Public perceptions of environmental risk in China

China, as a ‘double risk’ society, is in urgent need for effective environmental risk management systems. Compared with other risks, man-made environmental risks have not been given due weight. Public awareness and perceptions of environmental risks are crucial in all phases of effective risk management. However, little is known about public perceptions of environmental risks in China. To contribute to better understanding of public perception of environmental risk, a questionnaire survey was conducted among university students in Beijing, who represent a group with high level of education and a generally high sensitivity to new information. The results show that even this group has limited knowledge about environmental risks and current risk management systems. Further studies are needed to understand the social construction of environmental risks in China and to seek ways to involve the Chinese public in emergency response and risk management.     

Public perception and responses to environmental pollution and health risks: evaluation and implication from a national survey in China

Concerns have been raised among policy-makers, researchers and Chinese citizens regarding the widespread environmental degradation that has occurred in China in recent decades. Years of environmental education and media coverage on pollution harm and health risks have not only provided information about pollution to the public, but have also strengthened people’s concerns. However, an ‘intense focus’ on pollution is far from sufficient; at present, it is necessary to assess to what extent the public can identify specific environmental conditions and whether they are ready to cope with potential health risks from pollution. Through face-to-face surveys on trains and at railway stations nationwide, we investigated public experiences of environmental pollution accidents, perceptions of local environmental risks (focused on air and water quality) and responses to local environmental conditions. By comparing public perceptions with official environmental monitoring data-sets, we concluded that the accuracy of perceptions related to four environmental factors ranged from 40 to 60% at the individual scale. Furthermore, the accuracies increased approximately 2–10% at the county scale and 10–30% at the city scale, highlighting the possible benefits of collective intelligence in helping the public to identify existing environment conditions more accurately. Additionally, despite great concerns about pollution and health, public attitudes toward coping with the dangers of pollution and health risks were found to be indifferent. Our study revealed factors at the individual, social and governmental levels that led to low levels of perception accuracy and response scores. Thereout, we stressed potential pathways to improve the accuracy of public perception and the positivity of responses. The survey results indicate that there is a long way to go before the public is well prepared to cope with the risks of pollution; as a consequence, it is necessary to improve both personal environmental awareness as well as governmental, social and commercial responses to pollution events.     

The impact of climate risk on earnings management: International evidence

This study explores the influence of climate risk on properties of firms’ financial reporting practices with observations collected from 64 countries between 2005 and 2016. We use a country-level climate risk indicator developed by Germanwatch to measure the degree of damage from extreme weather events, and find that climate risk positively influences firms’ engagements in both accruals-based and real earnings management. Furthermore, we document that the above-mentioned effects of climate risk are moderated by the quality of country-level public governance. Subsample analysis suggests that the main effect of climate risk on earnings management is more pronounced for firms from developed countries, for firms in environment-sensitive industries, and for firms reporting losses. Our findings, which are supported by a battery of robustness tests, have important implication for regulators and policymakers.     

The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry

We test the hypothesis that practicing enterprise risk management (ERM) reduces firms’ cost of reducing risk. Adoption of ERM represents a radical paradigm shift from the traditional method of managing risks individually to managing risks collectively allowing ERM-adopting firms to better recognize natural hedges, prioritize hedging activities towards the risks that contribute most to the total risk of the firm, and optimize the evaluation and selection of available hedging instruments. We hypothesize that these advantages allow ERM-adopting firms to produce greater risk reduction per dollar spent. Our hypothesis further predicts that, after implementing ERM, firms experience profit maximizing incentives to lower risk. Consistent with this hypothesis, we find that firms adopting ERM experience a reduction in stock return volatility. We also find that the reduction in return volatility for ERM-adopting firms becomes stronger over time. Further, we find that operating profits per unit of risk (ROA/return volatility) increase post ERM adoption.     

