Fall Of The Lehman Brothers And Bean Stearns - Free Essay Example

Sample details Pages: 19 Words: 5746 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Essay any type Did you like this example? The fall of Lehman Brothers and Bean Stearns triggered the financial crisis from 2007 to 2008. In the case of Lehman Brothers, which was one of the largest investment banks with old history in United States, illustrated the importance of appropriate internal risk management with control. Self-interview threat occurred and was leading to the bankruptcy. Don’t waste time! Our writers will create an original "Fall Of The Lehman Brothers And Bean Stearns" essay for you Create order In the event of lacking enough bank reserve for withdrawal, Bank of East Asia (BEA) chose to enter mass of capital and welcome the public to take freely from the account balance. It would like to increase the stakeholder confidence and is finally success and solve the problem. It is s obvious that risk management plays an important role in the financial institutions. Risk management is the management of identification, assessment and prioritization of risks to assess the effectiveness and efficiency of the internal control system and reduce the impact of unexpected events. (ISO 31000, 2009) Without proper risk management, banks are difficult to operate with financial difficulties and survive during the financial crisis. An effective risk management also improves Corporate Governance procedures that help to increase investor confidence, transparency and accountability that helps institutions operate efficiently. If any error or missing occurs in the process of risk management, it caus es a failure of corporate governance and may result in operating difficulty. In United Kingdom (UK), the Financial Services Authority (FSA) provides framework of risk management (Arrow), risk assessment framework and financial risk outlook (FRO) for financial institutions to understand the major risks. In addition, Turnbull provides a guidance of good internal control with implication of UK corporate governance code that focuses on the quality and extent of risk management disclosures in an organization and thus reduces the impacts. Combined Code (1998) requires the board of director (BoD) to maintain a good internal control system that includes risk management that safeguarding the tangible and intangible asset and ensure the effectiveness of system. In United States (US), the Sarbanes-Oxley Act (SOX) 2002 requires that both management and auditor to maintain a sound internal control system. Section 302 requires management to certify the periodic financial reports and disclos e significant internal control deficiencies and section 404 requires management to provide assessment of the internal control and auditors to provide opinion on that assessment. And the generally accepted accounting principles (GAAP) set accounting rules that corporations need to follow, i.e. they need to prepare, present and report the financial statements. In Hong Kong, the international banking regulation Basel III is applicable to banks. And HKMA regulates the economic stability in banking industry. Many large banks, like the Hong Kong and Shanghai Banking Corporation Limited (HSBC), also implement the SOX act, New York Stock Exchange (NYSE) corporate governance rules and USA PATRIOT act of the other countries in the Hong Kong. Internal control plays an important role in enterprise risk management (COSO, 2004 Pagano, 2001) Woods (2008) states the relationship between an effective and efficiently internal control linking with enterprise risk management (ERM). It also claim s that management-based internal control includes conflicts of interest for internal auditors, is extremely risky for the financial institution. Harker and Stvros (1998) shows the efficiency of risk management significantly affect financial performance of financial institutions. Without effective risk management, auditing of financial statement and expense of audit may be affected and cause unreliable reports. In the financial crisis from 2007 to 2009, many corporations include banks liquated due to a weak internal control system without an effective risk management. Therefore, a good risk management programme is important to the firm in the Hong Kong banking industry. Hong Kong and Shanghai Banking Corporation Limited (HSBC) is one of the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s largest financial institutions and thus its risk management will be identified, analyzed and compared with its competitors. Banking regulations and frameworks will be reviewed and key elements of risk management will be identified and compared. The debates will be reviewed and the strength and weakness of internal control of HSBC will be identified. In addition, recommendations for future improvement in effective risk management will be drawn. Aim and objectives of study The aims of the study are to illustrate the importance of maintaining a good risk management programme in the Hong Kong banks and to draw recommendations for the improvement of weaken risk management. To achieve this aim, the objectives have been established: To review banking regulations and framework (Basel III) apply to Hong Kong banking industry To compare and examine the risk management of internal control systems in HSBC and its competitors To review different comments given by its stakeholders during financial crisis (2008) and era To identify the strengths and weakness of an HSBCà ¢Ã¢â€š ¬Ã¢â€ž ¢s risk management To provide conclusions and recommendations for future improvement in effective risk management in financial institutions 1.3 Proposed Chapter Headings: Introduction Importance of Risk management Background The aim and objectives of the study Structure of the dissertation Literature Review Introduction of risk management Kinds of bank risks Credit risk Liquidity riskà ¢Ã¢â€š ¬Ã¢â‚¬  funding risk Interest rate risk Mismatch risk Market liquidityà ¢Ã¢â€š ¬Ã¢â‚¬  market price risk Market risk Foreign exchange risk Regulations framework Benefit of risk management Weaknesses of risk management Causes of business failure Stress Testing Example of banks: Hong Kong and Shanghai Banking Corporation Limited (HSBC), Bank of China (BOC) Government and authority intervention Conclusion An effective internal audit function of an successful case in Hong Kong The weakness of internal control system cause influence and failure of business performance Research Methods Statistical analysis of annual reports of different corporations to compare their differences with in ternal control systems Data findings Profile of respondents Data analysis Conclusion Recommendation Research direction Recommendations and Conclusions Summary of the actual findings Recommendations for an effective internal control system and risk management Limitations of Corporate Governance Chapter 2 Literature Review 2.1 Introduction of risk management The uncertainty environment leads to financial services products have become more complex and also increase the accountability of regulation. (Collier, 2009) Doyle (2007) shows that there are common material weaknesses in the risk management of complex and rapidly growing. Krishnan (2005) states limited scope of research leads to insufficient disclosure of internal control. Internal control plays an