Operational Risk Essay Example | Topics and Well Written Essays - 1750 words

Operational Risk - Essay Example (Dictionary of Accounting, 1999). Most of the prior studies on operational risk have focused on estimating operational risk in a financial institution. Frachot et al. (2001) explored the Loss Distribution Approach (LDA) for computing the capital charge of a bank for operational risk where LDA refers to statistical/actuarial methods for modelling the loss distribution. In this framework, the capital charge is calculated using a Value-at-Risk measure. Frachot et al. (2001) show how to compute the aggregate loss distribution by compounding the loss severity distribution and the loss frequency distribution, how to compute the total Capital-at-Risk using copulas, how to control the upper tail of the loss severity distribution with order statistics. Fachot et al. (2001) also compare LDA with the Internal Measurement Approach (IMA) proposed by the Basel Committee on Banking Supervision to calculate regulatory capital for operational risk. The results show that LDA and IMA are bottom - up internal measurement models which a re apparently different. (Frachot et al., 2001). As earlier mentioned, much of the Literature has focused on operational risk in financial institutions with a particular emphasis on the Basel II accord and the quantification of operational risks. Kuritzkes (2002) notes that the Basel II Accord definition of operational risk considers only a subset of operational risks. According to Kuritzkes (2002) the term "operational risk" commonly refers to all non-financial risks whereas the Basel II Accord definition considers only a subset of non-financial risks including those resulting from failure of "internal processes, people, or systems or from external events". Mainelli (2002) suggests that operational risk has many pseudo-standard sub-taxonomies, such as people (e.g. workforce disruption, fraud), process (e.g., documentation risk, settlement failure), systems (e.g. failure, security) and external risks (e.g., suppliers, disasters, infrastructure utilities failures). However, day-to-da y operational risk management involves decisions about opening times, cleaning standards, rodent controls in dealing rooms, secure electricity supply, security controls and other management decisions not suitable to real-time spreadsheet analysis. (Mainelli, 2002). Mainelli (2002) further suggests that there is a tension between the top-down imposition of a change and the bottom-up nature of these detailed decisions. If the purpose of risk-based capital allocation is to reflect differences across banks in business mix and risk profile, then operational risk measurement will need to be supported bottom-up within individual institutions. (Kuritzkes, 2002) Figure 1: Taxonomy of Operational Risk. Source: Kuritzkes (2002) As shown in figure 1 above risks can be divided into financial and non-financial risk components. The financial risk components include market risk, credit risks and ALM insurance and other risks whereas the nonfinancial risk component includes internal event risk, external event risk and business risk. As the figure indicates, the Basel II Accord only considers a subset (internal event risk and external event risk) as the nonfinancial risk. It fails to take into consideration a very important aspect of the risks - business risks.

Assignment Example | Topics and Well Written Essays - 1250 words - 10

Assignment Example The use of information technology resources enables Hertz to facilitate its consumers through an efficient and sound online booking and reservation system. The business operations are expanded in more than 145 nations and there were nearly 9500 locations during 2009 - 2010. Nevertheless, USA, Australian and developed European economies are considered as its core markets unlike Asia and Africa. (Internet: Hertz.com) Hertz Car Rental focuses heavily on brand recognition, awareness, brand equity, customer satisfaction and loyalty. The company is in a transformation process as it has been paying special attention to update internal structure and to meet contemporary business requirements and challenges. New company logo, employee uniforms and induction of technologically advanced fuel-efficient vehicles in fleets are all the steps towards differentiation and positioning to obtain clear and distinctive image in the minds of customers (Hein, 2009). As far as other businesses of company are concerned, it has Equipment, Truck and Van rental and Car Sales units because of its business development strategy. The rental businesses deal directly with end-users; however, the Car Sales division is responsible to resale all used vehicles from company’s existing fleet of automobiles so that the old ones could be replaced by new ones. Safety, quality and reliability are the core principles of Hertz and the strategic planners never compromise upon these values for short-term monetary gains. Some of the major departments in the corporation are Finance, Sales, Process Improvement and Project Management, Marketing, HRM, Information Technology and Vehicle Maintenance. The top management is determined to facilitate internal communication and collaboration among employees, because information sharing is viewed as the actual asset in today’s workplace. The organization could not be called as absolutely complex in nature; however, co mplexity is observed at Hertz

Medical Ethics and Law Essay Example | Topics and Well Written Essays - 3000 words

