bluuebunny/crossref_metadata_2025 huggingface dataset:
AN ANALYSIS OF INTEGRATIVE OUTCOMES IN THE DAYTON PEACE NEGOTIATIONS
Authors: Beriker‐Atiyas Nimet , Demirel‐Pegg Tijen
Published: February 2008

The nature of the negotiated outcomes of the eight issues of the Dayton Peace Agreement was studied in terms of their integrative and distributive aspects. In cases where integrative elements were found, further analysis was conducted by concentrating on Pruitt's five types of integrative solutions: expanding the pie, cost cutting, non‐specific compensation, logrolling, and bridging. The results showed that real world international negotiations can arrive at integrative agreements even when they involve redistribution of resources (in this case the redistribution of former Yugoslavia). Another conclusion was that an agreement can consist of several distributive outcomes and several integrative outcomes produced by different kinds of mechanisms. Similarly, in single issues more than one mechanism can be used simultaneously. Some distributive bargaining was needed in order to determine how much compensation was required. Finally, each integrative formula had some distributive aspects as well.
CONFLICT AND SHARED IDENTITY IN GEOGRAPHICALLY DISTRIBUTED TEAMS
Authors: Mortensen Mark , Hinds Pamela J.
Published: February 2008

Though geographically distributed teams are rapidly increasing in prevalence, empirical research examining the effect of distance on group process has not kept pace. In a study of 24 product development teams located within five companies, we attempt to bridge the gap between research and practice by comparing the amount of affective and task conflict reported in collocated versus geographically distributed teams. We further examine how conflict is impacted by shared team identity, cultural heterogeneity, and reliance on technology for communication. As hypothesized, shared team identity was associated with less task conflict within distributed, but not collocated teams. Similar effects were found for affective conflict, suggesting that a shared identity may help distributed teams to better manage conflict. Our results also suggest more task conflict on teams that rely heavily on technology to mediate their communications. In examining performance, we found some support for our hypothesis that conflict would be more detrimental for distributed than collocated teams.
SOCIAL VALUE ORIENTATION AND IMPRESSION FORMATION: A TEST OF TWO COMPETING HYPOTHESES ABOUT INFORMATION SEARCH IN NEGOTIATION
Authors: Van Kleef Gerben A. , De Dreu Carsten K.W.
Published: February 2008

Two experiments investigated negotiators' information search strategies as a function of other's personality (cooperative vs. competitive vs. unknown) and own social value orientation (pro‐social vs. selfish). In Experiment 1, participants selected questions about other's intention to cooperate or to compete. In Experiment 2, participants generated questions themselves, which were coded as asking about cooperation or competition. Consistent with the false‐consensus hypothesis (Ross, Greene, & House, 1977) and inconsistent with the triangle hypothesis (Kelley & Stahelski, 1970), selfish negotiators who had no information about the other's personality asked more questions about other's intention to compete, and pro‐social negotiators asked more questions about other's intention to cooperate. Furthermore, both selfish and pro‐social negotiators engaged in confirmatory information search. Implications in terms of a self‐fulfilling prophecy are discussed.
Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post‐Cold War Conflicts
Authors: Watkins Michael , Rosegrant Susan
Published: February 2008

Much of the negotiation literature involves two parties that are each assumed to behave in a unitary manner, although a growing body of knowledge considers more complex negotiations. Examples of the latter include two parties where one or both parties do not behave in a unitary manner, multiple parties on one or both sides, parties on multiple sides and parties engaged in separate but linked negotiations. Greater degrees of complexity distinguish these negotiations from negotiations with two unitary parties.
TOWARD A THEORY OF MANAGING ORGANIZATIONAL CONFLICT
Authors: Afzalur Rahim M.
Published: February 2008

The management of organizational conflict involves the diagnosis of and intervention in affective and substantive conflicts at the interpersonal, intragroup, and intergroup levels and the styles (strategies) used to handle these conflicts. A diagnosis should indicate whether there is need for an intervention and the type of intervention needed. In general, an intervention is designed (a) to attain and maintain a moderate amount of substantive conflict in nonroutine tasks at various levels, (b) to reduce affective conflict at all levels, and (c) to enable the organizational members to select and use the appropriate styles of handling conflict so that various situations can be effectively dealt with. Organizational learning and effectiveness can be enhanced through an appropriate diagnosis of and process and structural interventions in conflict.
CONDITIONS UNDER WHICH RELATIONAL COMMITMENT LEADS TO EXPRESSING OR WITHHOLDING RELATIONAL COMPLAINTS
Authors: Roloff Michael E. , Solomon Denise H.
Published: February 2008