important role in enterprise risk management (COSO, 2004 Pagano, 2001) It includes 4 stages: risk identification, quantitative or qualitative assessment of risks, risk prioritization and response planning. Role of risk management Collier (2009) ALARM 2.2 Kinds of bank risks COSO (2004) defines enterprise risk management as a process applied with strategies to identify and manage potential risks and thus providing reasonable assurance of achieving corporate objectives. Basel I (1999) states banks should use measurement techniques based on robust data. Eccles et al (2001) reviews the US GAAP and SEC and illustrates 4 major risks: market risk, credit risk, operational risk and accounting risk. Then, Fell Devine (2003) demonstrate operational risk should be separated as liquidity risk, insurance risk and group risk. Further, De Wit (2007) recognizes that risks also include legal risk, concentration risk and reputation risk in financial institutions. There is legal risk of possibility of court cases. If they are well-known of providing good service about criminal, more companies would like to create financial relationship them that concentration risk arises. Also, negative publicity, which is uncontrollable and unpredictable, often lead to reputation r isk in money laundering case. Collier (2009) states there are many ways of classification of risks. Recently, Besis (2010) states there are 7 major types of risks in banks: credit risk; liquidity risk (funding risk); interest rate risk; mismatch risk; market liquidity (market price risk) and foreign exchange risk. 2.2.1 Credit risk Credit risk, which is risk of financial loss that creditors fail to execute their obligation of payment, is the main risk in banking industry that potential loss due to counterparty fail to execute payment obligation. (Besis, 2010) Collier (2009) mentioned that credit risk increases the impact of default as it can be transferred to third parties by using securitization. 2.2.2 Liquidity riskà ¢Ã¢â€š ¬Ã¢â‚¬  funding risk 2.2.3 Interest rate risk 2.2.4 Mismatch risk 2.2.5 Market liquidityà ¢Ã¢â€š ¬Ã¢â‚¬  market price risk 2.2.6 Market risk 2.2.7 Foreign exchange risk 2.3 Role of governing bodies in risk management and control International Federation of Accountants Committee (IFAC) concludes the role of governing bodies in risk management and control in public sector. (International Federation of Accountants, 2001, cited in Collier, 2009, p.37) They should ensure to establish an effective risk management in the framework of control. Also, ensuring effective internal audit function includes in that framework. Moreover, they should ensure a framework of internal control is well established with practice and the statement of effectiveness is included in the annual report. Lastly, they should form an audit committee that involves non-executive independent members to provide independent review of the framework of control and external audit process. 2.3 Regulations framework 2.3.1 Basel Basel III is a set of international banking regulations developed by the Basel Committee on banking supervision. It revises Basel I and II that requires a higher level of capital. Basel II, which improves the weakness of Basel I, considers regulatory capital with risks. (Glantz Mun, 2008) Basel II provides three approaches for calculation of risk. A standardized approach is commonly used that requires banks to use standard risk assessment to calculate the risk weightings. Next, internal ratings-based (IRB) foundation approach that is based on internal assessment in probability of default from counterparty (PD), quantified estimates of exposure at default (EAD) and loss given default (LGD) can be applicable. And the third approach is called IRB advanced approach, which is based on own internal assessment in PD, EAD and LGD. 2.3.2 Benefit of risk management Weaknesses of risk management Causes of business failure Fight (2004) states that many industry surveys analysed 5 top causes of business failure. First of all, it states cyclical decline in demand is at the top of the five causes. Recession is not the main factor of failure but the element that helps to show the weakness of risk management in firms. It mentions some examples of weakness, such as poor competitive position, problem in internal control of quality and financial and weak capital and liquidity ratios. With these weaknesses, firms lost competitive advantages and cannot fulfill customer needs and also lead to decline in demand. Next, poor top management is followed. Thirdly, lacking of centralized financial control Fourthly, bad acquisition or inadequate integration strategy. The fifth is inappropriate product or market strategy Except the cyclical decline in demand, the other four causes are related to management. It is showed that management of firms plays an important role of survival in economic downturns. Regarding to the case of Lehman Brothers, the creditor fail to execute their obligation of payment that the demand of mortgage or loan was dropped. 2.5 Stress Test 2.6 Example of banks 2.6.1 Hong Kong and Shanghai Banking Corporation Limited (HSBC) Hong Kong and Shanghai Banking Corporation Limited (HSBC) is a world-wide diversified banking group that involves in different business and activities since 2005. It takes conventional strategy in its entities in different areas, such as Europe, Hong Kong, Rest of Asia Pacific, Middle East, North America and Latin America. HSBC Holdings plc (2009) mentions that there are many factors vary the risks in HSBC, such as environment change. vary the degrees, measurement, evaluation of its risk management. mentions there are 4 main types of risks: credit risk, counterparty credit risk, market risk and operational risk in its business. Its credit risks arise from failure of receiving payment by customers or counterparties in its business, such as direct lending, trade finance, leasing business, guarantees, derivatives and debt securities. It applies 3 approaches in Basel international banking regulations to calculate the counterparty credit risk and determine exposure values. The three approaches are standardized, mark-to-market and internal model method (IMM). HSBC adopt the standardized approach and mainly adopt the IRB advanced approach to eliminate the credit risk. In addition, counterparty credit risk is risk of economic loss that counterparty may default in transactions arises from offer-the-counter (OTC) derivatives and securities financing transactions. HSBC uses the mark-to-market and IMM approaches to reduce the counterparty credit risk. Market risk is the risk of lower income or portfolio value with market risk factors, including foreign exchange rates and commodity prices, interest rates, credit spreads and equity prices. To get rid of it, HSBC applied standard rules of financial services authority (FSA) and value at risk (VAR) models. Lastly, operational risk is a risk of potential loss by imperfect internal processes and systems or external events. Actually, it also includes technological and legal risks. HSBC employed the standardized ap proach to determine its operational risk in group. To control risks in the IT area, 3 ways is implemented. First, it uses risk bases project management (RBPM) and a global HSBC tool that is called clarity tool to control the software development life cycle and ensure the consistency and efficiency of management. Second, a disaster recovery plan (DRP) is implemented. For example, it is used to recover system in the case of disasters to ensure the continuity of system. Third, it maintains a secure and reliable governance structure to control and response to the technological risk in different departments. For instance, senior management committees are responsible for managing the risk. The committees consist of HTS Steering Committee, Risk Management Committee (RMC), Operational Risk and Internal Control Committee (ORICC). In the way of managing legal risk, HSBC concerns with contractual, litigation, legislative or regulatory, reputation and non-contractual rights. In addition, it established policies and procedures, estimates potential losses from the judicial or administrative resolutions, disclose the relevant information. Moreover, it established policies and procedures for the identification, measurement of legal risk to eliminate or reduce the possible loss due to the non-performance of the norms and avoid adverse resolutions. 