Medical Ethics and Law - Essay Example The courts consider the best interests of the patients, and this situation can be seen in cases where the interests of the mother and her unborn child are involved. In the Re A case, the court opposed the wishes of the parents and held that a surgical operation was to be performed, so as to separate the conjoined twins1.The English courts have made it very clear that every individual is at liberty, under the common law, to accept or reject any kind of medical intervention, including surgery. Medical practitioners are required by law, to comply with the ethics of the medical profession and to exercise considerable skill and competence in their work. If they fail to work in accordance with this legal duty, they will be deemed to have been negligent in their profession. Communication plays a central role in the medical profession. Therefore, medical practitioners should maintain adequate communication with other medical professionals2. This is essential in cases entailing medical complications. The absence of such communication would result in poor deliverance of medical care to the patients. Moreover, doctors would be subjected to the allegation of clinical negligence, if there were to be inadequate communication between them. Similarly, doctors who fail to inform the dangers, inherent in the illness to the patient, are considered by the law to be negligent3. Such physicians will be prosecuted for negligence by the courts, if the patient files a case in this regard. Blab performed an emergency operation upon Sophie, without her consent. She is a competent adult, and as she is vehemently opposed to any medical intervention, the question arises, as to whether Blab is liable for having provided the surgical intervention to her. Patients can refuse medical treatment or surgery under the concept of freedom. However, their decisions will be valid only if they have the required levels of competence. If the patient

The Oil Crises in the 1970s Term Paper Example | Topics and Well Written Essays - 3000 words

The Oil Crises in the 1970s - Term Paper Example The oil blockade had a whooping impact on the economies of US and Western nations as they had to pay high prices for their oil imports and transportation cost in those nations became more costly due to the oil embargo imposed OPEC. â€Å"OPEC and its members and OPEC's involvement in the crisis† On October 17, 1973, OPEC implemented â€Å"oil diplomacy’ which banned its member nation’s exports of oil and announced embargo on its exports to Western nations and the USA that supported the war against Israel by Egypt and Syria. This oil embargo had been devastating impact on US economy as it put a full stop to the epoch of cheap gasoline, and the US share markets witnessed an unprecedented fall by about $97 billion followed by the worst economic recession in USA and other parts of the world. OPEC declared that it would penalize those who helped Israel in the War by slashing down the petroleum production by 5% a month till the Israel vacated the occupied provinces by reinstating the rights of the Palestinians over the region. It cited both USA and The Netherlands as the true enemies of Islam and threatened that it would deploy an indefinite ban of export of petroleum products, which would be in operation against Western nations. Customarily, before 1973, oil prices were fixed by Petroleum companies and in December 1973, OPEC announced that henceforth, it would fix the price of the oil products. Due to this, the price per barrel of oil escalated to $11.65 per barrel in December 1973 which was 130% increase as compared 1973 October price and 387% higher than 1972 price level. (www.history.com). â€Å"The Founding of OPEC† OPEC is an intergovernmental institution established on September 10-14, 1960 at the Baghdad Conference by Venezuela, Saudi Arabia, Iraq, Kuwait and Iran. Apart from the above five founding members , Indonesia , Qatar ,UAE , Libya , Nigeria , Algeria , Angola , Ecuador and Gabon joined the OPEC later . Initially, OPEC hea dquartered at Switzerland later shifted to Vienna in Austria in 1965. The core aim of OPEC is to coalesce and synchronize petroleum exploration, production and marketing strategies among Member nations so as to secure stable and just prices of oil product, an effective, viable and uninterrupted supply of petroleum products to consumer nations and to secure a just return on the capital employed on the petroleum resources by the oil-producing nations. (www.opec.org). â€Å"Yom Kippur War† This is also known as 1983 Arabs- Israeli War, or Ramadan War, which was waged against Israel by alliance of Arab nations, headed by Egypt and Syria and lasted from October 6 to 25, 1973. In the War, the USA, UK, Netherlands and France supported Israel and aggrieved by this, the Arab nations retaliated with a revolt in 1973 through an oil embargo against Western powers. Arab coalition made a surprise attack on Israel occupied regions on Yom Kippur and Egypt, and Syrian forces entered Golden He ights and Sinai Peninsula of Israel. In the Yom Kippur War, USA and its allied supported Israel by supplying arms while USSR supported the Arab Coalition and this war paved to almost direct confrontation between two superpowers during the cold war regime. In the War, Israel almost captured Egypt’s city of Suez by encircling the Egypt’s Army. In 1978, the Camp David Accord was signed where it was agreed to