FedEX company Essay Example | Topics and Well Written Essays - 500 words

FedEX company - Essay Example The Company also aims to achieve a 10% increase in its operating margin. In order to attain to this long term objective, the Company has set out certain business goals, as laid out below (www.fedex.com): Additionally, the Company also plans to improve its reputation as an environmentally friendly organization, by reducing carbon dioxide emissions by 20 percent by the year 2020. (www.thaipr.net). The central focus of the Company’s plans and goals revolves around its people, i.e., â€Å"people are the wind beneath our wings.†(Frock, 2006:201). In the achievement of its goals, FEDEX has capitalized the vision of its founder, Smith who believed the success of the Company lay in IT(Lappin, 1996) and has implemented IT systems that are geared towards strengthening its e-commerce operations. The realization that information systems could play a vital role in ensuring the success of business has enabled the Company to survive and gain a head start in package delivery (www.garyclarke.com). The Company has made large investments in technology, using tracking software in order to ensure that the current delivery status of a package is always available, through the use of its proprietary network called Cosmos. The Company also sets up computer terminals at its customers’ offices and allows them access to the tracking software as well, so that they are able to generate their own pick-ups and deliveries (www.brainmass.com). Customer tracking of packages is facilitated through the use of the Powership software and terminals (www.informationweek.com). The Company has been using wireless applications for a long time, but the efficiency of its current operations has been achieved by integrating SAP into its tracking system in managing its supply chain. The significant aspect of its technology development is the use of SAP R/3 systems to integrate its tracking systems with its supply chain logistics.

Ethics and Sustainability Essay Example | Topics and Well Written Essays - 2500 words

Ethics and Sustainability - Essay Example One of the ethical discussions on sustainability is the promotion of artificial products through the widespread application of genetic engineering in plants and animals, and creation of man-made ecosystem to alter the deteriorating ecological balance. Artificial is defined as formulation of something based on natural phenomenon but is completely lacks the intrinsic value of what is natural. Conservative thinkers postulate that incorporating artificial schema on environmental context is morally unjustified because it violates the natural mechanism of things, and in religious context, it defiles the God's creation. Conversely, radical thinkers posit that the integration of artificial schema in the environment is morally permissible because it helps in the prolongation and preservation of life, especially that the world is facing a huge problems on natural resources continuous supplies. Advocators Advocators of anti-artificial schema argue that the promotion of ersatz products necessitates the used of modern technology, and if certain technology is not yet available, then new technology must be invented first for the realisation of a specific artificial products. The problems with this is that most of the time, the actualisation artificial schema post threats on the natural resources because, one, a new technology must be applied to natural things before it can be proven, and if the technology fails, new technologies will be created, which means that the threat on environment will also increase; two, the artificial procedures of preserving life in the expense of our natural environment is becoming vicious because of the belief that preservation of life is justified in any given context, wherein our natural environment suffers greatly from this belief because the environment is only seen as resource that must be utilised for the nourishment of life. On the other hand, proponents of artificial schema conjecture that natural resources is finite and limited, hence the need to manufacture ersatz products in the expense and out of natural resources is permissible because through this, the continually increasing demand for basic human needs will be resolved, as well as, the environment will be preserved. Radical thinkers argue that modern technologies may have repercussions but its benefits are countless. They even stress out that application of artificial schema with the aid of technology is the only way humanity can preserve its environment and its people. Today the world is embracing the artificiality of things; foods products are being engineered, while natural environment are being photocopied such as lagoon, rainforest, etc. to prevent the continuous deterioration of the environment, and to preserve its present status. Thus our modern advancements and artificial schemes have created major environmental positive consequences, as well as, risks that threaten the lives and well-being not only

The Role of the English Essay Example for Free

The Role of the English Essay A status quo in vocational students to learn English Students weak economic foundation, poor foundation. Most of the cultural roots of vocational students, poor attitude towards learning English and some even 26 letters written well, are not allowed to read, even the five fundamental the vowels not know, arbitrarily called the students to ask him voice or syntax, you will find him very bad control. Spelling words to find a few grammar learning is controlled, it is the cream of the crop. Poor student approaches to learning, and generally feel that learning English is very strenuous, some thought that the English words in mind and forgot, some even have never had the joy of learning English, not to mention the experience of victory. Long-term so that they gradually lose interest and confidence in learning English, no longer do the efforts of learning English. Some talk about the English mere mention, I did encounter a boy and told him to recite the English word, even panic was sweating, mouth twitching, stuttering a long time, unable to speak, usually on the way to see me, and the head is always low are afraid even to say hello and I, as well as flagrantly reason to object to learn English: We are Chinese people do not speak English. Incredible on the classroom, these students is how the performance of, or lying on the table, or play phone or speak or see other books, jobs often do not pay, some do not want to do as well as complete English homework. Autonomous learning can be lacking, not enough learning perseverance. English learning to fight from time to time with the forgotten work needs perseverance and hard to pay, and strive to the process of theory and experience. Of vocational students in English learning process and long-term persevered few, the overwhelming majority of studies, lack of perseverance and patience. Even the teachers the moment aroused since their self-confidence, it is difficult to permanently maintain the interest of their learning, or just a temporary heat, a few days discourage you. Due to their lack of scientific approaches to learning and the right attitude, and good study habits and the lack of simply the effort of deep strokes fell great oaks or dripstone wear perseverance, perseverance, therefore, students learning English collapse ignorant. 3 students accumulate enough vocabulary. The word is the foundation of learning English, and did not  accumulate a certain amount of vocabulary, on nurturing English listening, speaking, reading and writing abilities. Independent study to students learning English is poor, lack of perseverance, persistence, there is no systematic scientific approaches to learning, coupled with lack of awareness of the importance of learning English, and thus the accumulation of vocabulary rarely a year to participate in the National English Test, the vast Most students can only apply for the lowest level of a B research reported level of each class only a handful. Often do not understand in the classroom, can not write, can not read, and thus make their weariness mood is even more serious. 4 instructor for students learning English enthusiasm aroused enough. Faculty ignore the location of the student body, simply follow the traditional form of teaching, teaching approaches single the word mechanically commentary repeatedly to instil in students a tedious word grammatical knowledge speak less, do less, students put learning initiative long-term lack of effective sexual exercise, did not participate in the teaching, learning English gradually lose interest; faculty disregard the importance of verbal communication interaction, abundant invention language environment for students to learn English, completed just blindly teaching task time time to catch the number of classroom stiff, boring, boring, is one of the reason students weariness English; the faculty unable hierarchical teaching, not based on the different classes, different extent, different preferences classmate individualized, and therefore one thousand the articles Yigai different levels of students are not dif ferent teaching guide. English movies farewell why How caliber aroused the interest of students learning English, I used to consider this issue. Has gone through a variety of ways, through abundant mobilize the enthusiasm of students learning. Among them, the movie has sparked learning interest is one of the good way. English movies can assist students listening exercise, enhanced word, the understanding of words, sentences, increased vocabulary. Learn English, it is necessary from the heard hands. Since learning English listening and speaking English is no  longer prohibitive lifeless knowledge, and a fun, fresh and agile theory. But learning heard does not equal Acquisition heard of Chinese-American English is good have the Acquisition heard a necessary condition: the English-speaking environment. But we do not have the conditions, could have invented the conditions, for example, to see American movies and situation comedies, understanding to create one kind of foreign English environment forced my ears to to withstand English, o pen their mouths to speak English, will be able to in a relaxed, happy atmosphere Xi was heard. English heard including six local speech, language conditioning outs, words, sentences, ideas and culture. First, with respect to any one speech, the voice is bedrock, it includes not only the pronunciation of the word, and also includes real communication, vocabulary, idioms of tonal loss burst, weakening, cloud, the many accent contractions sound change way. The language conditioning outs, fluent authentic expression English Glazes, not authentic contact with the foreigner, and they have a face-to-face conversation, it is difficult to feel the language conditioning outs in expression of thought grand and powerful vibration force. Speech is the carrier of culture, the wording and sentence is correct or not directly demonstrated the level of understanding of foreign culture from top to bottom. Be able to say, before the arrival of the three arrived with the shape of Americans, if the Society of American thought and culture, to arrive quite similar to the effect of American culture a nd thought. This is a flat-screen English form of education, the film is the best medium. English movies can subtly arouse interest of students learning English. Movie itself illustrated, intuitive, image, easy