2.6.2 Bank of China (BOC) Bank of China applied the stress testing. 2.7 Government and authority intervention Woods et al (2009) states without perfect credit risk management, the survival of numerous financial institutions in the financial crisis relies on financial support or taking-over by government. In United States, Lehman Brothers, Bear Stearns and Merrill Lynch collapsed because of no financial support to continue the business. On the contrary, United Kingdom mortgage providers, Northern Rock and Bradford and Bingley, survive in financial crisis as had been taken over by government. In addition, Derbyshire Building Society and the Cheshire Building Society faced substantial problems and then survived as it had been taken over by the Nationwide, a large mortgage lender with a stronger capital base. Starting from summer 2007, accumulating losses on sub-prime mortgage triggered financial tsunami in the global financial system. The paper analyzes that banks and mortgage providers using special purpose entities (SPE), collateralized mortgage obligations (CMOs) or collateralised debt obl igations (CDOs) and illiquidity as the problems Financial Services Authority (FSA) provides operating framework (Arrow II), risk assessment framework and regulations for financial institutions. 2.8 Conclusion Chapter 3à ¢Ã¢â€š ¬Ã¢â‚¬ Research method The research is mainly based on quantitative research by obtaining statistical data, such as complaints or commercial crimes, and related to annual reports and financial statement. Reports from Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) will be a part of source to analyze the data as it is easily assessed and convenient in obtaining data. In addition, the risk management system of 10-15 limited companies will be examined and compared. It helps to define the strength and weakness between different risk management systems under sudden events. It supplements questionnaires collection and theoretical research. Questionnaires collection is also used as an instrument in obtaining useful information. To obtain relevant information from stakeholders, questionnaires about satisfaction of financial institutions will be collected and some samples will be further conducted by face-to-face survey. And theoretical research is taken place on reviewing infor mation of theories and practices about an effective internal control system with suitable risk management from academic journals and textbooks. 3.2Limitation: It is difficult to assess information because the internal information is not related to the operation that source is limited and limited samples are not be sufficient to conclude subject to risk management. In other words, recommendations are not be sufficient for the whole banking industry. In addition, the online questionnaires do not have a large number of respondents as the respondent rate is limited due to many reasons. For example, some people do not interest in filling questionnaire and some people feel trouble to complete the questionnaire. Chapter 4 Profile of the respondents A survey was conducted in late 2010, from October to November. Online questionnaires were collected from 30 respondents to understand their confidence level of banks in Hong Kong whether it is influenced by the occurrence of financial crisis and also obtain recommendations of risk management in Hong Kong banks for improvement. There are 25 questions in a questionnaire (see appendix) and it is formed as 3 parts: Personal Details; Before Financial Crisis (2007 -2008); After Financial Crisis (2007 -2008). The first 5 questions are about à ¢Ã¢â€š ¬Ã…“personal detailsà ¢Ã¢â€š ¬?. For question 6 to 8, questions are part of à ¢Ã¢â€š ¬Ã…“before financial crisisà ¢Ã¢â€š ¬?. And questions 9 to 25 are focused on à ¢Ã¢â€š ¬Ã…“after financial crisisà ¢Ã¢â€š ¬? that shows present. The major findings drew from the questionnaires are concluded as below. Personal Details Question 1: What is your gender? Female Male Total 16 14 30 In the online questionnaires, there were 30 respondents that slightly more than half of them are Female while slightly less than half of them are male. Question 2: What is the range of your age? From the questionnaires, it was found that the respondents are mainly youngsters which are most (26 in 30 respondents) in the range of 18 to 29 years old. And there are a small number of respondents (2 in 30 respondents) in the range 30 to 39 years old and (2 in 30 respondents) the range of 40 to 49 years old. Question 3: What is your education level? According to results of questionnaires, no respondents are educated under primary level. Three fifths of respondents achieve the degree education whereas the minority of them, 2 in 30 respondents, reach the master or above education level. And the other two sixths of respondents completed secondary to diploma education. Question 4: What is the range of your monthly salary? It is showed that half of the respondents have monthly income less than $5000 while one fifth of them have over $5000 but lower than $10000 and the other one fifth have monthly income between $10000 and $19999. The minority of respondents got income more than $20000 each month that one respondent got more than $20000 but less than $30000 and two respondents got more than $30000. Question 5: What is your role in bank? The respondents are mainly customers in banks that there are over 90% of them, 28 in 30 respondents, as the role of customers and less than 10%, 2 in 30 respondents, of them as the role of employees in bank. Before Financial Crisis(2007-2008) Question 6: Before financial crisis (2007 2008), what was the percentage of your salary you spend on saving in a bank each month? Before financial crisis (2007 2008), almost two fifth (37%) of respondents expressed that they had habit of saving. Only a few of them spent their salaries mostly on saving while a minority spent much more on saving every month. And one in six respondents spent almost half of salary on saving. In the meanwhile, three fifths of them spent fewer while a few respondents spent slightly fewer or none on saving. Question 7: Before financial crisis (2007-2008), did you invest in stock of Hong Kong banks, such as HSBC? Over 70% of respondents, 73%, said that they had habit of investment in Hong Kong stock