Although relational commitment increases the likelihood that intimates will confront each other about relational problems, commitment may promote decisions to withhold complaints in some circumstances. We conducted a survey of undergraduate daters that focused on the conditions under which relational commitment prompts individuals to express or withhold relational complaints. As expected, we documented a positive association between relational commitment and the willingness to confront a partner; the magnitude of this association was stronger among respondents who had dated for less than a year compared to those who had been involved for a longer time. Despite this general trend, we also found that relational commitment was positively associated with withholding grievances because the respondent believed that the problem was minor and perceived the partner would not change. Finally, we observed an interaction between relational commitment and partner's supportiveness when predicting the number of complaints withheld. Among individuals who were not very committed to their relationships, the association between partner supportiveness and the number of irritations withheld was negative and statistically significant. Among highly committed respondents, the same association was positive and not significant.
NEGOTIATION ROLE‐PLAY EXERCISE: “WATER, WATER, EVERYWHERE, BUT NOT A DROP TO DRINK:” THE RICHLAND‐RIVER CITY DISPUTE
Authors: Proksch Brian R. , Ross William H. , Estness Tony
Published: February 2008

A six‐day negotiation simulation was developed from newspaper articles and interviews with elected officials. In this integrative bargaining exercise, participants assume the role of either the Richland Town Board or the River City Mayor's Office and attempt to resolve a conflict between the two governments. Several homeowners in the unincorporated town of Richland have had their wells fail and have asked to annex into River City. Richland officials want to stop such annexations and instead purchase water from River City. River City officials want to annex as much of Richland as possible and prevent it from incorporating. Both sides are provided with common information as well as confidential information. Using their information, they must negotiate over several days, seeking an agreement that addresses each side's interests and concerns.
BUILDING EMOTIONAL INTELLIGENCE IN NEGOTIATIONS
Authors: Ogilvie John R. , Carsky Mary L.
Published: February 2008

With the increased emphasis on emotions in negotiation, an exercise is presented which can be used with a simulated negotiation to develop emotional skills. Linking research on the role of emotions in negotiation to emotional intelligence, we propose a set of activities to develop greater awareness, understanding, and ability to manage emotions while negotiating. The teaching note explains how to use two worksheets, one before and one during the simulation. Headings on the worksheets correspond to levels of emotional intelligence. Suggestions for debriefing along with supporting literature are provided.
THE UNEXPECTED OFFER
Authors: Holtom Brooks C. , Wilhelm Michael J.
Published: February 2008

The Unexpected Offer is a relatively short case involving the valuation and sale of a Web site and its domain name. Because the issues involved are easily identified and apparently straightforward, it may be used at the start of a negotiation course. Specifically, it can be very effective in introducing a discussion of how to value or quantify a BATNA. While students in the marketing associate role tend to rely on budgets and other internal concerns to assess their BATNA, those in the entrepreneur role tend to focus on external factors or their own widely varying estimates. This variability frequently generates a stimulating discussion.
DANIEL DRUCKMAN: INTERNATIONAL ASSOCIATION FOR CONFLICT MANAGEMENT'S LIFETIME ACHIEVEMENT AWARD WINNER, 2003
Authors: Barry Bruce
Published: February 2008

In this issue, IJCM begins what we hope will become a regular practice: publishing an article based on the address given by the recipient of the International Association for Conflict Management (IACM) Lifetime Achievement Award. This award is currently given every other year to someone whose work over many years achieves scope and impact of the first order. In a year when the lifetime award is to be given, a committee consisting of IACM's current president, past president, and president‐elect solicits and evaluates nominees, and recommends a recipient to the association's board of directors. Although IACM is a relatively young professional society (it was founded in 1984), the roster of past Lifetime Achievement Award recipients is an outstanding group of thinkers and scholars in the field of conflict.
SUBSTANTIVE AND RELATIONAL EFFECTIVENESS OF ORGANIZATIONAL CONFLICT BEHAVIOR
Authors: Euwema Martin C. , Van de Vliert Evert , Bakker Arnold B.
Published: February 2008

In this observation study the theory of conglomerated conflict behavior is tested. The impact of seven conflict behaviors on substantive and relational conflict outcomes is examined through multiple independent observations of 103 Dutch nurse managers handling a standardized conflict. Results show that process controlling is most important for achieving substantive outcomes, whereas problem solving, confronting, and forcing are most important for relational outcomes. In addition, substantive and relational outcomes are positively related. Implications for managerial practice and training are discussed.
FOUNDATIONS AND EVIDENCE FOR AN INTERACTION‐BASED FLICT NEGOTIATION
Authors: Taylor Paul J. , Donald Ian
Published: February 2008

This paper outlines 4 assumptions behind attempts to explain the sequential organization of communication behavior during conflict. These assumptions were supported by an analysis of behavioral sequences coded from 9 hostage negotiations and 20 divorce mediations. Analyses showed that negotiators use only a small proportion of available responses to other party's behavior, and that this proportion rapidly decreases as sequence length increases. Critical to this channeling in behavior was the triple‐interact (i.e., cue‐response‐cue‐response), which represents the maximum sequence length required to enable accurate prediction of negotiators' future behavior. More detailed analysis showed that the triple‐interact reduced uncertainty in behavior by over 70%, which compares to less than 1% from knowledge of negotiation context and approximately 10% from knowledge of individual differences.
A COMMUNICATION AND CULTURAL CODES APPROACH TO ETHNONATIONAL CONFLICT
Authors: Ellis Donald G. , Maoz Ifat
Published: February 2008