to bear, plus absorbing human story, like a magnet to absorb the students live. Farewell itself popular with people, especially in vocational students like watching movies. Excellent English movies, to intercept one interesting, fragments of educational materials as a teaching students in the absorption of the story, glad to studying fragments of dialogue presented word vocabulary, statements, grammar, learning English is no longer a cold s out, but under the context of the special story of emotional expression, with the meaning of life. English movies can help students progress in writing proficiency and translation can be made English literature ornamental to. Movie disseminator of culture, whether it is the narrative of the story, the plot  to carry out, as well as changes in the relationship between the characters have a lot of central Chinese thinking is not the same, after verbalize cultural differences, but not just with words dissect thorough, which needs our Western culture, especially some of the characteristics of American culture be understood, parsed and then point by point in the foundation of understanding, and from time to time to summarize, the intention to understand the values ​​of the East and the West is different, and the resulting ideological the difference of the way, a comprehensive understanding of Western history and culture, the words rise to the true sense of the exchange to make English the live together. English movies to promote students perception of life. The excellent English movies can bring students spiritual vibrations, from which to experience life, the taste of life, to promote the growth of the students in mind, the progress of the overall quality. For example: I intercept to return to the 17-year-old four fragments, is good for students education theme. After the first fragment: the movie show Mike return to the age of 17 under mysterious cleaners soul-oriented, with high school classmate Ned posing as father and son, to return to the high school campus, found his daughter Maggie and her boyfriend Stan fared hot, his son, Alex, often harassed. The high school campus Stan world and his love the bully bully who will come to, Alex suffered. Mike Love of Stan attack others, counting on a strong performance to stop outright psychological profiling it not as good as ashamed. Confidence Mike Stan this wonderful psychological autopsy, love to flaunt the students at the school is v ery educational. Second fragment: class men and women classmate of sex filled adventures, gearing up, the school has been unable to prevent their sexual behavior in order to the girls peace, only to grant them peace sets, see rampant students caught Ping sets, which Mike was shocked, including his daughter. His father as a daughter, as a someone who has tried to discourage them. He said if the girls are popular education, numerous peace sets thrown back into the basket. His daughter also was deeply impressed, and thus later her boyfriend with her when the onset of sexual activity, she can insist rejected each other and against them. The third fragment: Jimmy at home to open birthday party, Mike went to Jimmy home, hoping to prevent the appointment of Maggie and Stan. In the  process of looking for Maggie, he was stopped by three girls are fighting to date him, without taking into account the self-esteem in order to reach the purpose of dating him, hinted that he, if he is willing to be able to not have to remember their names. Mike persuasion they should first develop self-esteem, competence be respected by others. This fragment is very educational exchanges with the boys not to pay attention to the girls. The fourth fragment: this period is mainly about Mike and his son win the battle of the basketball team where the team of Stan Stan is very dejected to attack sexual relationship with Maggie, Maggie refused, he said the other discarded. She was curled up in lonely without a long ladder mired in misery discarded by her boyfriend. Mike and her daughter some dialogue about his daughter and is in this situation are the role of education. Indeed, the English film is an effective teaching tool. It promotes feelings of teachers and students, and to improve the relationship between teachers and students, the enthusiasm of the students learning English greatly improved, altered the status of students weariness English. Students in the process of watching English movies, either exercise a hearing in order to accumulate a vocabulary control syntax progress writing can translate to the influence of the emotional, was the ideological education, further promoting the perception of life, taste of life. Abstract: The English word is the foundation of learning English and how to arouse students English learning interest, excellent English movie is an effective teaching tool, how to raise the enthusiasm of students learning English is the focus of discussion in this article. . On, http://www.51lunwen.org/ 2010, (4). [2] Zhaoming Fang On the vocational students in English Learning Situation and teaching countermeasures. Secondary vocational education, 2006, (08). [3] Li Yuelin English movie viewing teaching New Exploration [J]. Sichuan International Studies University, 2003, (02). [4] Yang Ji Tang on the effective application of the movies resource in the teaching of English and redevelopment [J]. Vocational Education Seminar, 2005, (9)

Brownfield Land Redevelopment

Brownfield Land Redevelopment Recently brownfield sites have become popular due to the serious deficiency in the number of greenfield spaces on hand for development. This is more prominent in the built up areas where the demand for residential and commercial property is elevated. In 2008 the UK set a target for brownfield developments. 60% of all new houses were to be built on brownfield sites. Records show that we have already exceeded that target and with the rate that we are reclaiming brownfield sites at present we should significantly raise that percentage over the coming decade. The uses for brownfield sites are not restricted to residential and commercial buildings. They are often considered for redevelopment into open spaces for recreation, woodland and various other community related areas. Reclaiming brownfield sites is at the heart of the UK Sustainable Development Strategy. This Development Strategy incorporates an extensive collection of economic, social and environmental objectives. Brownfield redevelopment cleans up environmental health hazards and eyesores and in doing so it promotes community growth and regeneration. Managed effectively as a sustainable redevelopment scheme, Brownfield sites provide affordable housing, encourage economic growth through locally sourced materials nurturing local business and trades, protect local wildlife and provide environmentally safe areas for families to enjoy. Furthermore, redevelopment of brownfield sites can give an area a make-over and can help send a message to the locality indicating the importance of preservation and recycling. 2.0 Brownfield Land Redevelopment Steps Now that the land has been chosen for the proposed development, a large sports centre within a small town in Scotland, it is important to establish whether or not the Brownfield site in question is suitable for such a development. The proposed site will involve the demolition of an existing building. Therefore all planning laws must be adhered to and the local planning authorities must be notified in writing outlining the intentions for the proposed site. This is important as special licences are required to reclaim Brownfield sites. There are a number of tests and studies that must be carried out in order to obtain the required information to determine the extent of the decontamination measures required to prepare the site. 2.1 Demolition and Recycling Existing Building On-Site In order to maximise the sustainability of the development it is important to identify, separate and eliminate all hazardous materials from the demolished waste. Furthermore any recyclables such as masonry rubble and other materials should be extracted from the demolition waste and can be used in the concrete / asphalt or paved areas around the site. This promotes sustainable development by contributing to the government sustainability objectives of prudent use of natural resources and protection of the environment. Using low embodied building materials reduces the CO2 emissions during the construction process and also has a positive effect on the cost of the entire project as less waste is sent to expensive landfill. There are a number of companies within the UK that specialise in construction and demolition waste recycling and disposal. These companies work closely with Site Waste Management Plans ensuring that only hazardous materials are disposed of and everything recyclable is reused. 2.2 Identification of Hazardous Materials A large number of materials are involved in any build, therefore, when a building is being demolished it is important to identify these hazardous materials and dispose of them safely so that they do not become a danger to anybody else in the future. The building on the proposed site is a 150 year old derelict masonry building. The existing building is to be demolished and any suitable recyclables are to be used in constructing the new sports centre and any concrete / asphalt or paved areas around the site. In order to identify the various materials it is important to put a sorting plan in place. This will ensure only recyclable materials get reused and all hazardous materials are disposed of appropriately. The history of the building plays a key part in the types of hazardous materials that can be expected to be found within the building. From the period the building was built a suitably qualified professional can conclude that the building shell itself will contribute various hazardous materials to the list for safe disposal. These are likely to include asbestos, insulation materials, foams containing CFCs (Chlorofluorocarbons) that are harmful to the O-Zone layer, roofing felts and bitumen. An engineer will also look into the space within the building to determine what hazardous materials may have been associated with the various uses of the building. The derelict building in question was originally used as a textile factory and later a furniture factory. This would indicate that hazardous materials such as varnishes, glues, sealants, resin-based floorings and wood treated with chemicals or preservatives may be present from that period of the buildings lifetime. In recent decades the building was used as a truck repair shop. This might suggest that there may be some contamination from oil or lubricants, petroleum and any spillage from car / truck batteries. It is very important to test for the presence of these substances and more as identifying the presence of hazardous material is the first step to decontaminating the site. 2.3 Further Investigation Following investigation into the building to be demolished, tests must be carried out on the condition of the soil around the site. It is important to note that all Brownfield site redevelopments come hand in hand with strict environmental issues. As a result it is recommended that an appropriately experienced environmental consultant is used. The environmental consultant will have background knowledge of Brownfield developments and will adequately investigate any environmental risks. Firstly they will undertake a desk top review of the proposed site by gathering all historical information available. This may relate to former quarrying or landfill in the area. Secondly they will prepare an environmental assessment report. Contained within this report will be the results from extensive testing for hazardous compounds within the soil, ground water and surface water. If the findings of the report are positive and support redevelopment on the site, the next step is remediation and elimination of hazardous materials. 