before financial crisis (2007-2008) while slightly less than 30%, 27%, had not invested. Question 8: Before financial crisis (2007-2008), what was the percentage of your salary you spend on investment each month? Before financial crisis (2007-2008), most of respondents had habit of investment. Three fifths of respondents had spent much more and majority or all of salary on investments each month. For example, less than half of them, 43%, had spent the majority and almost all of salary (80% 100%) on investment while one sixth had spent 60% to nearly 80% of salary. And a small number of them, 10%, had spent almost half of salary (40% 59.99%) on investment while nearly one quarter (23%) of them had spent fewer (25% 39.99) on investment. But, few respondents, 7%, said that they had not invested or spent slightly fewer on investment. Question 9: Did you have habit of checking your balance in your current accounts /investment accounts in banks? And how often did you check your balance each month? Before financial crisis (2007-2008), none of the respondents never check their current account or investment account balance. One in three respondents showed that they seldom (1 to 7 times per month) checked their balance in accounts while half of them often checked their accounts over once a week and nearly once per two days (8-15 times per month). And one in five respondents usually checked their accounts (16-30 times per month). After Financial Crisis (Present) Question 10: Do you own any current accounts for saving in banks? How many banks do you own current account? All respondents have current accounts for saving in banks in Hong Kong. One-fifth of respondents reported that they only owned current account in one bank while almost most of them, 77%, said that they owned current accounts in from two to four banks. In addition, only one respondent responded that hold current accounts in more than five banks. Question 11: What is the percentage of your salary you spend in saving each month? It is showed that most of the respondents have habit of saving. Almost a quarter of them, 23%, spend much more on saving while about two fifths of them, 41%, spent majority or almost all on it. Also, no respondents spend almost half of salary (40%-59.99%) while a minority of them reported they spent fewer and nearly a quarter of them reported they spent slightly fewer and almost none on saving. Question 12: Do you invest in stock Hong Kong banks, such as HSBC? After financial crisis (2007-2008), three fifths of respondents said that they had habit of investment in stock of Hong Kong banks while two fifths did not invest. Question 13: Do you own any investment accounts in banks? How many banks do you own current account? Most of the respondents own investment accounts in Hong Kong banks. For illustrate, more than half of respondents, 73%, only own investment accounts in a bank while 1 in 10 respondents own an investment account in two to four banks. And one-sixth of them, 17%, do not own any investment account and. However, no respondent hold investment accounts in more than five banks. Question 14: What is the percentage of your salary you spend on investment each month? More than half of respondents reported that they spent their salaries less on investment. One third of them spent slightly few and almost none of their salary on investment while one fifth spent fewer as well as the other one fifth almost spent half of it on investment. On the other hand, a small number of them, 10%, responded that they spent much more while 1 in 6 respondents spent most and almost all on investment. Question 15: Do you have habit of checking your balance in your current accounts/ investment accounts in banks? And how often do you check your balance each month? After financial crisis, none of the respondents never check their current account balance. Nearly three fifths of respondents,57%, reported that they seldom (1 to 7 times per month) checked their balance in account while one fifth of them often checked their accounts over once a week and nearly once per two days (8-15 times per month). In addition, about a quarter of them checked their accounts frequently (16-30 times per month). Question 16: After financial crisis (2007-2008), what do you pay attention to the bank before investment in it? (Answers can be chosen more than one.) The table shows the issues about bank whether respondents pay attention to before investment or not. After financial crisis (2007-2008), the respondents mainly pay attention to the news about the bank and also the banking industry before investment. Nearly three quarters of them, 73%, pay attention to the news about the bank and banking industry to concern about their investment. In addition, one-fifth of them pay attention to the risk management of the bank to concern whether risks are minimized and properly controlled. And the other one fifth also pay attention to relevant court cases while three in ten respondents focus on the changes in its share price. However, only a minority pay attention to the big issues, such as big loss or financial difficulties. Question 17: What element(s) do you think it is important in risk management? The table illustrates that importance of elements in risk management respondents revealed. Regarding to questionnaires, almost two fifths of the respondents thought identification of risk was important in risk management while about two thirds of them did not. About assessment of risks, nearly third fifths (57%) of them agreed it was an important element while more than two fifths of them (43%) disagreed. In addition one third of respondents expressed that internal control is an important element in risk management. However, only a minority of respondents, 4%, totally agreed that identification, assessment, and prioritization of risks and the internal control are important in risk management. Question 18: Do you trust the risk management of bank can ensure steadily operation with lower risks to prevent bankruptcy? Two thirds of respondents reflected they trusted the risk management of bank that can ensure it operating steadily with lower risks and prevent bankruptcy while one third said that they did not trust it. Question 19: What is the level you rely on the risk management of bank? After financial crisis (2007-2008), a small number (10%) of respondents reflected that they extremely relied on the risk management of bank while one fifth said that they more relied on it. Half of them remained neutral whereas a minority less relied and a few respondent never rely on the risk management of the bank. Question 20: After financial crisis (2007-2008), have your confidence in bank been cracked? About two fifths of respondents, 37%, thought their confidence in bank had not be cracked after financial crisis (2007- 2008). Nevertheless, half of them reflected their confidence were partly impaired while a minority (13%) revealed that their confidence were mostly damaged. Question 21: What is (are) the issue(s) that impair your confidence in the bank and make you think that it has weak risk management? The chart illustrates the issues whether it can impair their confidence of respondents and affect their investment decision in the bank. According to the responds, a majority of respondents, 90%, thought occurring liquidity problem and big loss can impair their