This paper describes a communication and cultural code approach to ethnonational conflicts. More specifically, it describes theory and research emerging from transformative communication events aimed at building constructive relationships betwetact necessitated by conflict. These are dialogue groups organized according to principles established by Allport's (1954) contact hypothesis including sustained contact, cooperative interdependence, and norms of equality. Secondly, we state the assumptions of an interactional approach to conflict, which assumes that conflict is, by definition, interactive making communication impossible to avoid. These assumptions also include an emphasis on the relational aspects of communication, and the fact that interaction sequences become patterned over time and become constitutive of the defining characteristics of the conflict. Moreover, the participants are influenced by communication codes, which are culturally based orientations to producing and interpreting interactions. These codes are grounded in the work of Katriel (1986), Carbaugh (1990), Ellis (1994, 1999) and Philipsen (1997) and have implications for the meaning potential of individuals in conflict situations. Finally, we explicate these issues by describing research that is representative of this communication approach to conflict. This research conceptualizes reconciliation‐aimed contacts and demonstrates how communication codes are modified by situational constraints.
CONFLICT AT WORK AND INDIVIDUAL WELL‐BEING
Authors: De Dreu Carsten K.W. , van Dierendonck Dirk , Dijkstra Maria T.M.
Published: February 2008

Conflict theory and research largely ignored the possible relationships between conflict at work, and individual health, well‐being, and job satisfaction. We present a model that argues that poor health and well‐being can trigger conflict in the workplace, and reduce the extent to which conflict is managed in a constructive, problem solving way. The model further proposes that conflict, especially when managed poorly, can have negative long‐term consequences for individual health and well‐being, producing psychosomatic complaints and feelings of burnout. We review research evidence and conclude, among other things, that the model is more likely to hold up when conflict involves relationships and socio‐emotional, rather than task‐related issues. Avenues for future research and implications for policy and organizational design are discussed.
COST‐BENEFIT ANALYSES FOR YOUR GROUP AND YOURSELF: THE RATIONALITY OF DECISION‐MAKING IN CONFLICT
Authors: Louis Winnifred R. , Taylor Donald M. , Neil Tyson
Published: February 2008

Two studies in the context of English‐French relations in Québec suggest that individuals who strongly identify with a group derive the individual‐level costs and benefits that drive expectancy‐value processes (rational decision‐making) from group‐level costs and benefits. In Study 1, high identifiers linked group‐ and individual‐level outcomes of conflict choices whereas low identifiers did not. Group‐level expectancy‐value processes, in Study 2, mediated the relationship between social identity and perceptions that collective action benefits the individual actor and between social identity and intentions to act. These findings suggest the rational underpinnings of identity‐driven political behavior, a relationship sometimes obscured in intergroup theory that focuses on cognitive processes of self‐stereotyping. But the results also challenge the view that individuals' cost‐benefit analyses are independent of identity processes. The findings suggest the importance of modeling the relationship of group and individual levels of expectancy‐value processes as both hierarchical and contingent on social identity processes.
THE DYNAMICS OF SALARY NEGOTIATIONS: EFFECTS ON APPLICANTS' JUSTICE PERCEPTIONS AND RECRUITMENT DECISIONS
Authors: Porter Christopher O.L.H. , Cordon Donald E. , Barber Alison E.
Published: February 2008

One aspect of attracting new employees that has historically been ignored by recruitment researchers is salary negotiations. In this study, we used a hypothetical scenario design to depict salary negotiation experiences in which we varied the levels of salary offer, the behavior of a company and its representative, and the deadlines for receiving a signing bonus. MBA students served as study participants who read the scenarios and responded to questions about perceived organizational attractiveness and job acceptance decisions—two important recruitment outcomes. As hypothesized, our results indicated that salaries, a company's responsiveness to candidate questions, and a company representative's expression of derogatory comments all impact recruitment outcomes. However, exploding signing bonuses had no significant effects, calling into question the negative connotation practitioners have of exploding compensation schemes. Our justice framework revealed that many of the effects that we found for our manipulations on participants' judgments regarding our recruitment outcomes were mediated by perceptions of organizational justice. Finally, we found some evidence of the frustration effect, as procedures that were considered fair worsened rather than mitigated the negative effects of unfair outcomes on job acceptance decisions.
INSTITUTIONAL DYNAMICS AND THE NEGOTIATION PROCESS: COMPARING INDIA AND CHINA
Authors: Kumar Rajesh , Worm Verner
Published: February 2008