2.4 Remediation / Elimination of Hazardous Materials Now that the various hazardous materials have been identified, it is time to categorize and divide them so that they can be safely disposed of. This is whats known as remediation. The demolition of the building itself should be the final step when clearing the site. Initially the building should be stripped down with careful consideration given to how each material is classed and whether it can be recycled or disposed of. This includes all loose material, fixtures, fittings, windows, doors, heating and electrical systems and roofing. Once this has been categorized and divided all that should be left is the building skeleton and foundations for safe demolition Up until a few years ago remediation of Brownfield sites was an expensive process. However, recent new remediation technologies have emerged and are cheaper than the more traditional methods. They include: Bioremediation This utilises the natural processes of indigenous bacteria, microorganisms, plants, enzymes and fungi to destroy or neutralise toxins and contaminants. Phytoremediation This process uses plants. The can store contaminants in their leaves and stems (bioaccumulation). Some contaminants such as heavy metals can be harvested and mined for reuse (phytomining). In-Situ Chemical Oxidation This process injects oxygen or chemical oxidants into the contaminated soil or water to destroy harmful compounds. 2.5 Recycling Masonry Rubble With a project like this there is serious demand for concrete / asphalt and pavements around the development. Fortunately with the demolition of the existing derelict masonry building, a lot of the requirements can be met using recycled masonry rubble from the existing building. When using recycled masonry rubble from demolitions such as this it is important to ensure that the rubble is free from contaminants. Once this is done, the rubble is then graded into aggregates. This is a simple process that involves sieve like machines that vibrate, separating the various sized aggregates and compiling them with aggregate material of similar sizes. The aggregates can then be used in various locations around the site depending on their size and classification. It is important to note that the quality of recycled masonry rubble meets the requirement for use in constructing roads. Strenuous testing and categorizing is required on the aggregates that are intended for concrete use within the building in order to ensure the consistency is sufficient. Lightweight aggregate does not meet requirements for use as a secondary concrete aggregate as the majority of masonry materials are too soft and will adversely affect the strength of concrete products. 2.6 Access Roads and Pavements The existing building will have a number of access roads already in place. These roads will have to be excavated and in keeping with the sustainable design of the proposed building and use of recycle materials in the new build it is only fitting that the excavated asphalt should also be recycled and form part of the new access roads and pavements around the site. The manufacture of asphalt it a very energy expensive process as the materials involved must be heated to very high temperatures in order to mix together. Therefore, the use of recycled asphalt for road toppings around the site will have a cost benefit to the project as well as a positive impact on the environment. 3.0 Proposed Sports Centre Complex The proposed sports centre will be built using low embodied, recycled materials where possible paying particular attention to the energy performance of the building. The building design will take passive solar heating into consideration with cleverly positioned windows and landscaping throughout the site providing adequate shelter from the elements during the winter months. Sourcing materials locally cuts down on transport costs over large distances. This automatically reduces carbon emissions and also supports the local industry ensuring jobs and community growth. This will be a key component in the sustainable building of the proposed sports centre. 3.1 Foundations The best foundation for the proposed sports centre is a raft foundation. Due to the size and scale of the proposed build a raft foundation will allow the weight of the building to be transferred to the ground over a greater area and also provide a level surface for which to build upon. It is important that there is adequate steel reinforcement in the concrete to combat ground movement. When the recycled masonry rubble is graded into aggregates, some of these aggregates will be suitable for use in the concrete raft foundation. Recycled concrete aggregates can replace up to 20% of virgin aggregate in concrete within the provisions set out in BS 8500-2. 3.2 Structural Framing / Building Skeleton The most efficient way to build the proposed sports centre building is using a steel framed construction. The steel structure would meet the spatial requirements of the main sports hall, high ceilings with long spans and column free space to accommodate an indoor football pitch or basketball court. Recycled steel would be appropriate here as steel can be used countless times with no negative affects to its strength or performance. 3.3 Wall Build-Up Once the foundations and steel structure are in place it is time to think about the external wall build up. Given the intended use of the sports hall it is important to use a material that will not only be sustainable in its construction and hard wearing but also have an acoustic quality as the noise generated within the sports hall when its occupied will be of an elevated nature and could disrupt the surrounding public. There is a wide array of products available such as concrete blocks with 50% coarse aggregates replaced with plastic while still providing adequate strenght but all things considered, I would suggest an aerated concrete block. These are among the most environmentally friendly building products available. They are formed from recycled materials. One of which is Pulverised Fuel Ash (PFA), this is an unavoidable by-product of the coal-fired power generation process which is normally stockpiled in huge unsightly mounds or is dumped at sea. Further enhancing the sustainability of this product is the fact that no material goes to waste, anything left over when a batch is made automatically goes into the next mix. Also due to the lightweight of the material, more can be loaded onto a single lorry reducing the CO2 emissions produced in transport and speeding up construction. The cavity should be 100mm partially filled with natural wool insulation or a similar approved natural insulation or recycled insulation system. The external face of the building should be clad with recycled bricks tied back to the internal leaf with acoustically approved wall ties. 3.4 Floor Build-Up Each area of the sports centre will require a different finish depending on the proposed use. The reception for instance will need to provide a warm and welcoming atmosphere, this can be achieved using carpet. Recycled carpet is available, this is formed from recycled material such as plastic, wool, cotton or nylon and laid on a recycled rubber underlay. The rubber could be derived from any scrap tyres remaining on the site from the truck repair shop. The changing rooms will require a hard floor which is impervious to water. Many green options are available such as recycled ceramic floor tiles and eco-friendly rubber floor tiles. A study should be undertaken of the business in the area in order to decide which material is easiest to obtain with the pursuit of sustainability in mind. If there is a quarry nearby it might be an idea to investigate stone as a possible material for the flooring in hard wearing areas. Stone has a natural, timeless beauty and a feeling of solid quality which is hard to match with any other type of material. Unfortunately due to the costs associated with stone it may not be a plausible material as it is by no means the cheapest type of flooring to install or maintain. The flooring in the sports hall is a specific type of flooring material. It has a number of functional requirements associated with it. It must be durable, smooth and slightly soft to prevent serious injury. An ideal surface therefore, would be a rubber based surface which can be formed from any scrap tyres found on the site. This is a cost beneficial process as it is a sustainable use for the waste rubber meaning it is not necessary to pay for the safe disposal of the unused tyres. The recycled rubber surface should then sit on some rigid insulation such as woodwool, mineral./rock wool or expanded or extruded polystyrene to increase the thermal performance. 3.5 Roof Construction For the proposed sport centre i would suggest a green roof. A Green Roof is a roof that has a vegetated covering planted over a waterproofing membrane. The roof consists of various layers, each with its own function. The various layers cater for drainage, moisture, root protection and filtering. Green roofs have many benefits over traditional or conventional roofs. They offer a longer roof life span, increased acoustic performance, improved thermal performance in the winter and heat shielding in the summer and as they are living organisms they retain and store 90% of rain and storm water and return it to the atmosphere by means of evaporation. 3.6 Energy Performance of the Building A key feature of this building is the excessive use of recycled and sustainable materials in the construction. This has a positive effect on the environment ensuring minimal CO2 emissions are generated in the manufacture of the materials. This is an admirable practice and it sends a clear message to developers that the use of recyclables can have beneficial implementations for both the project budget and also the environment. It is important to maintain this objective throughout the buildings lifetime. This can be done by implementing micro renewable technologies during the construction process. A building of this scale is often associated with large energy bills. With the prices of oil escalating and the UKs dependency on fossil fuels at a peak, it is vital that this building incorporates as many micro renewable technologies as possible in order to drive the running costs down to a manageable level. I would strongly suggest the use of solar photovoltaic cells (PV) and wind turbines to generate electricity along with wood fuelled boilers (biomass) connected to a central heating system as the most relevant micro generation technologies that a building of this nature could benefit from. 4.0 Sustainable Urban Drainage Systems 4.1 Introduction to SUDS Sustainable urban drainage systems are a new environmentally friendly way of dealing with surface water run-off. Traditional drainage schemes lead to flooding, cause pollution and are generally more expensive to install. Surface water no longer has the opportunity to soak into the ground, instead it is collected in a network of pipes along with any contaminants such as oil, solid matter or toxic metals it may pick up along the way and it is discharged into the nearest rivers or streams. Sustainable urban drainage systems replicate natural drainage methods. Water run-off is collected and stored to allow natural cleaning to occur prior to infiltration or controlled release to watercourses. As a result they prevent pollution, control flooding, recharge ground water in the natural water table and enhance the environment. There are for main design options. These are: Filter Strips and Swales Filter Drains and Permeable Surfaces Infiltration Devices Basins and Ponds It is important to note that depending on the required performance of the sustainable urban drainage system, a combination of two or more design options may need to be incorporated in order to achieve a suitable drainage solution. 