confidence in the bank. And 70% of them expressed that weaken defense of risks and without experience of facing financial crisis can lead to bank have a weak risk management and also impair their confidence. Besides, slightly more than a quarter of them, 27%, considered human resources problem was one of the elements of weak risk management. For example, improper authorization and delegation policies lead to conflict of interest exists in the bank. Moreover, nearly one-fifth thought operating without following regulation, such as Basel framework, is more likely to maintain weak risk management. Finally, only a few of them, 7%, responded that involving in court case impair their confidence in bank and they might think it had weak risk management Question 22: Do you read the annual report of bank to understand its risk management before investment? The above chart shows that one third of respondents responded that they saw annual report of the bank before investment to understand its risk management. However, two thirds of them expressed that they did not. Question 23: Do you think these banks have good risk management? In five Hong Kong banks, respondents expressed which banks they think have good risk management. As a result, most of them commented HSBC had a good risk management while only one third thought Bank of China had a good risk management. Also, half of them expressed that Hangseng Bank had good risk management while the other half disagreed that. Concerning to standard chartered bank, only one fifth thought its risk management was good. Moreover, slightly less than twenty percent of them reflected that Citibank had good risk management. Question 24: What rank do you give for the risk management of HSBC? (Please rank from 1to 5: 1 is weakest; 5 is best) Rank of HSBC Number of respondents 1 1 2 3 3 13 4 9 5 4 Total 30 Mean 3.4 Medium 3 Gathering the data from the questionnaires, the mean of rank of risk management of HSBC is 3.4 and the medium is 3. More than two fifths of the respondents (43%), gave 3 of risk management in HSBC while almost one third gave 4 and a small number of them gave 5. And only a few respondents (3%) ranked 1 while a minority ranked 2. Question 25: What is (are) the problem(s) of risk management in HSBC you think? According to the comments from respondents, there are some problems of risk management in Hong Kong and Shanghai Bank (HSBC). First of all, it is difficult to accurately predict the risks under the uncertain environment. Second, the company structure of HSBC is too huge that the monitoring between different countries would include some gap. For example, HSBC has different business in different countries that standard of monitoring is less effective and efficiency. Thirdly, it had a weak risk management in credit risks during the sub-prime mortgage crisis. For instance, it had written off large amount since the Lehman Brother in United States. Lastly, HSBC more focus on globalization but less in customer. Summary Chapter 5 Data findings and analysis 5.1 Questionnaire 5.2 HSBC According to the risk management framework of HSBC, Capital and risk management pillar 3 disclosures (2009) illustrates the figures of credit risks in HSBC Holding plc. It is measured by 3 methods: IRB advanced approach; IRB foundation approach and standardized approach. The appendix 2 demonstrates the figures of risk-weighted assets analysis by geographical region. At 31 December 2009, the risk weighted assets in Hong Kong accounts for 119.5 billion US dollars where total risk-weighted assets are 1133.2 billion US dollars. It is shown that entity in Hong Kong own 11% in HSBC group. At 31 December 2008, it was 102.1 billion US dollars in Hong Kong out of 1148.0 billion US dollars in total risk-weighted assets. In 2008, Hong Kong accounts for 9% in HSBC group. Comparing 2008 and 2009, it is obvious that the weighted average in Hong Kong is raised from 11% to 9%. To maintain good risk management, HSBC holds more capital base to support the development of its business than Ba sel regulation requires. Although Basel requires 8% minimum total capital, HSBC holds 13.7% in 2009 to withstand future risks. Appendix 2 Table 1 shows the figures of capital requirements that total amount accounts for 90.7 billion US dollars. It shows that credit risk accounts for 80% (72.3 billion US dollars) while counterpart credit risk accounts for 5%, market risk 5% and operational risk 10%. Clearly, credit risk is the main risk in HSBC and a threat during sub-prime mortgage crisis. Without accurate prediction of risks, it is more likely to write off huge amount and lead to big loss in bank and easier to bankruptcy. Regarding to maintain a healthy risk management, HSBC is monitored by its group audit committee to independently review the effectiveness of its internal control and also its risk management system. Its group audit committee is formed by non-executive directors to meets regularly with HSBCà ¢Ã¢â€š ¬Ã¢â€ž ¢s senior financial, internal audit, risk, legal and complia nce management and the external auditor to consider HSBC Holdingsà ¢Ã¢â€š ¬Ã¢â€ž ¢ financial reporting, the nature and scope of audit reviews and the effectiveness of the systems of internal control, compliance and risk management When considering risk matters, Group Management Board (GMB) convenes as the Risk Management Meeting (RMM), chaired by the Chief Financial Officer, Executive Director, Risk and Regulation. RMM is the Groupà ¢Ã¢â€š ¬Ã¢â€ž ¢s senior à ¢Ã¢â€š ¬Ã‹Å"designated committeeà ¢Ã¢â€š ¬Ã¢â€ž ¢ as defined by the FSAà ¢Ã¢â€š ¬Ã¢â€ž ¢s rules, and has responsibility for setting risk appetite and approving definitive risk policies and controls. It formulates high-level Group risk management policy, exercises delegated risk authorities and oversees the implementation of risk appetite and controls. It monitors all categories of risk, receives reports on actual performance and emerging issues, determines action to be taken and reviews the efficacy of HSBCà ¢Ã¢â€š ¬Ã¢â €ž ¢s risk management framework Internal assessment of capital adequacy remains sufficient to support the Groupà ¢Ã¢â€š ¬Ã¢â€ž ¢s risk profile and outstanding commitments; exceeds the Groupà ¢Ã¢â€š ¬Ã¢â€ž ¢s formal minimum regulatory capital requirements by an agreed margin; is capable of withstanding a severe economic downturn stress scenario; and remains consistent with the Groupà ¢Ã¢â€š ¬Ã¢â€ž ¢s strategic and operational goals, and shareholder and rating agency expectations. HSBC Holdings plc (2009) mentions that there are many factors vary the risks in HSBC, such as environment change. vary the degrees, measurement, evaluation of its risk management. mentions there are 4 main types of risks: credit risk, counterparty credit risk, market risk and operational risk in its business. Its credit risks arise from failure of receiving payment by customers or counterparties in its business, such as direct lending, trade finance, leasing business, guarantees, derivatives and debt securities. It applies 3 approaches in Basel internati onal banking regulations to calculate the counterparty credit risk and determine exposure values. The three approaches are standardized, mark-to-market and internal model method (IMM). HSBC adopt the standardized approach and mainly adopt the IRB advanced approach to eliminate the credit risk. In addition, counterparty