This paper develops the argument for analyzing negotiations from an institutional perspective. A major theme of the argument being advanced in this paper is that the institutional perspective provides a more comprehensive understanding of the negotiation process in its entirety. The negotiation process can be broken down into three distinct components, namely (a) the pre‐negotiation phase; (b) the negotiating phase; and (c) the post negotiation evaluation. Each of these phases is critically influenced by a specific component or components of the institutional environment. Scott's distinction between the regulative, the normative, and the cognitive dimension of the institutional environment is drawn upon to illustrate the usefulness of this perspective. The framework is applied to assess the similarities and differences between Indian and Chinese institutional environments and their implications for negotiating processes in the countries discussed. Choosing India and China to illustrate the utility of this framework is justified by the fact that India and China are both in the process of transforming their economies, and although confronted with similar challenges, they have dealt with them in very different ways. This comparison is thus useful, not only for illustrating the value of the institutional perspective, but also for understanding the dynamics of the negotiation process in these countries.
INFORMATION SHARING AND GROUP CONFLICT: GOING BEYOND DECISION MAKING TO UNDERSTAND THE EFFECTS OF INFORMATION SHARING ON GROUP PERFORMANCE
Authors: Moye Neta A. , Langfred Claus W.
Published: February 2008

We investigated the role of task and relationship conflict as mediators of the relationship between information sharing and group performance. We suggest that, in addition to the commonly studied effect of conflict on information sharing, the reverse causal direction is theoretically likely and relevant in today's business climate. Specifically, we hypothesize that information sharing will reduce both task and relationship conflict with beneficial effects on team performance in established groups. We also explore boundary conditions to these conflict‐reducing effects of information sharing, suggesting that the lower a group's task interdependence, the more information sharing reduces task conflict, and the lower a group's average general mental ability, the more information sharing reduces relationship conflict. Analysis of data from 38 groups supported our expectations, revealing the expected negative relationships between information sharing and both task and relationship conflict, as well as the expected moderating effects of task interdependence and general mental ability.
EMOTIONS IN THE CONFLICT PROCESS: AN APPLICATION OF THE COGNITIVE APPRAISAL MODEL OF EMOTIONS TO CONFLICT MANAGEMENT
Authors: Bell Chris , Song Fei
Published: February 2008

This study systematically explored the role of a range of emotions in the conflict process. In order to do so, we articulated and tested a typology of discreet conflict‐relevant emotion constructs. Emotions were demarcated by the two dimensions of self‐concern versus other‐concern, and motives to approach or withdraw from the other party or conflict. This typology produced four emotion constructs: hostility (self‐focused approach), self‐conscious emotions (self‐focused avoid), relational positivity (other‐focused approach) and fear (other‐focused avoid). Self‐ and other‐blame and self‐ and other‐concern were proposed as cognitive antecedents of emotions and choice of conflict resolution strategy. We measured individual behavior in the conflict using the conflict resolution strategy scale (Rahim & Magner, 1995). A critical incident survey technique was used to gather data on people's self‐report of a conflict experience. We also explored the contextual effects of conflict issue and relative status. Results brought into question the general hypothesis that emotions mediate the effects of cognitive appraisals on choice of conflict resolution strategy. However, there were consistent patterns in the direct links between cognitions, emotions and conflict resolution strategies that shed further light on the complex relationships between these variables.
TEAM ROLE PREFERENCE AND CONFLICT MANAGEMENT STYLES
Authors: Aritzeta Aitor , Ayestaran Sabino , Swailes Stephen
Published: February 2008

In the context of the widespread and extensive use of team work in organizations this study analyses the relationship between individual team role preference and styles of managing interpersonal conflict. Data were collected from 26 work teams containing 169 individuals at two times four months apart. Results show that team role preference is related to Dominating, Integrating, Avoiding, Compromising and Obliging conflict management styles. Moreover, two different effects were observed over time. Firstly, at Time 2 an increase in the role clarity (reduction of role ambiguity) of team members was observed. Secondly, time pressure and team learning processes moderated the relationship between team roles and conflict managing style. Results have theoretical as well as practical implications for team building programmes in search of integrative solutions to conflict.
CONFLICT MANAGEMENT IN WORK TEAMS: THE ROLE OF SOCIAL SELF‐EFFICACY AND GROUP IDENTIFICATION
Authors: Syna Desivilya Helena , Eizen Dafna
Published: February 2008