4.2 Filter Strips and Swales Filter strips and swales are vegetated surface features that drain water evenly off impermeable areas. Swales are long shallow channels whilst filter strips are gently sloping areas of ground. 4.3 Filter Drains and Permeable Surfaces Filter drains and permeable surfaces are devices that have a volume of permeable material below ground to store surface water. Water run-off flows to a storage area via a permeable surface such as gravelled paving areas or solid paving blocks with gaps between the individual units. When the water falls it passes through the surface to the permeable fill in the filter drain. This then allows the storage, treatment, transport and infiltration of the water resulting in clean uncontaminated water being returned to ground. 4.4 Infiltration Devices Infiltration devices drain water directly into the ground. They may be used either at source or alternatively the runoff can be conveyed in a pipe or swale to the infiltration area. They include soakaways, infiltration trenches and infiltration basins as well as swales, filter drains and ponds. Infiltration devices can be integrated into and form part of the landscaped areas. 4.5 Basins and Ponds Basins and ponds store water at the ground surface, either as temporary flooding of dry basins and flood plains, or permanent ponds. These structures can be designed to manage water quantity and quality. 4.6 Benefits of Sustainable Urban Drainage Systems There are a number of benefits to installing a sustainable drainage system as opposed to a traditional / conventional system. For example the cost of connecting to storm sewers and public drains is avoided and maintenance is simple and cheap. Maintenance can be carried out by landscaping contractors without the need of skilled engineers and heavy machinery. When clean filtrated water is distributed back to the site it gives the natural vegetation a chance to thrive and can create a very pleasant environment for everyone to enjoy. 4.7 Proposed Sustainable Urban Drainage System A sports centre will require a number of hard surfaces to cater for car parking. I would suggest using solid paving blocks for the surface in the car parking areas. A gap must be left between each block allowing water to filter through to an under the surface storage drain which runs to a designated area such as a vegetated or green area. This rainfall run-off precaution must be implemented in the initial design stage. I would also suggest soak holes / soakaways around the site to filter any water collected in downpipes around the building. With the current climate that we live in it has to be expected that substantial rain will fall each year. As such, a well designed sustainable drainage system can minimise flooding and any inconvenience that may be caused during times of high rain fall. 5.0 Conclusion The aim of the brief for this report was to critically analyze and evaluate the possibilities of redevelopment on a brownfield site with the demolition of an existing derelict masonry industrial building and the construction of a new sports centre utilising as many of the recycled materials from the demolition as possible. I approached this project somewhat blind with my basic knowledge of brownfield redevelopment. After researching the topic further I discovered all the environmental benefits surrounding brownfield redevelopment. With the declining availability of greenfield sites and the growing need for housing and community growth, brownfield redevelopment has got to be at the top of the list where possible in order to preserve what natural areas are left. Furthermore building on brownfield sites removes unsightly and often dangerous derelict buildings and gives local areas a chance to regenerate and create a new image. Decontaminating brownfield sites in a specialised task but the removal of hazardous materials makes it a safer environment for all concerned. Luckily new techniques for remediation of contaminated sites have made it cheaper. This can be appetising for potential developers looking to expand their property portfolio and as a result it can have a knock on effect within a community generating jobs and business for local trade. The brief stated that materials from the demolition of the existing masonry industrial building must be recycled and used in the construction of the new sport centre. When the list of materials that could be recycled in the existing building was broken down, it was found that almost everything could contribute in some way to the new build. This impacts on the budget for the project and in keeping with the UKs carbon emission reduction targets subsequently cuts down on any CO2 emissions that would have been produced in the manufacture of virgin material. The use of micro-technologies would fit in well with the overall idea of a sports centre as in my opinion a sports centre implies health and wellbeing which can be related back to the terms clean and green energy associated with these methods and the environment. The implementation of Sustainable Urban Drainage Systems permits the safe return of clean irrigated water back to the soil. The benefits of cost and minimal maintenance alone speak for themselves. With four main design options available I feel it is important to include at least one system as a drainage solution on sites such as this within small towns in order to preserve the local wildlife and allow vegetation to thrive free from water pollution. All in all i feel that this project were it to be undertake would be very feasible. Most of the costs for would come from decontaminating the site. The build itself would prove to be cheaper with recycled materials already available on-site and given the nature of the proposed sports centre I would not foresee any issues with the local community as it will provide a safe location for children and adults alike to hang out. The sustainable nature of the proposed build also indicates that this building is embracing plans to move forward into a greener future and it may set a precedent for future green development within the area. 6.0 References Brown, G., (24th September 2007). Gordon Browns First Speech to the Labour Conference as Party Leader. Available from: http://news.bbc.co.uk/1/hi/uk_politics/7010664.stm [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Biomass. Available from: http://www.lowcarbonbuildings.org.uk/micro/biomass/ [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Ground Source Heat Pumps. Available from: http://www.lowcarbonbuildings.org.uk/micro/ground/ [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Solar PV. Available from: http://www.lowcarbonbuildings.org.uk/micro/solarpv/ [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Solar Hot Water. Available from: http://www.lowcarbonbuildings.org.uk/micro/solartherm/ [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Small Scale Hydro. Available from: http://www.lowcarbonbuildings.org.uk/micro/hydro/ [Accessed xx September 2009] Department of Energy and Climate Change. Low Carbon Building Program, Wind Turbines. Available from: http://www.lowcarbonbuildings.org.uk/micro/wind/ [Accessed xx September 2009] Department for Environment Food and Rural Affairs. The Environment Waste and Recycling What Happens to Waste Construction Waste. Available from: http://www.defra.gov.uk/environment/waste/topics/construction/ [Accessed xx September 2009] Kelly, R., (13th September 2006). Zero-Carbon Homes Plan Unveiled. Available from: http://news.bbc.co.uk/1/hi/sci/tech/6176229.stm [Accessed xx September 2009] Lomas, J., (13th December 2007). Public Service Review: Transport, Local Government and The Regions Issue 11. Creating Zero-Carbon Communities. Available from: http://www.publicservice.co.uk/article.asp?publication=Transport,%20Local%20Government%20and%20the%20Regionsid=293content_name=Social%20Housing%20and%20Construction%20incorporating%20The%20Carbon%20Challengearticle=8879 [Accessed xx September 2009] Lomas, J., (13th December 2007). Public Service Review: Central Government Issue 15. Meeting the Challenge. Available from: http://www.publicservice.co.uk/article.asp?publication=Central%20Governmentid=287content_name=Sustainable%20Housing%20and%20Regenerationarticle=8680 [Accessed xx September 2009] New Forest Transition, (October 2009). Interesting in Generating Your Own Energy?. Available from: http://www.newforesttransition.org/index.php?/archives/2009/10/12.html [Accessed xx September 2009] Sheffield City Council. Sustainable Housing Code For Sustainable Homes. Available from: http://www.sheffield.gov.uk/?pgid=67894fs=b [Accessed xx September 2009] Sustainable Build. Types of Construction, Wood Frame Construction. Available from: http://www.sustainablebuild.co.uk/ConstructionWoodFrame.html [Accessed xx September 2009]

Personal Narrative: Hiking Accident :: essays research papers

Many years ago when I was a freshman in high school, an event happened to me that changed my life for the better. My friend invited me to go hiking with him and his sister. He was going to go hiking in Yosemite. The following day I prepared myself mentally and physically in order to accomplish this hike. While on the road my friend’s sister and I got to know each other very well. We talked about how we were doing in school, and many other things. As time went by we could see the mountains getting closer and closer to us. We could not wait to climb El Capitan. When we finally arrived, we unpacked and got ready to hike El Capitan. On the way up the hike we had a great time because as we hiked up we talked about how cool it was going to be up there on top of the world. After three hours we arrived at our first break stop. We stopped at a section that was on top of the waterfall. The view was amazing and spectacular because we had never seen anything like this. As we continued our hike after several more break stops, and nine more hours of hiking, we finally arrived at the top of El Capitan. Once we got to the top the view was amazing. We could not imagine how beautiful it was up there on top of the world. After about half an hour we started heading back down, when all of a sudden out of no where I felt someone push me out of the way. A man that was in a hurry to get back down pushed me so hard, that I lost my balance and fell of a twenty foot cliff. At that moment in time I could see flashbacks of my life. After a couple seconds of falling I somehow landed between two rocks which shattered my right foot. After that happen every one that was there tried to get help but unfortunately cell phones do not work in Yosemite, but the man that pushed me ove r the cliff had a walky-talky and he called for help.