credit risk is risk of economic loss that counterparty may default in transactions arises from offer-the-counter (OTC) derivatives and securities financing transactions. HSBC uses the mark-to-market and IMM approaches to reduce the counterparty credit risk. Market risk is the risk of lower income or portfolio value with market risk factors, including foreign exchange rates and commodity prices, interest rates, credit spreads and equity prices. To get rid of it, HSBC applied standard rules of financial services authority (FSA) and value at risk (VAR) models. Lastly, operational risk is a risk of potential loss by imperfect internal processes and systems or external events. Actually, it also includes technological and legal risks. HSBC employed the standardized approach to determine its operational risk in group. To control risks in the IT area, 3 ways is implemented. First, it uses risk bases project management (RBPM) and a global HSBC tool that is called clarity tool to control the software development life cycle and ensure the consistency and efficiency of management. Second, a disaster recovery plan (DRP) is implemented. For example, it is used to recover system in the case of disasters to ensure the continuity of system. Third, it maintains a secure and reliable governance structure to control and response to the technological risk in different departments. For instance, senior management committees are responsible for managing the risk. The committees consist of HTS Steering Committee, Risk Management Committee (RMC), Operational Risk and Internal Control Committee (ORICC). In the way of managing legal risk, HSBC concerns with contr actual, litigation, legislative or regulatory, reputation and non-contractual rights. In addition, it established policies and procedures, estimates potential losses from the judicial or administrative resolutions, disclose the relevant information. Moreover, it established policies and procedures for the identification, measurement of legal risk to eliminate or reduce the possible loss due to the non-performance of the norms and avoid adverse resolutions.

A Separate Peace - Symbolism Essay examples - 1597 Words

In John Knowle’s A Separate Peace, symbols are used to develop and advance the themes of the novel. One theme is the lack of an awareness of the real world among the students who attend the Devon Academy. The war is a symbol of the quot;real worldquot;, from which the boys exclude themselves. It is as if the boys are in their own little world or bubble secluded from the outside world and everyone else. Along with their friends, Gene and Finny play games and joke about the war instead of taking it seriously and preparing for it. Finny organizes the Winter Carnival, invents the game of Blitz Ball, and encourages his friends to have a snowball fight. When Gene looks back on that day of the Winter Carnival, he says, quot;---it was this†¦show more content†¦Phineas’ death is the end of Gene’s childhood. He is forced to grow up when he realizes that he is living in a world of hate, crime, and disappointment. He is getting older and closer to his eighteenth bir thday when he will be drafted into the war, and he finally begins to prepare. At the conclusion of the novel, after Phineas is gone, Gene says, quot;I was ready for the war, now that I no longer had any hatred to contribute to it. My fury was gone, I felt it gone, dried up at the source, withered and lifeless. Phineas had absorbed it and taken it with him and I was rid of it foreverquot; (871). This is another example of how the war furthers Gene’s advance into adulthood. The war is a symbol of how things aren’t always what they seem. Recruiting posters and propaganda advertising the army convince many boys into thinking the war is an exciting adventure in which young men interact. Leper enlists in the army after being impressed by a film shown by a recruiter from the U.S. ski troops. quot;The ski movie had decided him. ‘I always thought the war would come for me when it wanted me†¦I never thought I’d be going to it. I’m really glad I saw that movie in time, you bet I am’quot; (826) Leper is amazed by these men and how they, with their recognizable and friendly faces, give a clean response toShow MoreRelatedAnalysis Of A Separate Peace 901 Words   |  4 Pages Devon had many incidents that occurred during the summer session and the regular school year. â€Å"Peace had deserted Devon† (Knowles pg.72). A tree, showing symbolism, has a big part in the story, A Separate Peace. The events happening during the summer session and regular school session, hinted foreshadowing, for later events to come. In Devon’s school, multifariously terminus students have a distinct story and oblique events tremble throughout the school. The students attending Devon have been throughRead MoreLord Of The Flies, By William Golding And The Perks Of Being A Wallflower1087 Words   |  5 Pagesgenres. Novels such as Lord of the Flies by William Golding and The Perks of Being a Wallflower by Stephen Chbosky are among some of my most beloved. In my junior year, I read A Separate Peace by John Knowles for my AP U.S. History class while I read The Catcher in the Rye by J.D. Salinger over the summer. A Separate Peace explores the rivalry that can lie at t he heart of many friendships and conveys the concept of individuality rather than conformity. Similarly, The Catcher in the Rye is the storyRead MoreAnalysis Of Sylvia Plaths Tulips831 Words   |  4 Pageshospital room, separate from their family. No one is present in the white hospital room, except for the speaker and the tulips. The room is peaceful and allows the speaker to enjoy a lack of commitment towards anything. Unfortunately for the speaker, the tulips in the room remind the speaker of their life and bind the speaker to their responsibilities. In Sylvia Plath’s â€Å"Tulips,† color symbolism and personification contrast the peace of disconnection and commitments in life. Color symbolism of the whiteRead MoreWilliam Golding s Lord Of The Flies 1299 Words   |  6 PagesDecember 2014 Savagery in Civilization: Symbolism in Lord of the Flies Symbolism as defined by the Merriam Webster Dictionary, is â€Å"the use of symbols to express or represent ideas or qualities in literature, art, etc.