The current study focused on intra‐group conflict by attempting to elucidate individual and situational factors underlying choices along two dimensions of conflict management patterns: engagement versus avoidance and constructive versus destructive. In the study, the role of two types of self‐efficacy (global and social) among group members was investigated, as was the sense of group identification in team dispute resolution preferences modes. Sixty‐seven members of volunteer community service communes in the Israeli Scouting youth movement, 48 females and 19 males, representing 13 intact teams, participated in the study. Self‐report structured questionnaires (previously used and adapted for this study) served as research instruments. Both global self‐efficacy and group identification independently predicted the conflict engagement‐destructive pattern of domination. Social self‐efficacy served as the sole predictor of the preference to manage intra‐team conflict by means of integrating—the engagement‐constructive mode. In contrast, the choice of compromising was also fostered by the joint contribution of social self‐efficacy and group‐identification, beyond the direct effect of social self‐efficacy. The study corroborates the assumption that conflict management patterns within an intact team are related to dispositional variables on the individual level, i.e., global and social self‐efficacy, and to the team‐related variable of group identification.
Creating Shareholder Value: Turning Risk Management into a Competitive Advantage
Authors: STRONGIN STEVE , PETSCH MELANIE
Published: February 2008

Many companies have either rejected or reduced the size of risk management (hedging) programs because they do not believe that the market will reward them sufficiently for the reduction in earnings volatility. In fact, many commodity companies would take the argument a step farther and argue that the market will punish them for reducing their commodity exposure.
Risk Allocation for Pension Funds: Beyond Measurement to Management
Authors: SHEN HUBERT
Published: February 2008

Risk allocation as currently practiced in pension funds is typically characterized by: 1) measurement of the risk of returns relative to a benchmark, and 2) the assignment of asset class and profit center limits on potential losses that remain within the fund's overall risk appetite, yet do not excessively hinder achievement of performance targets. Recently, there has been an increased effort to make risk allocation more proactive, i.e., to use risk allocation as a tool for adding value, rather than simply as part of a monitoring or “warning flag” system (see “Covering Bases” [1998, p. 45] and Hemmerick [1998, p. 1]). The underlying notion is that allocated risk capital can improve performance when viewed as a target, rather than a limit, if the goal of the fund is to maximize returns, or, specifically, to maximize expected surplus growth aggregated across the fund, for a given total value at risk (VaR) of returns relative to the benchmark.
Investing in Leveraged Index Funds
Authors: POLSON NICHOLAS G. , YASUMOTO JEFFREY
Published: February 2008

Standard financial models predict that investors who are willing to hold an investment in the short‐run will hold the same investment for the long‐run. It is well known that a leveraged investment's expected excess return is equal to the unlevered excess return scaled by the leverage factor. Volatility is likewise scaled‐up by the leverage factor. It is not so well known, however, that the realized terminal wealth generated by the leveraged investment is very likely to be significantly lower than its expected value. This is true because leverage induces positive skewness into the distribution of long‐run wealth. The skewness and hence the probability of achieving a lower‐than‐expected terminal wealth increases with the length of time that a leveraged investment is held. Even for moderate leverage factors, this effect can be so dramatic that the leveraged investor will lag behind the unleveraged investor.
Commercial Paper Defaults and Rating Transitions, 1972–1995
Authors: CARTY LEA V. , LIEBERMAN DANA
Published: February 2008

Investors in commercial paper (CP) markets include money market mutual funds, corporate treasurers, state and local governments, and commercial banks and their trust departments. The obligors in the market are predominantly large and highly creditworthy corporations. The credit risks faced by CP investors have been minimal historically. However, the general decline in corporate credit quality that began in the first half of the 1980s set the stage for the spate of credit problems and defaults that took place in many CP markets beginning in 1987. While the incidence of default has decreased since 1991, the credit risks faced by commercial paper investors have not subsided to pre‐1987 levels. This analysis addresses concerns generated by this surge in credit risk.
Accounting for Value at Risk in Financial Institutions' Portfolios
Authors: DOWD KEVIN
Published: February 2008

One of the most important developments in portfolio risk management in the 1990s was the increased use of Value at Risk (VaR). VaR has enjoyed a spectacular rise, from being largely unknown at the beginning of the 1990s, to prominence among financial institutions and, more recently, also in the corporate world. VaR is particularly useful because it measures aggregate portfolio risk by accounting for correlations between the individual risk factors in a portfolio.
The Basel 2 Approach to Bank Operational Risk: Regulation on the Wrong Track
Authors: HERRING RICHARD J.
Published: February 2008

The banking industry has adopted an approach to managing financial risk based on economic capital, the amount of capital necessary to achieve a specified level of protection against financial ruin. In the New Basel Capital Accord, regulators have recently proposed capital regulation to reduce operational risk. In this article, the author challenges the rationale for employing a capital charge to mitigate operational risk.
A Shortcut to Sign Incremental Value at Risk for Risk Allocation
Authors: TASCHE DIRK , TIBILETTI LUISA
Published: February 2008

Incremental value at risk (IVaR) is becoming a standard tool to identify investment strategies that enhance risk‐adjusted returns. Recently, practice‐oriented research has focused applying IVaR to hedging and speculating with options and risk reduction. IVaR approximation methods provide easily applied preliminary guidelines for risk allocation. This article examines two such approaches.
The Impact of Valuation Uncertainty in the Pricing of Risky Debt
Authors: SOBEHART JORGE R. , KEENAN SEAN C.
Published: February 2008

