NYSE is down badly.
Economy is still clearly showing a decline.
However, there are aggressive individuals who seeks to battle this difficult time of the history.
Xanadu. This is the name of the mall which is planned to open during Summer 2009.
It is not an ordinary shopping mall which we have experienced in the past.
it is considered one of the largest commercial real estate project in the country.
The features are astonishing.
it is not too much to say that this mall provides more entertainment than shopping.
Such things like indoor ski fields and surfing pool may give you a better idea.
The CEO who is responsible for the project is Larry Siegel from Xanadu Corp.
It may be that the project has already been launched but this group must be doing intense risk management.
And I believe with their projection, they are all out for making money on this location near Manhattan NY.
This project would be very interesting on viewing how consumers reaction.
The CEO also mentioned that the spending seen on Manhattan area has the most immunity to the current economy in the U.S.
These types of information can also be very valuable when determining the VaR which we discussed in class.
Friday, March 6, 2009
Monday, March 2, 2009
AIG recieving more
March, 2 Government has announced another bailout for AIG.
And perhaps the article states that it will not be the last.
AIG has reported a huge loss of $61.7 billion in the 4th quarter.
I am currently in Japan and most of the news channel is talking about this case.
However, what I felt different from watching American news is that they talk much about the companies which are functioning under AIG such as
-ALICO Japan
-AIG Edison
Since the first bailout, those 2 companies were trying to find the buyer of the company.
And at one point Aflac was considering the purchase of Alico.
However, that proposal has gone away.
What I belive is that , Alico Japan is separate from AIG's business structure and they should be having business according to japanese laws.
Moreover, if they have differnt business structure, I will not be surprised if they carry different type of risk management strategy.
Believe it or not these companies are proposing strong solvency ratio and guaranteeing a strong asset management.
And perhaps the article states that it will not be the last.
AIG has reported a huge loss of $61.7 billion in the 4th quarter.
I am currently in Japan and most of the news channel is talking about this case.
However, what I felt different from watching American news is that they talk much about the companies which are functioning under AIG such as
-ALICO Japan
-AIG Edison
Since the first bailout, those 2 companies were trying to find the buyer of the company.
And at one point Aflac was considering the purchase of Alico.
However, that proposal has gone away.
What I belive is that , Alico Japan is separate from AIG's business structure and they should be having business according to japanese laws.
Moreover, if they have differnt business structure, I will not be surprised if they carry different type of risk management strategy.
Believe it or not these companies are proposing strong solvency ratio and guaranteeing a strong asset management.
Stocks are falling for most but not for all.
http://www.businessweek.com/investor/content/mar2009/pi2009031_014366.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
There are 376 financail or invested firms listed on U.S exchanges.
Eversince the financial crises began, most of the firms listed are going through singnificant losses.
Therefore, most of the investro's expectations could not be satisfied.
However, there were few firms which boosted their performances.
Amont the 376, 10 or 2.7% since the start of the crises.
I respect these 10 firms in many ways.
They must have done intensive Risk Management within their companies, simply eliminating the risks which other comapny was exposed to.
I think the beauty of risk management is if done properly, even when the world economy is suffering, it allows individuals or firms to enjoy the stability during the unexpected very bad year or very bad day.
There are 376 financail or invested firms listed on U.S exchanges.
Eversince the financial crises began, most of the firms listed are going through singnificant losses.
Therefore, most of the investro's expectations could not be satisfied.
However, there were few firms which boosted their performances.
Amont the 376, 10 or 2.7% since the start of the crises.
I respect these 10 firms in many ways.
They must have done intensive Risk Management within their companies, simply eliminating the risks which other comapny was exposed to.
I think the beauty of risk management is if done properly, even when the world economy is suffering, it allows individuals or firms to enjoy the stability during the unexpected very bad year or very bad day.
Sunday, February 22, 2009
Stress test on the bank: Testing Stability
From http://www.nytimes.com/2009/02/23/business/23bank.html.
What can happen in the worst day of that firm?
What can their loss be?
How much would the loss be?
This is what we have been discussing in the 4350 class.
This stress test that is going to be tested against the U.S banks exactly aims to answer the question listed above.
It would take several weeks to complete the test and depending on the result we would know if the company needs more capital or it is good as it is now.
Due to this stockholders for these U.S banks started to worry about the value of those stocks.
It is a good thing to measure the outcome in "what if" scenario.
And risk managers often approaches to risk in such manner.
However, it says that the scenario that will be given has the possibility of "highly will not happen" to the firm.
I hope that the outcome of the test does not scare the shareholders to the point where they decide to massively give up on their investment portfolios which they have with the company.
I think that can create a even worse chaos.
What can happen in the worst day of that firm?
What can their loss be?
How much would the loss be?
This is what we have been discussing in the 4350 class.
This stress test that is going to be tested against the U.S banks exactly aims to answer the question listed above.
It would take several weeks to complete the test and depending on the result we would know if the company needs more capital or it is good as it is now.
Due to this stockholders for these U.S banks started to worry about the value of those stocks.
It is a good thing to measure the outcome in "what if" scenario.
And risk managers often approaches to risk in such manner.
However, it says that the scenario that will be given has the possibility of "highly will not happen" to the firm.
I hope that the outcome of the test does not scare the shareholders to the point where they decide to massively give up on their investment portfolios which they have with the company.
I think that can create a even worse chaos.