† (â€Å"Symbolism†). For this reason, symbolism is utilized in literature in order to make novels more interesting and convey notions that are usually either highly controversial or extremely philosophical. For example in the popular novel A Separate Peace, John Knowles uses Gene in order toRead MoreWonder Wom The Feminist Symbol Behind The Bracelets1379 Words   |  6 Pagesinclude classics such as a sword and shield, and also includes a lasso a. She possesses superhuman abilities that were blessed to her by the gods and they included Hermes, Aphrodite, Artemis, Hestia, and Demeter. Her amazonian origin creates powerful symbolism for women everywhere and she provides women with strength. To truly understand Wonder Woman you must know of her origin. Created out of clay by her mother Hippolyta--the queen of the Amazons-- Wonder Woman was given life from the the gods of ancientRead MoreThe Story By Naigub Mahfouz1727 Words   |  7 Pagesmiracle worker to cure him) is in pursuit to achieve the mystical Islamic Zaabalawi. On the other perspective, the narrator’s pursuit appears as a search for piety, God, and mystical experience. One of the two perspectives depicts the search for inner peace while the other depicts the search for a great physician. Therefore, one of the search is necessitated by the illness while the other is an urge to return to the roots. The short story by Naigub Mahfouz presents a search for religious knowledge byRead MoreComparison and Contrast of a Separate Peace and Catcher in the Rye1515 Words   |  7 PagesComparison and Contrast Essay A Separate Peace and The Catcher in the Rye The coming of age novels, The Catcher in the Rye, written by J.D. Salinger, and A Separate Peace, written by John Knowles, both interpret the lives of adolescent boys journeying through their conflicts and inner confusion to reach the level of maturity. Salinger and Knowles both discern the literal ways a typical teenager grows up with the help of literary elements such as plot, setting, character development, conflictsRead More Religious Symbols and Symbolism in Faulkners Light in August1555 Words   |  7 PagesReligious Symbolism in Light in August  Ã‚  Ã‚   William Faulkner’s, Light in August has many references to Christianity. He employs a great deal of religious symbolism in all of his characters. These parallels seem very intentional, even though, Faulkner himself says he did not do it purposely. The Christ story is one of the most popular stories invented and it seems right that at some point someone is going to write similar to it. William Faulkner says he did not put the Christian parallels inRead More Comparing A Separate Peace and The Catcher in the Rye Essay example1500 Words   |  6 PagesComparing A Separate Peace and The Catcher in the Rye The coming of age novels, The Catcher in the Rye, written by J.D. Salinger, and A Separate Peace, written by John Knowles, both interpret the lives of adolescent boys journeying through their conflicts and inner confusion to reach the level of maturity. Salinger and Knowles both discern the literal ways a typical teenager grows up with the help of literary elements such as plot, setting, character development, conflicts, irony, symobolismRead MoreEssay on Symbols and Symbolism in the Poems of Robert Frost1463 Words   |  6 PagesSymbolism in the Poems of Robert Frost    Nature has inspired countless poets from primitive times to the present. They have used it as a metaphor for virtually all human emotions-his stormy brow, her sky blue eyes, as wild as a summer storm. Very few, however, have so masterfully crafted their verse to fully express the range of nature’s power and influence, or suited the tone of a poem to encompass both human nature and ‘true’ nature. This is true in the poetic works of Robert Frost. The aspects

Distance Between Us free essay sample

In the memoir, â€Å"The Distance Between Us,† by Reyna Grande, Reyna explains how her and her three siblings managed to grow up without any parents. Mago, Carlos, Reyna and their new sister, Betty, all live a rough life without any real type of love from their parents so they have to rely on each other for guidance and support. The four Grande children formed a special bond over the years that they will not leave anyone behind. Each character in the memoir contributes significant personality traits that help the others cope with their current situation. First, one of the oldest Grande child, Mago, who is caring, courageous, develops leadership amongst everyone and is capable of being a good mother at such a young age. Mago’s mother left her with a huge responsibility to be â€Å"their little mother† (12). Mago was stripped of her childhood and forced to mature up. Mago molded Carlos and Reyna into who they are today because of the absence of their mother when they were younger. We will write a custom essay sample on Distance Between Us or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page When she found out the news about the new baby coming, she quickly said, â€Å"they’re replacing us†(33). Mago wasn’t please with her mom new baby because she told her mom. Carlos and Reyna believes Mago portrays a much more better mom than their real mom. Following by Carlos, the second oldest who has a great sense of humor and has ambition to support his sisters. Carlos may not have been the bravest, but he did the best he can to support his sisters when they needed it most. When his sister, Mago, was feeling down, â€Å"he tried to make Mago laigh by telling us his favorite jokes about a boy named Pepito† (38), Carlos was sad when his mother left and Mago was there to support and encourage him to not be sad over it. Reyna always encouraged Carlos to do his best in whatever he was doing. Over the months, Carlos sacrificed himself and lost connection with his sisters because he was always gone with a male guardian doing labor just to support his siblings. Carlos may not have been there at some points, but he was always back at the end of the with his sisters. When their mother came back, he became a man for not just his mother, but for his sisters as  well. When he got sick trying to protect their land, his Abuelita asked to take him home but refused and answered, â€Å"no, no, no. I want to help Mami with her dream house† (128). Carlos had wanted to prove to his mother that he wants her to stay badly, even if it could cost him his life. The second to youngest of the Grande children, Reyna, who is much more of a supportive friend than is a sister, would always boost everyone’s confidence in the memoir. Therefore, it gives confidence to everyone in order to succeed. Reyna was always the most baby in the memoir but Mago changed that and taught her how to be brave in the time of need. Reyna looks up to Mago the most because Mago is the only one who notices what she does. Carlos supports Reyna, but he’s also going on away trips to find a decent father role model. Mago once told Reyna that, â€Å"it doesn’t matter that there’s a distance between us now. That cord is there forever† (21). Mago wasn’t Reyna’s real mom; she tried her best to be the best she could be for not only Reyna but for Carlos and Betty too. Last, the youngest of the Grande children, Betty. She is not portrayed a lot in the memoir but she was most close to Mago since she took care of her when their mom left. Although, Mago didn’t like it at first throughout the memoir because when her mom, â€Å"handed Mago her little girl and told her to take care of her while and Abuelita Chinta prepared dinner,†(73) she refused. Mago knew she was not going to be responsible for a child that wasn’t due to her action. But Betty quickly adapted and eventually Mago and the other siblings grew a bond that was inseparable. Even if, they didn’t accept the fact that they had to take care of Betty when they were struggling on themselves. Mago realizes that the mom put Mago in a difficult position. In conclusion, the 4 Grande children had no parental guidance other their the oldest sibling, Mago. We learned that no matter what kind of obstacle is thrown at the siblings, they would overcome everything together. They will all stick together, and make sure no one will be left behind. Mago, Carlos, Reyna and Betty all love each other very much and they never want to lose each other. They all carry a special bond that certain families don’t have, which is struggling through a tough time and still manage to stay with one  another.