Tribulations Of The Self (sociology) Essay -- Sociology Essays

What constitutes the 'tribulations of the self' in contemporary society, according to Anthony Giddens? Do you agree? Give reasons for your answer.This essay will seek an explanation of what constitutes the 'tribulations of the self' according to Anthony Giddens (1991). In the first part of this paper, I discuss some central ways language has been viewed focusing the review on social constructivist writings as well as those stemming from the study of human development. In the second part of this paper, I discuss data that leads to the reconsideration of aspects of the language - selfhood interface. I conclude by suggesting some future avenues of research.First the essay will outline the various tribulations that Giddens describes in 'Modernity and Self-identity' (1991).A tribulation of the self is a test or trial for the self, that involves some degree of severity. Many of these tribulations that Giddens outlines are to do with the anxieties brought about by different aspects of life and how the individual deals with them.The first tribulation that Giddens examines is the influence of risk and doubt. Feelings of anxiety arise when the individual doubts or takes risks. Such anxieties may be reduced by adhering to a faith or religion. Often these will dictate a certain lifestyle that either reduces doubt and risk or allows the individual to think about them less (Giddens, 1991). This was certainly the case in pre-modernity. Today more anxiety arises with the awareness that there are several possibilities and choices to do with decisions about life. Anxieties caused by risk may be more often caused by the risk calculations than the risks them selves (Giddens, 1991). Risk taking is an important part of life, people take risks every day and some become so much part of a routine that they appear no longer to be a risk. There are certain risks that are beyond our immediate control. Such as 'ecological disaster, nuclear war or the ravaging of humainity by as yet unanticipated scourges' (Giddens, 1991. p 183). Those who spend all their time worrying about such things are not considered normal yet they are sources of anxiety (Giddens, 1991). Among other things there is awarness of high consequence risks and the notion that 'things go wrong' (Giddens, 1991. P182) are going to cause anxiety in every day life. The next tribulation Giddens examines is 'ontological... ...or town. Through mediation we are informed of day to day events across the other side of the globe. According to Giddens (1991, p 188):'the appropriation of mediated information follows pre-established habits and obeys the principle of the avoidance of cognitive dissonance.' Most of the mediated information is accepted without question. In avoiding this questioning of the information one is remaining protected from the outside world and thus maintaining ontological security (Giddens, 1991). In this world we live in Giddens makes some direct comaprisons which are the root of tensions. The first dilemna is 'unification versus fragmentation'. Modernity fragments as well as unifying. In traditional society fragemntation was not seen as such a problem. Fragmentation of the self is the division of the self into several selves. This may come from different presentations of the self that may be used upon meeting with different people. Part of the problem that causes tension and anxiety is that a person maybe more aware of 'the debate over global warming that with why the tap in the kitchen leaks.' (Giddens, 1991, p189). Tasks at hand may be more obscure than large scale global events.

Bank6003 Notes

BANK6003 Final Exam Notes TOPIC 4A: Credit Risk – Estimating Default Probabilities Overview * Theory of credit risk less developed than VaR based models of market risk. * Much less amenable to precise measurement than market risk – default probabilities are much more difficult to measure than dispersion of market movements. * Measurement on individual loans is important to FI for pricing and setting limits on credit risk exposure. Default Risk Models 1. Qualitative Models * Assembling relevant information from private and external sources to make a judgement on the probability of default. Borrower specific factors (idiosyncratic or specific to individual borrower) include: reputation, leverage, volatility of earnings, covenants and collateral. * Market-specific factors (systematic factors that impact all borrowers include): business cycle and interest rate levels. * FI manager weighs these factors to come to an overall credit decision. * Subjective 2. Credit Scoring Mod els * Quantitative models that use data on observed borrower characteristics to calculate a score that represents borrower’s probability of default or sort borrowers into different default risk categories.Linear Probability Models (LPMs) * Econometric model to explain repayment experience on past/old loans. * Regression model with a â€Å"dummy† dependent variable Z; Z = 1 default and Z=0 no default. * Weakness: no guarantee that the estimated default probabilities will always lie between 0 and 1 (theoretical flaw) Logit and Probit Models * Developed to overcome weakness of LPM. * Explicitly restrict the estimated range of default probabilities to lie between 0 and 1. * Logit: assumes probability of default to be logistically distributed. Probit: assumes probability of default has a cumulative normal distribution function. Linear Discriminant Analysis * Derived from statistical technique called multivariate analysis. * Divides borrowers into high or low default risk cl asses. * Altman’s LDM = most famous model developed in the late 1960s. Z < 1. 8 (critical value), there is a high chance of default. * Weaknesses * Only considers two extreme cases (default/no default). * Weights need not be stationary over time. 3. New Credit Risk Evaluation Models Newer models have been developed – use financial theory and financial market data to make inferences about default probabilities. * Most relevant for evaluating loans to larger corporate borrowers. * Area of very active continuing research by FIs. Credit Ratings * Ratings change relatively infrequently – objective of ratings stability. * Only chance when there is reason to believe that a long-term change in the company’s creditworthiness has taken place. * S&P: AAA, AA, A, BBB, BB, B and CCC * Moody’s: Aaa, Aa, A, Baa, Ba, B and Caa Bonds with ratings of BBB and above are considered to be â€Å"investment grade† Estimating Default Probabilities 1. Historical Data * Provided by rating agencies e. g. cumulative average default rates * If a company starts with a: * Good credit rating, default probabilities tend to increase with time. * Poor credit rating, default probabilities tend to decrease with time. * Default Intensity vs Unconditional Default Probability * Default intensity or hazard rate is the probability of default conditional on no earlier default. * Unconditional default probability is the probability of default as seen at time zero. Default intensities and unconditional default probabilities for a Caa rated company in the third year * Unconditional default probability = Caa defaulting during the 3rd year = 39. 709 – 30. 204 = 9. 505% * Probability that Caa will survive until the end of year 2 = 100 – 30. 204 = 69. 796%. * Probability that Caa will default in 3rd year conditional on no earlier default = 0. 09505/0. 69796 = 13. 62% Recovery Rate * Usually defined as the price of the bond 30 days after default as a perce nt of its face value. * Recovery rate % = 1 – LGD% * Ranking of bonds * Senior Secured * Senior Unsecured Senior Subordinated * Subordinated * Junior Subordinated Credit Default Swaps * Instrument that is very useful for estimating default probabilities is a CDS. * Buyer of the insurance obtains the right to sell bonds issued by the company for their face value when a credit event occurs and the seller of the insurance agrees to buy the bonds for their face value when a credit event occurs. * The total value of the bonds that can be sold is known as the CDS’ notional principal. * Total amount paid per year, as a percent of the notional principal, to buy protection is known as the CDS spread. Buyer of the instrument acquires protection from the seller against a default by a particular company or country (the reference entity) * Example: buyer pays a premium of 90bps per year for $100m of 5-year protection against company X. * Premium is known as the credit default sprea d. It is paid for the life of contract or until default. * If there is a default, the buyer has the right to sell bonds with a face value of $100m issued by company X for $100m. * Payments are usually made quarterly in arrears * In the event of default, there is a final accrual payment by the buyer * Attractions of the CDS market Allows credit risks to be traded in the same way as market risks * Can be used to transfer credit risks to a third party * Can be used to diversify credit risk Credit Indices * Developed to track credit default swap spreads. * Two important standard portfolios are: * CDX NA IG, portfolio of 125 investment grade companies in North America * iTraxx Europe, portfolio of 125 investment grade companies in Europe * Updated on March 20 and September 20 each year. * Example * 5 year CDX NA IG index is bid 165bp, offer 166bp. Quotes mean that a trader can buy CDS protection on all 125 companies in the index for 166 basis points per company. * Suppose an investor wan ts $800,000 of protection on each company. * The total cost is 0. 0166 x 800,000 x 125 = $1,660,000. * When a company defaults, the investor receives the usual CDS payoff and the annual payment is reduced by 1,660,000/125 = $13,280. * Index is the average of the CDS spreads on the companies in the underlying portfolio. Use of Fixed Coupons * Increasingly CDS and CDS indices trade like bonds so that the periodic protection payments remain fixed. A coupon and a recovery rate is specified. * Quoted spread > coupon, buyer of protection makes an initial payment. * Quoted spread < coupon, seller of protection makes an initial payment. Credit Spreads * Extra rate of interest required by investors for bearing a particular credit risk. CDS Spreads and Bond Yields * CDS can be used to hedge a position in a corporate bond. * Example: investor buys a 5-year corporate bond yielding 7% per year for its face value and at the same time enters into a 5-year CDS to buy protection against the issuer o f the bond defaulting. CDS spread is 2% p. . Effect of the CDS is to convert the corporate bond to a risk-free bond. If the bond issuer does not default, the investor earns 5% per year. If the bond issuer defaults, the investor exchanges the bond for its face value and this can be invested at the risk-free rate for the remainder of the five years. The Risk-Free Rate * The risk-free rate used by bond traders when quoting credit spreads is the Treasury rate. * Traditionally used LIBOR/swap rate * Normal market conditions: risk free rate is 10bp less than the LIBOR/swap * Stressed conditions, the gap is much higher Asset Swaps Provide a direct estimate of the excess of a bond yield over the LIBOR/swap rate. * Example: asset swap spread for a particular bond is quoted as 150 basis points. 