Industry interest in equity‐based contingent claims models for evaluating credit risky securities has recently surged. These methods assume away valuation uncertainty that exists in practice. This article explores the impact of valuation uncertainty on these contingent claims models, by analyzing how varying levels of model uncertainty bias default probability estimates obtained from standard contingent claims models.
Match Funding Prepayable Assets with Callable Debts Using Simulated Prepayment Bounds
Authors: LIU SHIJUN , MOZER PETER A.
Published: February 2008

A majority of the loan products produced by modern financial intermediaries (e.g., banks) provide borrowers with an option to prepay loans. The institutions issuing these products typically retain much of this prepayment exposure on their balance sheets. This article develops and applies a general framework to match funding to the prepayment‐sensitivity of assets, in order to preserve spread and achieve a more stable return profile.
The Risk Finance of Class Action Settlement Pressure
Authors: HEATON J.B.
Published: February 2008

Most high‐stakes litigation settles prior to the trial verdict being achieved. This apparent class action settlement pressure raises an interesting risk finance question addressed by the authors in this article. The article describes the basic law and economics of settlement risk within the context of potential and limitations of insurance and capital markets solutions.
Global Warming and Financial Umbrellas
Authors: DOSI CESARE , MORETTO MICHELE
Published: February 2008

Weather derivatives have emerged as a generally acknowledged, if not widely utilized, risk management product within the past 5 to 10 years. The authors of this article compare the costs and benefits of weather derivatives in relation to insurance contracts for hedging weather risk, within the context of long‐term trends in hedging demand due to global warming. The article finds that, as global warming results in increased climactic variation and greater frequency and intensity of climatic anomalies (i.e., higher volatility), derivatives may provide coverage at a lower cost than standard insurance.
“Leapfrogging” the Variance: The Financial Management of Extreme‐Event Risk
Authors: POWERS MICHAEL R.
Published: February 2008

Events surrounding September 11, 2001, have motivated increasing interest in identifying, assessing, and managing the risk of “extreme events.” This article introduces a new mathematical framework for the risk management of extreme event risk. In the article, the author proposes criteria based on “higher” (the third and fourth) moments that dominate variance (the second moment) in explaining the economics of insurance and reinsurance. Economic and financial implications are then applied to the underwriting and investment activities of insurers and reinsurers.
Capital Markets and Insurance Cycles
Authors: KARL KURT , HOLZHEU THOMAS , RATURI MAYANK
Published: February 2008

Although much research has been published on the convergence of insurance and capital markets, few researchers have explored the interrelation between capital market and insurance cycles, i.e., the covariation between (excess) capital and the supply of insurance capacity. The article focuses, in particular, on how investment returns restricted capital outflow and thus impaired the influence of capital market discipline on property and casualty over‐capacity during the mid‐1990s. The authors also discuss how certain risk convergence products develop or evolve in response to the insurance cycles.
Insurance League: Italy vs. U.K.
Authors: CONSIGLIO ANDREA , SAUNDERS DAVID , ZENIOS STAVROS
Published: February 2008

Insurers are competing by adopting product innovations that provide the insured with integrated coverage for actuarial and financial risks. This article compares the contract structures of blended life policies between the insurance markets in Italy and the United Kingdom within the context of asset‐liability management and welfare analysis.
Developing and Implementing a Stochastic Decision‐Support Model Within an Organizational Context: Part I—The Model
Authors: HØYLAND KJETIL , RANBERG ERIK , WALLACE STEIN W.
Published: February 2008

Enterprise risk management is the discipline that governs the integrated management of the aggregate risks for a given firm with consideration for its strategic and organizational context. The authors present, in three installments, a case study on developing and implementing a stochastic decision‐support model within an organization. This first installment describes the model.
A Critique of Modeled Credit Default Swap Duration
Authors: BOBERSKI DAVID A.
Published: February 2008

With the emergence and widespread adoption of credit derivatives, determining the price volatility of a credit default swap has become fundamental to fixed income trading and valuation. The author asserts that this problem has not received adequate treatment, and presents a brief case study that compares the modeled durations of three synthetic bonds with the duration of actual bonds. An alternative modeling approach is proposed that might better match the actual duration.
Impact of Risk Management on the Recent Market Volatility in the U.S. and Japan
Authors: TILMAN LEO M. , WONG RAYMOND , YAMAGUCHI MISAHIRO
Published: February 2008

While interpreting violent market movements can potentially be illuminating, many experienced finance practitioners shy away from this exercise, having recognized the difficulty of this task. At the same time, the majority of them appears to have accepted the premise that supply‐and‐demand dislocations have emerged as increasingly influential forces driving fixed income markets. In both business‐as‐usual and catastrophic market environments, their impact on interest rates, credit spreads, and implied as well as realized volatilities rivals that of geopolitical events, economic fundamentals, and credit crises.
Review of Trends in Insurance Securitization April 2002 to March 2003
Authors: LANE MORTON N. , BECKWITH ROGER G.
Published: February 2008