Kurt Cobain1 Essay Example For Students

Kurt Cobain1 Essay For our modern day hero we used the singer and songwriter Kurt Cobain from the band Nirvana. This punk Seattle band moved almost mainstream almost overnight. Nirvana caught on fast and changed rock and roll music forever and molded the music of the 90s, alternative. Cobain had an enormous amount of talent but unfortunately his life was cut short by a still controversial suicide in his Seattle home. On April 9, 1994, his body was discovered. He is a hero for many of todays troubled youth because his music influences how these troubled kids feel. They are able relate to Cobain and his music. Kurt Cobain was born in 1967. He lived with his sister and parents two hundred miles away from Seattle in the small logging town of Aberdine. His aunt, who helped him form his first band, introduced him to music at a very young age. His parents divorced when Kurt was only seven years old. Torn up by his parents divorce, he went to live with his mother in a trailer. After the divorce, Kurt was force d to look at his life in a different light. Kurt became extremely anti-social, had few friends, and was picked on in school because kids thought he was gay or weird.Kurt started writing poetry at the age of thirteen, and when he was 14, he received his first guitar. Throughout high school he was in many bands- Fecal Matter, Skid Row, Brown Cow, The Sellouts and Pencap Chew. He formed Nirvana during his senior year of high school with his friends Chris Novoselic and Dave Grohl who Kurt called the worlds best drummer. Shortly after the band was formed, Kurt dropped out of high school, and his mother kicked him out of the house. Homeless, he lived under a bridge at the end of his street. It was here that he would spend time alone writing his own songs. From his parents divorce to his mother pushing him out of the house, Kurt had become even more alienated from other people and life. He was very detached. Kurt hated the music of big rock bands like the Sex Pistols, Rolling Stones and Aerosmith. He felt their lyrics were sexist and pointless with no meaning. Kurt was a very sensitive and emotional person, a characteristic that showed through all of his songs. Eventually he became so famous that he a cult following. The songs exemplified the kids world. In the song Dumb Kurt sings, I think Im dumb over and over again to show how his years of neglect from his peers at high school and his family made him feel as if he was to blame. Kids relate to his music because it portrays how the world was so cruel and how he and the kids were treated badly. He was responsible for the most creative rock music of the last decade. Kurt didnt have to hide behind face paint or wear tight clothes to grab attention as the other rock stars. He wore flannel s and jeans, something that every other kid wore, and he wasnt ashamed by it. In one song Come As You Are Kurt sings Come as you are as I want you to be. He wanted to show the youth that they dont have to follow the crowd and do something someone else wants them to do to fit in. Every modern alternative song has a tint of Nirvanaism in it. Just like bands that followed the Beatles, many groups that followed Cobain tried to sound or copy his same music pattern. In his music he didnt communicate in complete sentences or elaborate arguments. Instead his lyrics were a stream of conscious insights that inspired and appealed to the short attention span of his audience.We picked Kurt Cobain as a hero because he is different than the conventional hero who just goes out and saves lives. Kurt was an emotional leader for the troubled youth, and he gave them a place to escape from a life that was hard to live. His music gave them a hideaway from the harsh realities of the real world. All they had to do was listen, and they felt instant relief because they knew that not only they felt the way they did. They could relate to Kurt and his fragile emotions. In the song Rape Me Kurt sings; Rape me, my friend. Rape me again. Im not the only one. Hate me. Do it and do it again. Waste me. Taste me, my friend. My favorite inside source, Ill kiss your open sores. Appreciate your concern. Youll always stink and burn. This shows how he believed society took advantage of him because he was weak and emotional. These kids relate to Kurt. Kurt once said that he would rather be in pain than fame. His words and music make him a modern day hero. .u422f2e1179412f0864e5f091390e7595 , .u422f2e1179412f0864e5f091390e7595 .postImageUrl , .u422f2e1179412f0864e5f091390e7595 .centered-text-area { min-height: 80px; position: relative; } .u422f2e1179412f0864e5f091390e7595 , .u422f2e1179412f0864e5f091390e7595:hover , .u422f2e1179412f0864e5f091390e7595:visited , .u422f2e1179412f0864e5f091390e7595:active { border:0!important; } .u422f2e1179412f0864e5f091390e7595 .clearfix:after { content: ""; display: table; clear: both; } .u422f2e1179412f0864e5f091390e7595 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u422f2e1179412f0864e5f091390e7595:active , .u422f2e1179412f0864e5f091390e7595:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u422f2e1179412f0864e5f091390e7595 .centered-text-area { width: 100%; position: relative ; } .u422f2e1179412f0864e5f091390e7595 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u422f2e1179412f0864e5f091390e7595 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u422f2e1179412f0864e5f091390e7595 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u422f2e1179412f0864e5f091390e7595:hover .ctaButton { background-color: #34495E!important; } .u422f2e1179412f0864e5f091390e7595 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u422f2e1179412f0864e5f091390e7595 .u422f2e1179412f0864e5f091390e7595-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u422f2e1179412f0864e5f091390e7595:after { content: ""; display: block; clear: both; } READ: Rosa Parks EssayBibliography: