S/F/122. Hedging against foreign exchange exposure

The paper reports on the problem of foreign exchange exposure (FEE) faced by ElecdyneWales (EW), a subsidiary of the Japanese company Elecdyne. Types of FEE are described including translation, transaction and economic exposures; hedging techniques for each type of exposure are outlined highlighting their advantages and disadvantages.

S/F/121. Many American families and small businesses affected by Hurricanes Katrina and Rita were apparently uninsured. Discuss the individual behavioural factors which might explain why these individuals chose not to purchase insurance cover against the risk of potential windstorm damage to property, possessions and businesses

The paper examines the purchasing behaviour towards the natural disaster insurance focusing on the economic losses of Hurricanes Katrina and Rita in the USA. The problem of decision making about low probability events is discussed on the basis of the Prospect theory, personal behavioural factors, ethnic background, etc.

S/F/110. Explain the terms: information asymmetries, first time lending and repeat lending, and moral hazard, discussing the following statement: 'Lenders are wary of high-technology ventures because of their higher risk. Lenders can overcome this risk by developing close relationships with the businesses'

The paper examines the implications of information asymmetry for financial companies analyzing the risks of money lending, and discussing the peculiarities of investment in high-technology companies. Approaches to risk management are reviewed.

S/F/107. Key risk management decision and the estimation of direct and indirect costs and benefits associated with them

The paper examines the issues of risk management providing definitions of risk and uncertainty, and discussing the process of organizational risk management (RM) including risk assessment, risk measurement, risk avoidance, risk reduction, risk transfer, risk sharing, risk financing, etc. The costs and benefits of RM method are highlighted.

C/F/168. Estimate the average return, standard deviation and coefficient of variation for two assets

The works shows the average return, standard deviation and coefficient of variation for 2 assets. The work discusses why standard deviation and coefficient of variation is used and the 'preferred' asset is chosen. Given betas for both assets, CAPM expected return is worked out. The work then discusses why it is better to use betas rather the standard deviation to measure the risks of the assets. All of the calculations are included in the appendix.

P/F/520. Measurement of Portfolio Performance Under Uncertainty: critical review

The paper critically reviews the theory of investment performance measurement by Friend and Blume addressing the issue of risky portfolios and discussing economists’ opinions about the theory.

P/P/349. Impacts of 9/11 terrorist attacks and catastrophe insurance

The paper examines the impacts of September 11, 2001 terrorist attacks on the USA (9/11) focusing on the issues of insurance related to the event. Insured losses are estimated including economic losses, the insurance premiums for businesses after 9/11, etc. The background of the insurance industry is described outlining various types of risk, the structure of the catastrophe bond, current markets for catastrophe insurance, etc. The features of a captive insurance company are described.

S/F/85. Comparison of the three investment models used by financial institutions to evaluate risk exposure; VAR, Monte Carlo and Historical methods

Information from the banks trading activities and measurements are put into models, which then provide the extent to which the bank is exposed to market risk. This is known as Value at Risk (VaR), it summarises the potential risk of a financial instrument in a one figure. ‘So-called value-at-risk (VAR) models determine the amount of capital that banks must set aside against their trading positions, and purport to show how many millions of dollars a bank might lose should markets turn against it’ (The Economist ‘The coming storm’). VaR has three components, a time period, a confidence level and the resultant estimate of future loss. VaR is a recommended method of calculating risk by the Bank of International Settlements (BIS).There are three methods that a bank can use to measure the capital they require to cover their market risk exposure: Variance / Covariance, Historical and Monte Carlo

P/F/502. Economic consequences of moral hazard: case study of insurance market

The paper examines the issues of moral hazard that may be caused by asymmetric information during a transaction or by the relationship between the employer and the employee, and may result in a market failure. The study focuses on the effects of moral hazard on insurance companies reviewing their policies of hedging against moral hazard risks.

P/F/469. Hang Sang Index (HIS) futures as hedge

The paper reports on hedging a portfolio of stocks using Hang Sang Index (HIS) futures identifying their position in Hong Kong capital market, reviewing HIS securities, discussing the issues of Beta measurement, tailing, etc. Conclusions are made about the imperfection of futures contracts used as a hedge.

P/F/451. Attitudes of investors to risk

The paper examines the attitudes of investors to risk reviewing theories of choice behaviour under risk (the Ñprospect theoryÒ) and discussing investorsÒ evaluation of risks and returns.

P/F/450. Theoretical approaches to risk and decision making

The paper examines the effects of human behaviour on investment decisions critically reviewing decision making theories including the expected utility theory, the approaches to the concepts of risk and Ñloss aversionÒ, the portfolio theory, the prospect theory, etc. The measures of risk adjustment and the value of the expected utility theory are discussed.

P/F/437. Assessing and managing risks in offshore oil industry

The paper discusses the methods of assessing and managing risks in the offshore oil industry. Potential hazards of the industry environment are outlined; the concepts associated with risk are discussed including tolerance, Health and Safety Executive (HSE) regulations, safety culture, etc.

P/F/420. Value at risk estimation

The paper examines the parameters and measurements of Value at Risk (VaR), or a decrease of an asset value over a certain time. Models used to determine the VaR for a portfolio are outlined; a trail estimation of a portfolio VaR is conducted using the methods of variance-covariance and historical simulation. Advantages and disadvantages of both methods are highlighted.

P/F/409. Representations and warranties in debt risk management

The paper examines the impacts of including representations and warranties in an agreement focusing on the issues of lending risk management. The difference between the representations and warranties in a loan agreement and in a subscription agreement is discussed.

E/F/31. Approaches to risk management

The paper investigates project risk management providing definitions of risk and discussing the relationship between uncertainty, opportunity and risk, a four-stage approach to risk management, external risk anticipation, etc.

P/F/392. Methods to minimize risks at Italian Motor Manufacturer: analysis and suggestions

The paper offers a list of methods to assist in minimizing financial, economic and political risks that face Italian Motor Manufacturer. Suggested techniques include netting, matching, centre currency management, invoicing, forward contracting, money market hedging, etc.

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