The year 2002 was a record for insurance securitization. It's official. According to Marsh and McLennan $1.22 billion bonds were issued in 2002 versus $1.136 billion in 2000. Our own readings of history are slightly off calendar, usually measuring the 12 months in between first quarter ends. Nevertheless, like Marsh we believe that the most recent 12 months represent something of an uptick in activity. Like the margin by which the Marsh record was set, the magnitude of the uptick is small, tiny in fact, but potentially a significant harbinger of directional change. In truth, these are crumbs of comfort for those toiling in the vineyards of insurance securitization. The harvest from a great deal of intellectual and financial investment still eludes us. Notwithstanding, this article records the trends that have occurred during our last 12 months and the messages they contain for that brighter securitization future that surely lies ahead.
Integrating Interest Rate Risk in Credit Portfolio Models
Authors: GRUNDKE PETER
Published: February 2008

I. INTRODUCTION A typical shortcoming of most current credit portfolio models is the lack of a stochastic modeling of risk factors, such as interest rates or credit spreads, during the revaluation process at the risk horizon. For example, fixed income instruments, such as bonds or loans, are revalued at the risk horizon using the current forward rates and (rating class specific) forward credit spreads for discounting future cash flows. Hence, the stochastic nature of the instrument's value in the future which results from changes in factors other than credit quality is ignored, and the riskiness of the credit portfolio at the risk horizon is underestimated. A further consequence is that correlations between changes of the debtor's default probability and changes of market risk factors and, hence, the exposure at default cannot be integrated into the credit portfolio model. This drawback is especially relevant for portfolios of defaultable market‐driven derivatives. One reason why risk factors not directly related to credit risk are neglected in most current credit portfolio models is that there is still no commonly accepted approach for modeling the credit quality of a debtor and the dependencies between the credit quality changes of different debtors. Hence, it might be over‐ambitious to incorporate correlations between market risk factors and credit quality changes. Even empirical evidence on the sign of the correlation remains inconclusive. Additionally, introducing stochastic market risk factors and modeling the correlation between these risk factors and credit quality changes would significantly increase the computational burden for calculating robust risk measures of credit portfolios.
Forecasting Retail Portfolio Credit Risk
Authors: RÖSCH DANIEL , SCHEULE HARALD
Published: February 2008

A major topic in retail lending is the measurement of the inherent portfolio credit risk. The needs for a better understanding and dealing with default risky securities have been reinforced by the Basel Committee on Banking Supervision [1999a, 1999b, 2000, 2001a, 2001b, 2002, 2003] which has proposed a revision of the standards for banks' capital requirements.
Arbitrage Algebra and the Price of Multi‐Peril ILS
Authors: LANE MORTON N.
Published: February 2008

At this year's third annual Bond Market Association Risk‐Linked Securities Conference, John Seo gave an excellent address entitled “Risk Management Tools for Investors.” The more colorful subtitle was along the lines of “evaluating multi‐peril bonds and avoiding the Bermuda rectangle.” Yes, rectangle. We will leave the Bermuda angle (rect‐ or tri‐) for John to explain and he can be found (together with his brother Nelson) at Fermat Capital Management LLC managing a fund specializing in investing in cat bonds and other exotica. However, this article takes advantage of his basic plea (simplification) to further explore a favorite topic of ours—how should cat bonds be priced? In particular, to explore the vexing question of multi‐peril bonds compared to single peril bonds. Our approach is to explore “arbitrage‐equivalent” pricing in which covers can be either bought or sold. We do not yet know how to determine how the absolute level of cat bond prices should be set—although we expect it must be driven by two old friends (a.k.a. supply and demand)—but the Seo simplification allows greater insights into relative prices of single vs. multi‐peril bonds even in our arbitrage context. We begin with a reprise of John's examples (see Exhibit 1).
Developing and Implementing a Stochastic Decision‐Support Model Within an Organizational Context: Part II—The Organization
Authors: HØYLAND KJETIL , RANBERG ERIK , WALLACE STEIN W.
Published: February 2008

Enterprise risk management has been defined as the strategy that aligns the firm's business with the risk factors of its environment in the pursuit of strategic objectives. Mathematical models will always be part of enterprise risk management. By means of a case study, we discuss why it is necessary to align a model with the organization in order to achieve the desired results. The structure of a model's input must fit with the structure of data collection in the firm, and the output must be consistent with the decision structure. Otherwise, data collection will not be properly taken care of and the results of a model will not find their way to where decisions are made.
Assessing the regulatory impact: the challenges of UCITS III — Germany's regulators become the first to launch derivatives ordinance
Authors: LEIFERT KAI D.
Published: February 2008