3 possible situations: 1. Bond sells for its par value of 100. Company A pays the coupon and Company B pays LIBOR plus 150bp. 2. Bond sells below par, say 95. Company A pays $5 per $100 of principal at the outset. After that, Company A pays the coupon and Company B pays LIBOR plus 150bp. 3. Bond sells above par, say 108. Company B pays $8 per $100 of principal at the outset. After that, Company A pays the coupon and Company B pays LIBOR plus 150bp. Therefore, the present value of the asset swap spread is the present value of the cost of default. CDS-Bond Basis * CDS-Bond Basis = CDS spread minus the bond yield spread * Bond yield spread is usually calculated as the asset swap spread * Should be close to zero, but there are a number of reasons why it deviates: 1. Bond may sell for a price significantly different from par (above par = positive basis, below par = negative basis) 2. There is counterparty risk in a CDS (negative direction) 3. There is a cheapest-to-deliver bond option in a CDS (positive direction) 4.Payoff in a CDS does not include accrued interest on the bond that is delivered (negative direction) 5. Restructuring clause in a CDS contract may lead to a payoff when th ere is no default (positive direction) 6. LIBOR is greater than the risk-free rate assumed (positive direction) Estimating Default Probabilities from Credit Spreads * Average hazard rate between time zero and time t * s(t) = credit spread, t = maturity, R = recovery rate * s = 240bps, R = 0. 40, hazard rate = 0. 04 = 4% Real World vs Risk-Neutral Default Probabilities * Real world = backed out of historical data Risk-neutral = backed out of bond prices or credit default swap spreads * Produce very different results. Why? * Corporate bonds are relatively illiquid * Subjective default probabilities of bond traders may be much higher than the estimates from Moody’s historical data * Bonds do not default independently of each other. This leads to systematic risk that cannot be diversified away. * Bond returns are highly skewed with limited upside. The non-systematic risk is difficult to diversify away and may be priced by the market. * Use real world for calculating credit VaR an d scenario analysis. Use risk-neutral for valuing for credit derivatives and PV of cost of default Option Models * Based on the idea that equity prices can provide more up-to-date information for estimating default probabilities. * Employ option pricing methods e. g. KMV. * Used by many of the largest banks to monitor credit risk. Merton’s Model * 1974 – company’s equity is an option on the assets of the company. * Equity value at time T as max(VT – D, 0) * VT is value of the firm * D is the debt repayment required * Option pricing model enables value of a firm’s equity today to be related to the value of its assets today and the volatility of its assets. Read also Recording General Fund Operating Budget and Operating TransactionsVolatilities * Equation together with the option pricing relationship enables value and volatility of assets to be determined from value and volatility of equity. Example * Company equity = $3m * Volatility of equity = 80% * Risk-free rate is 5% * Debt = $10m * Time to debt maturity = 1 year * Value of assets = $12. 40m * Volatility of assets = 21. 23% * Probability of default is 12. 7% * Market value of debt = $9. 40m * PV of payment is 9. 51 * Expected loss 1. 2% * Recovery rate 91% Use of Merton’s Model to estimate real-world default probability (e. g. Moody’s KMV) * Choose time horizon Calculate cumulative obligations to time horizon (D) * Use Merton’s model to calculate a theoretical probability of default * Use historical data to develop a one-to-one mapping of theoretical probability into real-world probability of default. * Distance to default TOPIC 4B: Credit Value at Risk Backgr ound * Credit risk is the risk of loss over a certain time period that will not be exceeded with a certain confidence level. * Calculate credit risk to determine both regulatory capital and economic capital. * Time horizon for credit risk VaR is often longer than that for market risk. Market risk usually one-day time horizon and then scaled up to 10 days for the calculation of regulatory capital. * Credit risk VaR, for instruments that are not held for trading, is usually calculated with a one-year time horizon/ * Historical simulation is the main tool used to calculate market risk VaR, but a more elaborate model is usually necessary to calculate credit risk VaR. * Key aspect is credit correlation. Defaults (or downgrades or credit spread changes) for different companies do not happen independently of each other. * Credit correlation increases risks for a financial institution with a portfolio of credit exposures.Introduction * Internal economic capital allocations against credit ri sk are based on bank’s estimate of their portfolio’s probability density function of credit losses. * Probability of credit losses exceeding some level, say X, is equal to the shaded area under the PDF. * A risky portfolio is one whose PDF has a relatively long, fat tail i. e. where there is a significant likelihood that actual losses will be substantially larger than expected losses. * Target insolvency rate = shaded area under PDF to right of X * Allocated economic capital = X – expected credit losses Expected vs Unexpected Credit Loss Expected = amount of credit loss expected on credit portfolio over the chosen time horizon * Unexpected = amount by which actual credit losses exceed expected credit loss. Economic Capital Allocation * Economic capital = estimated capital required to support credit risk exposure. * Process is similar to VaR methods used for allocation of capital for market risk. * Probability of unexpected credit loss exhausting economic capital is less than the bank’s target insolvency rate. * Target insolvency rate usually consistent with desired credit rating. * â€Å"AA† rating implies a 0. 3% chance of default. Need enough economic capital to be 99. 97% certain that credit losses will not cause insolvency. * Based on two inputs: 1. Bank’s target insolvency rate 2. Bank’s estimated PDF for portfolio credit losses * Two banks with identical portfolios could have very different economic capital for credit risk, owing to: 1. Differences in attitudes to risk taking (reflected in target insolvency rates) 2. Differences in methods of estimating PDFs (reflected in credit risk models) Measuring Credit Losses * Credit loss = current value –future value at the end of some time horizon. Precise definition of current/future values contingent on specific credit loss paradigm. * Current generation of credit risk models employ either of two conceptual paradigms: 1. Default-Mode (DM) Paradigm * Most common. * Credit loss arises only if default occurs within the time horizon. * â€Å"Two-state† model – only two outcomes, default and non-default. * If borrower defaults, credit loss = bank’s credit exposure – present value of future net recoveries (cash payments less workout expenses). * Current values are known but future values are uncertain. Estimate joint probability distribution with respect to 3 types of random variables: 1. Associated credit exposure 2. Indicator denoting whether facility defaults during planning horizon 3. In the event of default, the loss given default (LGD). Unexpected losses approach: * Assumption that PDF is well-approximated by mean and standard deviation. * Set capital at some multiple of estimated standard deviation of losses. * Requires estimates of expected and unexpected credit loss from default. * Expected loss (? ) depends on 3 key components: 1. LGD = loss given default, expressed as a decimal . PD = probability of default 3. EAD = expect credit exposure at default. * Standard deviation of portfolio credit losses * i = stand-alone standard deviation of credit losses from ith facility; * i = correlation between credit losses from ith facility and those on the overall portfolio; 2. Mark-to-Market (MTM) Paradigm * Credit loss can arise in response to decline in credit risk quality. * â€Å"Multi-state† model: default is only one of several possible credit ratings a loan could ‘migrate’ to over the horizon. * Credit portfolio marked to market at the beginning and end of planning horizon. Likelihood of a customer migrating from its current risk rating to any other category within the planning horizon is typically expressed in terms of a rating transition matrix. Row = current rating Column = prob of migrating to another risk grade * Complex estimation – need to estimate credit risk migrations at end of horizon as well as future credit spreads (risk-premium associated with end-of-period credit rating). * Two approaches: 1. Discounted contractual cash flow (DCCF) approach 2. Risk-neutral valuation (RNV) approach: an option valuation framework. In each methodology, a loan’s value is constructed as a discounted PV of its future cash flows. * Approaches differ mainly in how discount factors and yield spreads are estimated or calculated. TOPIC 5: OPERATIONAL RISK Overview * Definition: the risk of loss resulting from inadequate of failed internal processes, people and systems or from external events. * Harder to quantify and manage operational risk than credit or market risk. * FIs make a conscious decision to take a certain amount of credit and market risk but operational risk is a necessary part of doing business. Operational risk has become a more significant issue as a result of: * Increased use of highly automated technology and sophisticated systems * Growth of e-commerce * New wave of M&A * Increased risk mitigation techniques that may produ ce other risks * Increased prevalence of outsourcing * Over 100 operational loss events exceeding USD 100m since the end of the 1980s: * Internal fraud * External fraud * Employment practices and workplace safety * Clients, products and business practices * Damage to physical assets * Business disruption and system failures Execution, delivery and process management Regulatory Capital for Operational Risk * Three methods which represent a continuum of approaches characterised by increasing sophistication and risk sensitivity: 1. Basic Indicator Approach (15% of gross income) 2. Standardised Approach (different % for each business line) 3. Advanced Measurement Approach 1. Basic Indicator Approach * KBIA=GI ? ? GI = average annual gross income (net interest income + non-interest income) ? = 15% 2. Standardised Approach Bank activities divided into 8 business lines.Capital charge for each line is calculated by multiplying its gross income by the denoted beta. Total capital charge: KTSA = (GI1-8 ? ?1-8) To qualify for use of this approach, a bank must satisfy, at a minimum: – Its board of directors and senior management, as appropriate, are actively involved in the oversight of the operational risk management framework – It has an operational risk management system that is conceptually sound and implemented with integrity. – It has sufficient resources in the use of the approach in the major business lines as well as the control and audit areas. 