Report: 4 million Americans lost health insurance since recession began
From http://www.bizjournals.com/albany/stories/2009/02/16/daily58.html.
Health insurance plays a critical role on personal finance.
From risk management point of view it is very important to have available coverages in time of need.
However, the economic crisis has driven the people out of their policies.
And report also says that much as 14,000 people could be losing their coverages daily.
In the past, I have researched about the rising health care issues for RMI 4010.
The health care price has gone up 2 times the amount of our inflation.
As unemployment rate rise, the people who are uninsured would go up by a large amount.
As we can expect the condition can get worse, each people must perform their personal risk management to stay in good shape .
Things can happen when you least epect it.
Health insurance plays a critical role on personal finance.
From risk management point of view it is very important to have available coverages in time of need.
However, the economic crisis has driven the people out of their policies.
And report also says that much as 14,000 people could be losing their coverages daily.
In the past, I have researched about the rising health care issues for RMI 4010.
The health care price has gone up 2 times the amount of our inflation.
As unemployment rate rise, the people who are uninsured would go up by a large amount.
As we can expect the condition can get worse, each people must perform their personal risk management to stay in good shape .
Things can happen when you least epect it.
Miners killed in China : at least 74 dies
From New York Times Feb 22, 2009
http://www.nytimes.com/2009/02/23/world/asia/23miners.html?hp
Okay, here is what happened.
China is known as having the most dangerous mining industry measured by the death rates.
This accident happened in the Tunlan Coal Mine in Shanxi province.
Xinhua( China's state news agency) reported thatt he blast or an explosion occured at 2:17AM.
The mining company was called the Shanxi coking Coal group.
This group, listed on the Shanghai Stock Exchange, is one of China's largest producers of coking coal. Which totals to be about five million tons a year.
Surprisingly, this coal mine was considered safe in China sinece it had no accident reports for the past 5 years.
ONLY 5 years.
This accident ranked itself for the 2nd deadliest accident since December of 2007, where it killed 105 miners.
However, due to the nature of being able to make tons of money, coal mine business seems to be attractive among the chinese.
There must be a way to manage these type of losses.
Because having 74 people being killed in a single accident seems very serious.
Government as well as other types of institutions must figure out the way to avoid these riks.
Risk managers in China should be able find a big niche market just by consulting with these large coal mining companies and providing them with an idea of safety standard.
http://www.nytimes.com/2009/02/23/world/asia/23miners.html?hp
Okay, here is what happened.
China is known as having the most dangerous mining industry measured by the death rates.
This accident happened in the Tunlan Coal Mine in Shanxi province.
Xinhua( China's state news agency) reported thatt he blast or an explosion occured at 2:17AM.
The mining company was called the Shanxi coking Coal group.
This group, listed on the Shanghai Stock Exchange, is one of China's largest producers of coking coal. Which totals to be about five million tons a year.
Surprisingly, this coal mine was considered safe in China sinece it had no accident reports for the past 5 years.
ONLY 5 years.
This accident ranked itself for the 2nd deadliest accident since December of 2007, where it killed 105 miners.
However, due to the nature of being able to make tons of money, coal mine business seems to be attractive among the chinese.
There must be a way to manage these type of losses.
Because having 74 people being killed in a single accident seems very serious.
Government as well as other types of institutions must figure out the way to avoid these riks.
Risk managers in China should be able find a big niche market just by consulting with these large coal mining companies and providing them with an idea of safety standard.
Monday, February 16, 2009
calling out "too risky" is sometimes not good?
Ariticle found here.
http://www.businessweek.com/ap/financialnews/D969BKFO0.htm
Major advantage of having risk management is to secure the survival of the firm.
As a student in RMI, we are getting better with many risk managing techniques.
It can be insurance.
It can be non-insurance transfer.
Some type of retention, whether it be active or passive.
Avoidance ( creates "risk free" as we discuss in 4350).
Risk control that can either be prevention or reduction.
It does not have to be a risk manager that goes through the process of knowing how risky the decision or action that the firms are currently making.
In the article it states that the former head of regulatory risk was fired for warning the CEO of riskiness of the firm.
Is it wrong to bring this type of opinion up to the boss?
If you get fired everytime when you warn something about risk how can risk managers have jobs?
It seems like the people who are firing is telling us to manage the risk of you being fired and not the risk that the actual company holds.
It is not a small company when we hear HBOS.
I think many firms should understand how important it is to manage risk.
If every single company did their job by having good risk management,
alot of what we see in the economy could have never happened.
http://www.businessweek.com/ap/financialnews/D969BKFO0.htm
Major advantage of having risk management is to secure the survival of the firm.
As a student in RMI, we are getting better with many risk managing techniques.
It can be insurance.
It can be non-insurance transfer.
Some type of retention, whether it be active or passive.
Avoidance ( creates "risk free" as we discuss in 4350).
Risk control that can either be prevention or reduction.
It does not have to be a risk manager that goes through the process of knowing how risky the decision or action that the firms are currently making.
In the article it states that the former head of regulatory risk was fired for warning the CEO of riskiness of the firm.
Is it wrong to bring this type of opinion up to the boss?
If you get fired everytime when you warn something about risk how can risk managers have jobs?
It seems like the people who are firing is telling us to manage the risk of you being fired and not the risk that the actual company holds.
It is not a small company when we hear HBOS.
I think many firms should understand how important it is to manage risk.
If every single company did their job by having good risk management,
alot of what we see in the economy could have never happened.
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