The differences in perception of radiological risks: lay people versus new and experienced employees in the nuclear sector

This paper studies the differences in perception of two radiological risks – an accident at a nuclear installation and medical X-rays – between four different groups: the general population without (1) and with experience related to radiological risks (2), new employees (3) and professionally exposed people (4) in the nuclear sector. More precisely, this study determines if differences in risk perception can be explained by the level of experiences with ionizing radiation, the knowledge level about radiological risks, the confidence in authorities, the attitude towards nuclear energy, the trust in a management of nuclear installations, gender and age. The data are gathered using computer assisted personal interviews based on the SCK-CEN Barometer of the Belgian Nuclear Research Centre. The relations between risk perception and the independent variables are tested with linear regression analysis. The risk perception of both risks differs significantly between the four population groups. The professionally exposed people and the new employees in the nuclear sector have a significant higher risk perception for medical X-rays compared to the risk for an accident at a nuclear installation. For the general population without experience, it was just the opposite. The general population with experience does not have a significant difference in risk perception between the two radiological risks. Level of experiences with ionizing radiation is determined as an important variable; people have a lower perception of radiological risks when they have higher experiences with risk.     

Public priorities and expectations of climate change impacts in the United Kingdom

Irrespective of the success of climate mitigation efforts, societies worldwide face the challenge of adapting to a changing climate. In this paper, we examine UK residents’ expectations of future threats and opportunities associated with climate change impacts, along with willingness to prioritise different climate change impacts for investment. Using a national survey (n = 2007), we report on three main findings. First, UK residents tend to expect threats related to flooding and wet weather to be more likely and concerning than heat extremes or opportunities. Second, UK residents’ expectations of climate change impacts do not align with expert assessments, especially showing lower estimates of heat-related threats as compared to experts. Third, willingness to allocate resources to potential climate change impacts tends to be more strongly associated with anticipated concern should they occur than climate change belief or the expected likelihood of them occurring. We discuss the implications of our findings for policies and communications about climate change adaptation in the UK and elsewhere.     

次贷危机后的保险业风险管理问题

2007年美国发生的次级贷危机再次将风险与风险管理的问题摆在了全球金融业面前,而以风险为主营业务的保险业更需要系统思考风险管理对于本行业健康运营的内在意义。本文从风险管理行为动机、非系统性风险的分散、系统性风险的控制三个方面分析了保险业影响危机发生及受到危机冲击的原因,进一步明确了今后保险业风险管理的发展方向,并提出通过建立合理目标、完善信息沟通机制和治理结构等为风险管理提供有效内部支持。     

Public sector risk managers and spending cuts: mitigating risks

This paper reports case study research, the results of which are used to consider whether councils have recognised the potentially substantially increased social risks they may create as they seek to reduce their spending in line with the UK Government’s programme of public sector austerity. It discusses the conceptual shift in the public sector risk management literature towards social risk management (SRM), presents empirical evidence of social risks and considers the approach to SRM developed by other organisations. It finds no evidence of SRM within the case study authorities and so advocates a shift in the public sector risk management culture from a preoccupation with defensive-institutional risk management practices to a more proactive social dimension. In so doing, it discusses the goals of SRM, the constraints limiting their achievement, metrics for measuring social risk, tools for mitigating social risk and the problems faced when operationalising SRM.     

Tax risk management and the multinational enterprise

The financial scandals in the United States and other countries ushered in financial reporting and corporate governance reforms that extend beyond the U.S. Sarbanes-Oxley Act of 2002 (SOX). These initiatives have increased the international financial community's awareness of the importance of risk management and internal controls. Tax risk management and related internal controls have been accorded less focus than risk management generally. The purpose of this research is to describe the current state of tax risk management of multinational enterprises (MNEs) by reporting survey responses from chief financial officers (CFOs) of U.S. and non-U.S. MNEs. The research shows that significant progress has been made by large MNEs in developing and implementing both general and tax risk management policies. The results provide guidance in identifying the loci and impact of organizational tax risk and indicate that respondents do not perceive alarming degrees of tax risk in their organizations. The study reveals a remarkable degree of similarity in U.S. and foreign firm responses and demonstrates, unexpectedly, that existing reporting structures enable CFOs to shift a significant degree of tax risk management to heads of tax.     