Historically, risk management was understood as a pure risk reporting function that included the monitoring of restrictions and portfolio management activities. More detailed analysis of customer portfolios was not necessary, and never requested. Resources were allocated to gain more capital, so it was client relationship management that drove the business. In this context, risk management has been mainly regarded as a “necessary” cost factor.
The continuing saga — Basel II developments: bank capital management in the light of Basel II — how to manage capital in financial institutions
Authors: ROWE DAVID , JOVIC DEAN , REEVES RICHARD
Published: February 2008

Capital matters to most corporations in free markets, but there are differences. Companies in non‐financial industries need equity capital mainly to support funding to buy property and to build or acquire production facilities and equipment to pursue new areas of business. While this is also true for financial institutions, their main focus is somewhat different. Banks actively evaluate and take risks on a daily basis as part of their core business processes. For example, the commercial lending business inherently involves weighing the credit risk of new loans and their associated mitigates. This involves analysis of the credit quality of the underlying obligor, the effectiveness of guarantees, collateral, cross‐default and other forms of credit protection. Today, however, best practice does not stop there. It also is necessary to evaluate the impact of portfolio diversification (e.g. in terms of geographical or industry concentration of exposures) and the degree of correlation among exposures on the bank's balance sheet. Another example is trading activity whereby a bank benefits from high trading volumes (by earning the bid/ask spread) and hopes to gain from proprietary net positions, but must bear some degree of market risk in the process.
Re‐assessing 21st century risk: the reaction to risky financial reporting — the rise and rise of cash
Authors: PURR JON
Published: February 2008

Accounting rules are too open to interpretation and abuse for companies' financial reports to be relied on by analysts and investors. Increasingly, CFOs and treasurers are being called upon to provide detailed cash flow information as a more accurate indicator of future performance. Drilling down into the company's systems around the world presents a significant challenge, but today's technology can ease the burden.
The risk management of everything
Authors: POWER MICHAEL
Published: February 2008

I recently decided that there was no longer space to store 20 years worth of Accountancy and Accountancy Age. Prior to disposal I reviewed all the back issues for articles of particular note worth saving. In the course of this process, a number of things were striking. First, articles on financial reporting were conspicuous in the 1980s, and in the 1990s it was auditing which seemed to be the main object of discussion. Second, risk and risk management begin to receive regular exposure only from about the mid‐1990s onwards. In particular, the late 1990s reveal an increasing commentary on practice management and risks to professional partnerships.
M&A integration at Delta Connection Inc.
Authors: FISHER J.T.
Published: February 2008

Delta Connection Inc. is a profitable, growing business, generating over US$3 billion in annual revenues, and employing five regional airlines to operate 430 modern jet aircraft for Delta Air Lines and the SkyTeam alliance. This case study looks at the challenges Delta faced when integrating two acquired regional airlines into the core business.
Unlocking the value of corporate real estate
Authors: MARTIN LAURALEE
Published: February 2008

Most chief financial officers view real estate as an important component of financial success, but not many take the time to align their real estate strategies with corporate strategies to ensure optimal performance. While this lack of attention to real estate issues is understandable given their workload, it is also detrimental to the goal of maximizing short‐ and long‐term financial performance. By contrast, CFOs who ensure that real estate strategies are aligned with financial objectives as well as business strategies realize financial gains that more than justify the additional investment in time and energy.
Informational Status and the Mass Media: The Case of the Urban Poor
Authors: Flores Duran Daniel
Published: February 2008

A relatively recent development in the history of social inequality is the growth of mass media communications. In developed and in underdeveloped nations, in highly stratified and in egalitarian societies, research documents the persistence of major disparities between different socioeconomic groups in their awareness of given topics. Despite the abundance of information available through a diversity of communication channels and information agencies in our nation, evidence points to the inability of major population sub‐groups to gather the appropriate types of information to cope with the most pressing information needs. These differences in information acquisition and in the ability to manage information seem to be related to differences in exposure to the mass media, which in turn appear to be strongly related to, or constrained by, differences in income, education, and other available socio‐economic resources.
Free and Inexpensive Materials
Authors: Weibel Kathleen
Published: February 2008

There's no such thing as free materials, you scoff. And rightly so. Every item added to a library's collection costs money in staff time and storage costs, if not in direct purchase price or postage. Free materials—like any others—are worth those costs if they enable you to better serve the library's clientele. If not, they are not worth the paper, celluloid or vinyl they're printed on.
Issues in Women's Studies Collection Development
Authors: Stineman Esther
Published: February 2008

We've been living in a homogenous world, you know a world centered on and seen through the language perceptions of men. The consequences of this for everything that we take for granted, for all our assumptions are very deep. Feminism, in the sense I use it, is a radical complexity thought in the process of transforming itself. It is a kind of breaking open of not only the oversimplification but of the lies and the silence in which so much of human experience has been cloaked. Too much has been left out, too much has been unmentioned, too much has been made taboo. Too many connections have been disguised or denied. (Interview with Adrienne Rich, Christopher Street, Jan. 1977, pp. 9–16.)