上提出了一个新的非线性激励契约:对管理人的奖励计划不再是连续的,而是提供一个有限的奖励范围以避免银行管理人的过度冒险;只有当银行管理人选择的风险水平不超过最优风险水平时,他才可以拿到与其努力水平相等的奖金。     

Financing Constraints and Workplace Safety

We present evidence that financing frictions adversely impact investment in workplace safety, with implications for worker welfare and firm value. Using several identification strategies, we find that injury rates increase with leverage and negative cash flow shocks, and decrease with positive cash flow shocks. We show that firm value decreases substantially with injury rates. Our findings suggest that investment in worker safety is an economically important margin on which firms respond to financing constraints.     

以数据仓库技术构建工商银行个贷信用风险管理体系

国际金融界普遍认为,消费信贷利率和净资产回报率高,且风险分散;但在我国由于缺乏有效的控制风险手段,导致贷款成本偏高,因而在大力发展个贷的同时如何控制个人客户信用风险成为各商业银行急需解决的问题。本文立足工商银行,研究发现近年来该行个贷余额不断扩大,在贷款中占比不断提高;但同时其不良率也有攀升的趋势,因而如何强化个贷信用风险管理也成为该行急需解决的现实课题。对此,笔者提出以数据仓库为依托,构建工商银行个人客户信用风险防范平台,重构个贷信用风险管理流程,是走出个贷“一管就死、一放就乱”两难境地的惟一出路。     

Influences of individual-level characteristics on risk perceptions to various categories of environmental health and safety risks

Over the last five decades, social science researchers have examined how the public perceives the risks associated with a variety of environmental health and safety (EHS) hazards. The body of literature that has been emerged diverse both in the methodology employed to collect and analyze data and in the subject of study. The findings have confirmed that risk perceptions vary between groups of individuals as well as between categories of EHS risks. However, the extant literature on EHS risk perceptions has failed to provide empirical insights into how risk perceptions can be best explained according to the interplay of both (1) the category of EHS hazard appraised and (2) the prominent individual-level characteristics that best explain observed risk perception differences. This study addresses this deficiency in the literature by providing insights into the individual and cumulative roles that various individual-level variables play in characterizing risk perceptions to various categories of EHS risks including ‘agentic risks’ like street drug use and cigarette smoking, ‘emerging technological risks’ like nanoparticles and cloning, and ‘manufacturing risks’ like air and chemical pollution. Our data are drawn from the 2009 Citizens, Science, and Emerging Technologies national study of United States households that investigated public perceptions of EHS risks, traditional and emerging media use, and various individual characteristics like personal demographics, socioeconomic factors, and perceptual filters. The findings show that some categories of EHS risks like those associated with emerging technologies may be more easily predicted than other categories of risks and that individual-level characteristics vary in their explanative power between risk categories even among a single sample of respondents.     

Evaluating the Risks of Modeling Assumptions Used in Risk Measurement

Over the past few years, risk measurement has become an important, high-profile responsibility for most firms in the financial services industry. With advances in academic theory and in technology, financial risk modeling has grown increasingly sophisticated. Most firms rely on a number of models to analyze their market risks (for example, sensitivity to changes in interest rates, exchange rates, commodity prices, and so on) for asset/liability management. But it is critical to recognize that even the most sophisticated models must make assumptions about key parameters that affect the results of the analysis. This so-called “model risk” reflects the fact that in the real world risk factors are unstable and the historical data upon which many modeling inputs are based can change. This paper discusses model risk, gives specific examples of how model risk can affect fixed-income portfolio valuation, and explains why risk measurement should involve stress testing of key modeling assumptions. If the results of a valuation or asset/liability analysis change dramatically given a small change in a modeling assumption, management may wish to reduce the firm’s exposure to that risk factor, as absolute certainty in financial modeling is an unobtainable goal.     

Session Ii: Capitalism and Social Insurance

In what Jeff Gordon describes as “the great risk shift,” large U.S. companies have responded during the last 50 years to the forces of globalization and increased pressure from investors by transferring the risks associated with product and worker obsolescence from their shareholders to their employees. Layoffs have generally meant very large, if not complete, losses of “firm‐specific investments” by displaced employees. And the problem is especially troubling in the U.S., where the employees of large companies lose not only their jobs and income streams, but also often their connection to their social network, to the entire system of social welfare and insurance that tends to be provided by large companies and the workplace. While applauding corporate retraining programs, Gordon suggests that individual company efforts are likely to be overwhelmed by the demand for such services. The solution accordingly lies in the form of government‐provided social insurance—in programs that, whether orchestrated and funded at the state or federal level, provide the most cost‐effective government “match” designed to ensure the preservation of human potential and lifetime earnings power of employees.     

Umwelthaftung, Umwelthaftpflichtversicherung und Umweltschutz

It is accepted in jurisprudence that liability has — as a side-effect — the aim to prevent damages, but up to now there has been no scientific proof that it works. There is no dispute that liability in tort is suitable for prevention, some approaches making cuts on the suitability of strict liability for this purpose. If liability insurance coverage is reasonable it is advantageous to the environment. German pollution liability coverage conditions at least provide adequate avenues: The insured is urged to present a risk index which is important for a risk analysis relevant to the current situation. The duty to give notice of claim and to acquire instructions from the insurer can help to minimize damage. The insurer has the right to ask the insured to improve his precautions. It would also deter environmental hazards if minor pollution which does not result unexpectedley or accidentally as well as misfeasance is excluded. The inclusion clause for such pollution and for developmental risks is not effective if the insured does maintain high safety and prevention standards. However it is counterproductive that, in the insurer’s understanding, salvage costs are not covered and at the same time they are not included in the environmental liability coverage.     

Relational contracts with subjective peer evaluations

We study optimal dynamic contracting for a firm with multiple workers where compensation is based on public performance signals and privately reported peer evaluations. We show that if evaluation and effort provision are done by different workers (e.g., consider supervisor‐agent hierarchy), first‐best can be achieved even in a static setting. However, if each worker both exerts effort and reports peer evaluations (e.g., consider team setting), effort incentives cannot be decoupled from truth‐telling incentives. This makes the optimal static contract inefficient. Relational contracts based on public signals increase efficiency. Interestingly, the optimal contract may ignore signals that are informative about effort.