Risk management and its practical application: lessons from the British Army

This study explores, using predominately qualitative data, the risk management approaches of British Army officers in operational theatre. Risks within an operational context are particularly challenging for the British Army to manage due to external constraints such as its adherence to various rules of engagement and international conventions such as the Geneva Convention that consists of treaties that clearly articulate legal protection to be accorded to both civilians and combatants during war. The British Army’s centralised and highly structured control and regulation mechanisms are the product of over 300 years of traditions. Few companies can draw on this history, but we argue that the historical successes of the British Army suggest that contemporary civilian organisations have much to learn from the military approach to risk management.     

Data for outcome payments or information for care? A sociotechnical analysis of the management information system in the implementation of a social impact bond

ABSTRACT

Social Impact Bonds (SIBs) are a policy intervention designed to explicitly link the activity of social interventions to outcome payments. Despite a burgeoning literature on SIBs there is a lack of evidence in relation to the information system characteristics and accounting mechanisms of SIBs. Applying a multi-dimensional sociotechnical lens to a case study of a SIB allows us to reveal the current problematic convergence of public management and information systems. The authors found that an information system within a SIB is introduced and adapted to increasingly prioritize the production of data for payment over documenting care accounts to support improved provision. The ?ndings of this paper also suggest that claims of SIBs as an innovation are limited as they are subject to the familiar problems of New Public Management practice, in the way they shape the design and use of the data in governance, management and service delivery practices.     

小概率高损失事件的忽略——对中国发展巨灾保险的意义

地震、洪水和台风等都属于小概率高损失的巨灾风险,一旦发生将给社会和人们的生活带来破坏性的后果。研究表明,巨灾事件的发生会极大地改变公众对风险或损失的预期和感知。在巨灾事件发生时以及一段时间内,由于风险信息的显著性和可获得性,公众会产生暂时的紧张和恐惧心理,随着时间的流逝,人们会慢慢从非理性中冷静下来,意识到巨灾风险发生的概率是如此之小,过度的担心是没有必要的。这对于巨灾风险制度的发展产生了重要的影响,因此,分析和研究公众对巨灾风险的感知、提出相应的巨灾保险发展的对策建议具有重要的理论和实践意义。     

Enterprise risk management in financial groups: analysis of risk concentration and default risk

In financial groups, enterprise risk management is becoming increasingly important in controlling and managing the different independent legal entities in the group. The aim of this paper is to assess and relate risk concentration and joint default probabilities of the group’s legal entities in order to achieve a more comprehensive picture of a financial group’s risk situation. We further examine the impact of the type of dependence structure on results by comparing linear and nonlinear dependencies using different copula concepts under certain distributional assumptions. Our results show that even if financial groups with different dependence structures do have the same risk concentration factor, joint default probabilities of different sets of subsidiaries can vary tremendously.

A multi-factor model for the risk management of portfolios

We propose a methodology for modelling the value at risk of a complex portfolio, based on an extension of the Ho, Stapleton and Subrahmanyam technique. We model the variance-covariance structure of up to seven variables. These could represent four country indices and three exchange rates, for example. In addition, the effect of an arbitrary number of orthogonal factors can be analysed. The system is illustrated by estimating the value at risk for a portfolio of international stocks where the factors are stock market indices and exchange rates, a portfolio of international bonds where the factors are interest rates as well as exchange rates, and a portfolio of interest rate derivatives in different currencies. In this last case, we model a two-factor term structure of interest rates in each of the currencies, valuing the derivatives at a future date using these term structures and the Black model. The model is applied for different fineness of the binomial density and computational accuracy and efficiency are estimated.
G13, G15, G21     

Determinants and value of enterprise risk management: empirical evidence from Germany

Enterprise risk management (ERM) has become increasingly relevant in recent years, especially due to an increasing complexity of risks and the further development of regulatory frameworks. The aim of this paper is to empirically analyze firm characteristics that determine the implementation of an ERM system and to study the impact of ERM on firm value. We focus on companies listed at the German stock exchange, which to the best of our knowledge is the first empirical study with a cross-sectional analysis for Germany and one of the first for a European country. Our findings show that size, international diversification and the industry sector (banking, insurance, energy) positively impact the implementation of an ERM system, and financial leverage is negatively related to ERM engagement. In addition, our results confirm a significant positive impact of ERM on shareholder value.     