3.Advanced Measurement Approach (AMA) * Regulatory capital requirement is determined using the quantitative and qualitative criteria for the AMA. * Banks can only use this approach if their local regulators/supervisory authorities have provided approval. * Qualitative Standards 1. Bank must have independent operational risk management function that is responsible for the design and implementation of banks’ operational risk management framework. 2. Bank’s internal operational risk measureme nt system must be closely integrated into the day-to-day risk management processes of the bank. 3.There must be regular reporting of operational risk exposures and loss experience to business unit management, senior management, and to the board of directors. 4. Bank’s operational risk management system must be well documented. 5. Internal and/or external auditors must perform regular reviews of the operational risk management processes & measurement systems. * Quantitative Standards 1. Banks must demonstrate that its approach captures potentially severe tail loss events. 2. Required to calculate regulatory capital requirement as the sum of expected loss (EL) and unexpected loss (UL) 3.Must be sufficiently ‘granular’ to capture the major drivers of operational risk. 4. Operational risk measurement system must include the use of internal data, relevant external data, scenario analysis and factors reflecting the business environment and internal control systems. Dis tributions important in estimating potential operational risk losses: 1. Loss frequency distribution * Distribution of number of losses observed during the time horizon (usually 1 year). * Loss frequency should be estimated from the banks own data as far as possible. One possibility is to assume a Poisson distribution: only need to estimate an average loss frequency. 2. Loss severity distribution * Distribution of the size of a loss given that a loss has occurred. * Based on both internal and external historical data. * Lognormal probability distribution is often used: only need to estimate mean and SD. AMA * The two distributions above are combined for each loss type and business line to determine the total loss distribution. * Monte Carlo simulation can be used to combine the two distributions. Four elements specified by the Basel Committee 1. Internal Data Operational risk losses have not been recorded as well as credit risk losses * Important losses are low-frequency high-severi ty losses * Loss frequency should be estimated from internal data 2. External Data * Data sharing or data vendors * Data from vendors: * Based on publicly available information biased towards large losses * Only be used to estimate the relative size of the mean losses and SD of losses for different risk categories. 3. Scenario Analysis * Aim is to generate scenarios covering all low frequency high severity losses * Can be based on both internal and external experience Aggregate scenarios to generate loss distributions 4. Business Environment and Internal Control Factors * Takes account of: * Complexity of business line * Technology used * Pace of change * Level of supervision * Staff turnover rates Power Law * Prob (v > x) = Kx-a * Power law holds well for the large losses experienced by banks. * When loss distributions are aggregated, the distribution with the heaviest tails tends to dominate. This means that the loss with the lowest alpha defines the extreme tails of the total los s distribution. Insurance * Important decision re operational risk is the extent to which it should be insured against.Moral Hazard * Risk that the existence of the insurance contract will cause the bank to behave differently than it otherwise would. * Example: a bank insures itself against robberies. As a result of the insurance policy, it may be tempted to be lax in its implementation of security measures – making a robbery more likely than it would otherwise have been. * Solution * Deductible – bank is responsible for bearing the first part of any loss * Coinsurance provision – insurance company pays a predetermined percentage of losses in excess of the deductible. * Policy limit – on total liability of the insurer.Adverse Selection * This is where an insurance company cannot distinguish between good and bad risks. * To overcome this, an insurance company must try to understand the controls that exist within banks and the losses that have been experien ced. Sarbanes-Oxley * Sarbanes-Oxley Act passed in the US in 2002. * Requires board of directors to become much more involved with day-to-day operations. They must monitor internal controls to ensure risks are being assessed and handled well. * Gives the SEC the power to censure the board or give it additional responsibilities. A company’s auditors are not allowed to carry out any significant non-auditing services. * Audit committee of the board must be made aware of alternative accounting treatments. * CEO and CFO must return bonuses in the event that financial statements are restated. TOPIC 6: LIQUIDITY RISK Overview * Liquidity refers to the ability to make cash payments as they become due. * Solvency refers to having more assets than liabilities, so that equity value is positive. Types of Liquidity Risk * Liquidity trading risk – markets can become illiquid very quickly.Cannot unwind asset position at a fair price fire sale prices. * Liquidity funding risk – risk of being unable to service cash flow obligations. Liquidity needs are uncertain. Liquidity Trading Risk * Price received for an asset depends on: * The mid market price * How much is to be sold * How quickly it is to be sold * The economic environment Bid-Offer Spread as a Function of Quantity * Dollar bid – offer spread, p = Offer price – Bid price * There is a spread which is constant up to some quantity. After a critical level (size limit of market makers), the spread widens.Proportional bid-offer spread= Offer price-bid priceMid-market price * Cost of liquidation in normal markets i=1n12si? i * N is the number of positions, alpha is the position of the instrument, s is the proportional bid-offer spread for the instrument. * Spread widens if market is in stressed conditions. * Cost of liquidation in stressed markets i=1n12(? i+ i)? i * Mean and SD, lambda is required confidence level Liquidity Adjusted VaRLiquidity-Adjusted Stressed VaR VaR+i=1n12si? i VaR+i= 1n12(? i+ i)? i Unwinding a Position Optimally (Two Options) Unwind quickly: trader will face large bid-offer spreads, but the potential loss from the mid-market price moving against the trader is small. * Unwind over several days: bid-offer spread each day will be lower, but the potential loss from the mid-market price moving against the trader is larger. Liquidity Funding Risk * Sources of liquidity * Liquid assets * Ability of liquidate trading positions (funding risk and trading risk are interrelated) * Wholesale and retail deposits * Lines of credit and the ability to borrow at short notice * Securitisation * Central bank borrowing (lender of last resort) Basel III Regulation * Liquidity Coverage Ratio: designed to make sure that the bank can survive a 30 day period of acute stress * Net Stable Funding Ratio: a longer term measure designed to ensure that stability of funding sources is consistent with the permanence of the assets that have to be funded. Liquidity Black Holes * Occurs when most market participants want to take one side of the market and liquidity dries up. Positive and Negative Feedback Trading * Exacerbates the direction of price movements * Positive feedback trader buys after a price increase and sells after a price decrease. Negative feedback trader buys after a price decrease and sells after a price increase. * Positive feedback trading can create or accentuate a black hole. Reasons for Positive Feedback Trading * Computer models incorporating stop-loss trading. Stop-loss trading = discarding position to prevent further losses. * Dynamic hedging a short option position. Example: if you have â€Å"sold an option† – cover yourself by going long i. e. buy underlying asset when price rises and sell when price decreases. * Creating a long option position synthetically * Margin calls The Leveraging CycleThe Deleveraging CycleIs Liquidity Improving? * Spreads are narrowing but arguably the risks of liquidity black holes are now greater than they used to be. * We need more diversity in financial markets where different groups of investors are acting independently of each other. Principles for Sound Liquidity Risk Management and Supervision (June 2008) * GFC regulators responded by undertaking a fundamental review of existing guidance of liquidity management and issued a revised set of principles on how banks should manage liquidity. Fundamental Principle for the Management and Supervision of Liquidity Risk 1.Sound management of liquidity risk – robust risk management framework. Governance of Liquidity Risk Management 2. Clearly articulate a liquidity risk tolerance 3. Strategy, policies and practices to manage liquidity risk 4. Incorporate liquidity costs, benefits and risks for all significant business activities. Measurement and Management of Liquidity Risk 5. Framework for comprehensively projecting cash flows arising from assets, liabilities and OBS items. 6. Actively monitor and control liquidi ty risk exposures and funding needs within and across legal entities. 7.Establish a funding strategy that provides effective diversification. 8. Effectively manage intraday liquidity positions and risks to meet payment and settlement obligations. 9. Actively manage collateral positions. 10. Conduct stress tests on a regular basis. 11. Formal contingency funding plan (CFP) in case of emergency. 12. Maintain a cushion of unencumbered, high quality liquid assets in case of stress scenarios. Public Disclosure 13. Publicly disclose information on a regular basis The Role of Supervisors 14. Regularly perform a comprehensive assessment of a bank’s overall liquidity risk management framework. 15.Supplement point 14 by monitoring a combination of internal reports, prudential reports and market information. 16. Should intervene to require effective and timely remedial action to address liquidity deficiencies. 17. Should communicate with other regulators e. g. central banks – coo peration TOPIC 7: CORE PRINCIPLES OF EFFECTIVE BANKING SUPERVISION Overview * Most important global standard for prudential regulation and supervision. * Endorsed by vast majority of countries. * Provides benchmark against which supervisory regimes can be assessed. * 1995: Mexican and Barings Crises Lyon Summit in 1996 for G7 Leaders. 