Implicit attitudes toward risk: the construction and validation of the measurement method

Methods that are typically used to examine individual differences in risk attitudes (e.g. lotteries, dilemmas, questionnaires) require participants to explicitly declare their willingness to take risk. Therefore, they may be biased by the need for self-presentation or situational characteristics such as time pressure and cognitive constraints that lead to more spontaneous and automatic processing of risk-related information. The aim of this study was to construct an indirect measure of risk attitudes that is free of these methodological limitations. The method based on the Implicit Association Test shows high internal reliability and satisfactory stability over time. It correlates moderately with different explicit measures of risk attitudes that are related to sensation seeking. Finally, it is characterized by a high predictive power. Adding the implicit measure to the set of independent variables representing declarative evaluations of risk attitudes significantly improved the model predicting risky real-life behavior. We argue that the indirect assessment of risk attitudes presented in this paper may be used as an universal measure of people’s risk propensity that is free of biases related to self-presentation and situational factors.     

Enterprise risk management: An empirical analysis of factors associated with the extent of implementation

Enterprise risk management (ERM) has emerged as a new paradigm for managing the portfolio of risks that face organizations, and policy makers continue to focus on mechanisms to improve corporate governance and risk management. Despite these developments, there is little research on factors associated with the implementation of ERM. Research is needed to provide insights as to why some organizations are responding to changing risk profiles by embracing ERM and others are not.This exploratory study examines factors associated with the stage of ERM implementation at a variety of US and international organizations. Based on data gathered from 123 organizations, we find the stage of ERM implementation to be positively related to the presence of a chief risk officer, board independence, CEO and CFO apparent support for ERM, the presence of a Big Four auditor, entity size, and entities in the banking, education, and insurance industries. We also find US organizations to have less-developed ERM processes than international organizations. We believe this paper will provide an initial foundation for more advanced research about ERM.     

Enterprise risk management and firm performance: The Italian case

This paper investigates whether a relationship exists between the extent of implementation of enterprise risk management (ERM) systems and the performance of Italian listed companies. While many contributions in the literature focus on the determinants of ERM adoption and use one-dimensional feature to proxy for ERM implementation, we detect the consequences of ERM implementation and capture a variety of features to measure the sophistication of the ERM system. The results show that firms with advanced levels of ERM implementation present higher performance, both as financial performance and market evaluation. Additional tests also corroborate the expectation that effective ERM systems lead to higher performance by reducing risk exposure and that reverse causality between ERM and performance is not present in the short term. The study provides a twofold contribution to the ERM literature. First, it introduces new and more complete measures for ERM implementation, concerning not only corporate governance bodies dedicated to risk management, but also the characteristics of the risk assessment process. Moreover, it provides evidence of a positive relationship between ERM implementation and firm performance in an under-investigated context such as Italy.     

发挥资本导向整合银行风险管理体制

近年来,资本管理在商业银行中的地位越来越重要,这是监管部门强调资本约束原则的效果,也是商业银行自身控制风险的重要手段。文章指出,作为商业银行风险管理工作的重要抓手,资本管理的核心是计量能力的提升,对于资本分配应掌握总量控制的原则。中国银行业应以资本管理为导向,逐步完善自身的风险管理体系。     

Risk management of real estate: The case of real estate swaps

Real estate swaps are a recent financial innovation based upon the principle of comparative advantage. A real estate swap is a useful tool for real estate risk management and for participating in real estate investment without the high costs associated with real estate. Potential economic benefits and costs associated with real estate swaps are considered and real estate swaps are compared to alternative tools for real estate risk management. The expected utility and effectiveness of risk management with a swap in a multiperiod framework are analyzed. The analysis finds that the subject property's return and its risk characteristics (as reflected in its correlation with interest rate and property index returns) delimit the risk management potential of a given swap position. Optimal swap positions are shown for various regions and property types based on historical return series, from the period between 1983 and 1992, and the parameters of the dynamic model developed.