1997: Document drafted and endorsed at G7 meeting. Final version presented at annual meetings of World Bank and IMF in Hong Kong. * 1998: G-22 endorsed * 2006: Revision of the Core Principles * 2011: Basel Committee mandates a major review, issues revised consultative paper. The Core Principles (2006) * 25 minimum requirements that need to be met for an effective regulatory system. * May need to be supplemented by other measures. * Seven major groups * Framework for supervisory authority – Principle 1 * Licensing and structure – Principles 2-5 * Prudential regulations and requirements – Principles 6-18 *Methods of ongoing banking s upervision – Principles 19-21 * Accounting and disclosure – Principle 22 * Corrective and remedial powers of supervisors – Principle 23 * Consolidated and cross-border banking – Principles 24-25. * Explicitly recognise: * Effective banking supervision is essential for a strong economic environment. * Supervision seeks to ensure banks operate in a safe and sound manner and hold sufficient capital and reserves. * Strong and effective supervision is a public good and critical to financial stability. * While cost of supervision is high, the cost of poor supervision is even higher. Key objective of banking supervision: * Maintain stability and confidence in the financial system * Encourage good corporate governance and enhance market transparency Revised Core Principles (2011) * Core Principles and assessment methodology merged into a single document. * Number of core principles increased to 29. * Takes account of several key trends and developments: * Need to deal with systemically important banks * Macroprudential focus (system-wide) and systemic risk * Effective crisis management, recovery and resolution measures. Sound corporate governance * Greater public disclosure and transparency enhance market discipline. * Two broad groups: 1. Supervisory powers, responsibilities and functions. Focus on effective risk-based supervision, and the need for early intervention and timely supervisory actions. Principles 1-13. 2. Prudential regulations and requirements. Cover supervisory expectations of banks, emphasising the importance of good corporate governance and risk management, as well as compliance with supervisory standards. Supervisory powers, responsibilities and functions 1.Clear responsibilities and objectives for each authority involved. Suitable legal framework. 2. Supervisor has operational independence, transparent processes, sound governance and adequate resources, and is accountable. 3. Cooperation and collaboration with domestic a uthorities and foreign supervisors. 4. Permissible activities of banks is controlled. 5. Assessment of bank ownership structure and governance. 6. Power to review, reject and impose prudential conditions on any changes in ownership or controlling interests. 7. Power to approve or reject major acquisitions. 8.Forward-looking assessment of the risk profile of banks and banking groups. 9. Uses appropriate range of techniques and tools to implement supervisory approach. 10. Collects, reviews and analyses prudential reports and statistical returns. 11. Early address of unsafe and unsound practices. 12. Supervises banking group on consolidated basis (including globally) 13. Cross-border sharing of information and cooperation. Prudential regulations and requirements 14. Robust corporate governance policies and processes. 15. Banks have a comprehensive risk management process, including recovery plans. 6. Set prudent and appropriate capital adequacy requirements. 17. Banks have an adequate credit risk management process. 18. Banks have adequate policies and processes for the early identification and management of problems assets, and maintain adequate provisions and reserves. 19. Banks have adequate policies re concentration risk. 20. Banks required to enter into any transactions with related parties on an arm’s length basis. 21. Banks have adequate policies re country and transfer risk. 22. Banks have an adequate market risk management process. 23.Banks have adequate systems re interest rate risk in the banking book. 24. Set prudent and appropriate liquidity requirements. 25. Banks have an adequate operational risk management framework. 26. Banks have adequate internal controls to establish and maintain a properly controlled operating environment for the conduct of their business. E. g. delegating authority and responsibility, separation of the functions that involve committing the bank. 27. Banks maintain adequate and reliable records, prepare financial state ments in accordance with accounting policies etc. 8. Banks regularly publish information on a consolidated and solo basis. 29. Banks have adequate policies and processes e. g. strict customer due diligence. Preconditions for Effective Banking Supervision 1. Provision of sound and sustainable macroeconomic policies. 2. A well established framework for financial stability policy formulation. 3. A well developed public infrastructure 4. A clear framework for crisis management, recovery and resolution 5. An appropriate level of systemic protection (or public safety net) 6. Effective market discipline 001: IMF and World Bank Study on Countries’ Compliance with Core Principles * 32 countries are compliant with 10 or few BCPs * Only 5 countries were assessed as fully compliant with 25 or more of the BCPs. * Developing countries less compliant than advanced economies. * Advanced economies generally possess more robust internal frameworks as defined by the ‘preconditions’ 2008: IMF Study on BCP Compliance * Based on 136 compliance assessments. * Continued work needed on strengthening banking supervision in many jurisdictions, particularly in the area of risk management. More than 40% of countries did not comply with the essential criteria of principles dealing with risk management, consolidated supervision and the abuse of financial services. * More than 30% did not possess the necessary operational independence to perform effective supervision nor have adequate ability to use their formal powers to take corrective action. * On average, countries in Western Europe demonstrated a much higher degree of compliance (above 90%) with BCP than their counterparts in other regions. * Africa and Western Hemisphere weak. Generally, high-income countries reflected a higher degree of compliance. TOPIC 8: CAPITAL ADEQUACY Overview * Adequate capital better able to withstand losses, provide credit through the business cycle and help promote public confidence in ba nking system. Importance of Capital Adequacy * Absorb unanticipated losses and preserve confidence in the FI * Protect uninsured depositors and other stakeholders * Protect FI insurance funds and taxpayers * Protect deposit insurance owners against increases in insurance premiums * To acquire real investments in order to provide financial services e. . equity financing is very important. Capital Adequacy * Capital too low banks may be unable to absorb high level of losses. * Capital too high banks may not be able to make the most efficient use of their resources. Constraint on credit availability. Pre-1988 * Banks regulated using balance sheet measures e. g. ratio of capital to assets. * Variations between countries re definitions, required ratios and enforcement of regulations. * 1980s: bank leverage increased, OBS derivatives trading increased. * LDC debt = major problem 1988 Basel Capital Accord (Basel I) * G10 agreed to Basel I Only covered credit risk * Capital / risk-adjusted assets > 8% * Tier 1 capital = shareholders equity and retained earnings * Tier 2 capital = additional internal and external resources e. g. loan loss reserves * Tier 1 capital / risk-adjusted assets > 4% * On-balance-sheet assets assigned to one of four categories * 0% – cash and government bonds * 20% – claims on OECD banks * 50% – residential mortgages * 100% – corporate loans, corporate bonds * Off-balance-sheet assets divided into contingent or guarantee contracts and FX/IR forward, futures, option and swap contracts. Two step process (i) derive credit equivalent amounts as product of FV and conversion factor then (ii) multiply amount by risk weight. * OBS market contracts or derivative instruments = potential exposure + current exposure. * Potential exposure: credit risk if counterparty defaults in the future. * Current exposure: cost of replacing a derivative securities contract at today’s prices. 1996 Amendment * Implemented in 1998 * Requi res banks to measure and hold capital for market risk. * k is a multiplicative factor chosen by regulators (at least 3) VaR is the 99% 10-day value at risk SRC is the specific risk charge Total Capital = 0. 08 x [Credit risk RWA + Market risk RWA] where market risk RWA = 12. 5 x [k x VaR + SRC] Basel II (2004) * Implemented in 2007 * Three pillars 1. New minimum capital requirements for credit and operational risk 2. Supervisory review: more thorough and uniform 3. Market discipline: more disclosure * Only applied to large international banks in US * Implemented by securities companies as well as banks in EU Pillar 1: Minimum Capital Requirements * Credit risk measurement: * Standardised approach (external credit rating based risk weights) * Internal rating based (IRB) Market risk = unchanged * Operational risk: * Basic indicator: 15% of gross income * Standardised: multiplicative factor for income arising from each business line. * Advanced measurement approaches: assess 99. 9% wor st case loss over one year. * Total capital = 0. 08 x [Credit risk RWA + market risk RWA + Operational risk RWA] Pillar 2: Supervisory Review * Importance of effective supervisory review of banks’ internal assessments of their overall risks. Pillar 3: Market discipline * Increasing transparency – public disclosure Basel 2. 5 (Implemented 2011) * Stressed VaR for market risk * Incremental risk charge Ensures products such as bonds and derivatives in the trading book have the same capital requirement that they would if they were in the banking book. * Comprehensive risk measure (re credit default correlations) Basel III (2010) * Considerably increase quality and quantity of banks capital * Macroprudential overlay – systemic risk * Allows time for smooth transition to new regime * Core capital only retained earnings and common shares * Reserves increased from 2% to 4. 5% * Capital conservation buffer – 2. 5% of RWA * Countercyclical capital buffer * Tracing/ monitoring of liquidity funding Introduction of a maximum leverage ratio Capital Definitions and Requirements * Common equity > 4. 5% of RWA * Tier 1 > 6% of RWA * Phased implementation of capital levels stretching to Jan 1, 2015 * Phased implementation of capital definition stretching to Jan 1, 2018 Microprudential Features * Greater focus on common equity * Loss-absorbing during stress/crisis period capital conservation buffer * Promoting integrated management of market and counterparty credit risk. * Liquidity standard introduced introduced Jan 1, 2015 Introduced Jan 1, 2018 Available Stable Funding FactorsRequired Stable Funding Factors Macroprudential Factors * Countercyclical buffer * Acts as a brake in good times of high credit growth and a decompressor to restrict credit during downturns. * Within a range of 0-2. 5% * Left to the discretion of national regulators * Dividends restricted when capital is below required level * Phased in between Jan 1, 2016 – Jan 1, 2019 * Leverage Ratio * Target 3% * Ratio of Tier 1 capital to total exposure > 3% * Introduced on Jan 1, 2018 after a transition period * SIFIs * Required to hold additional loss absorbency capital, ranging from 1-2. 5% in common equity