scholarly journals FAIR VALUATION OF INSURANCE LIABILITY CASH-FLOW STREAMS IN CONTINUOUS TIME: APPLICATIONS

2019 ◽  
Vol 49 (2) ◽  
pp. 299-333 ◽  
Author(s):  
Łukasz Delong ◽  
Jan Dhaene ◽  
Karim Barigou
Keyword(s):  
Cash Flow ◽  
Continuous Time ◽  
Financial Risk ◽  
Explicit Solutions ◽  
Financial Risks ◽  
Practical Applications ◽  
Risk Margin ◽  
Hedging Strategies ◽  
Fair Market ◽  
Fair Valuation

AbstractDelong et al. (2018) presented a theory of fair (market-consistent and actuarial) valuation of insurance liability cash-flow streams in continuous time. In this paper, we investigate in detail two practical applications of our theory of fair valuation. In the first example, we consider the fair valuation of a terminal benefit which is contingent on correlated tradeable and non-tradeable financial risks. In the second example, we consider a portfolio of unit-linked contracts contingent on a non-tradeable insurance and a tradeable financial risk. We derive partial differential equations (PDEs) which characterize the continuous-time fair valuation operators in these two examples and we find explicit solutions to these PDEs. The fair values of the liabilities are decomposed into the best estimate of the liability and a risk margin. The arbitrage-free representations of the fair values of the liabilities are derived and the dynamic hedging strategies associated with the continuous-time fair valuation operators are also established. Detailed interpretations of the results, which should be useful both for researchers and practitioners, are provided.

Minimizing the Risk of Shortfall in Cash Flow for Long-Term Service Agreements Provision

2013 ◽  
Vol 5 (4) ◽  
pp. 72-92
Author(s):  
Aparna Gupta ◽  
Chaipat Lawsirirat
Keyword(s):  
Cash Flow ◽  
Operations Management ◽  
Gas Turbines ◽  
Management Strategies ◽  
Optimal Investment ◽  
Financial Risks ◽  
Hedging Strategies ◽  
Optimal Maintenance ◽  
Basic Infrastructure

Long-term service agreements (LTSAs) for the maintenance of capital-intensive equipments like gas turbines, medical equipments, aircraft and locomotive engines, are gaining popularity. A typical LTSA contract, spanning 5-20 years, makes a provider responsible for fully maintaining the equipments. Effective management of LTSAs, using reliability assessment and maintenance strategy, is important since these equipments are vital to basic infrastructure and the economy of a country. Even if a provider utilizes optimal maintenance and operations management strategies, residual financial risks of cash flow shortfalls remain. In this article, a framework for LTSAs risk management is developed to construct hedging strategies that minimize cash flow shortfall risk, while maximizing profit through the life of a contract. Optimal investment decisions for a set of securities are determined to construct the hedging strategies. Using the framework, a combined risk-return objective of the provider is significantly improved by the optimal hedging strategy.

Financial Risks of the Bank: Assessment and Mechanism of Neutralization

2020 ◽  
Vol 22 (1) ◽  
pp. 6-12
Author(s):  
Nelia Volkova ◽  
◽  
Alina Mukhina ◽  
Keyword(s):  
Risk Assessment ◽  
Financial Stability ◽  
Financial Risk ◽  
Stable Operation ◽  
Financial Risks ◽  
Negative Consequences ◽  
Conceptual Approach ◽  
Relevant Today ◽  
Banking Institution ◽  
The Impact

Abstract. Introduction. The issue of financial risk management of commercial banks is quite relevant today, because the activity of banks is the most risky of all. The presence of risks in banking can lead to unexpected losses, namely the loss of own resources. That’s why for the stable operation of the bank without loss the priority is to assess the financial risks, which is the basis for their further neutralization. Purpose. The purpose of the article is to develop conceptual provisions for assessment financial risks and justifying the need to neutralize them. Results. The article analyzes the impact of risks on the financial stability of a banking institution. The main methods of bank risk assessment are considered. All these include the statistical method, the analytical method, the expert method, the analogue method and the combined method. The necessity of neutralization of financial risks in order to avoid negative consequences is substantiated. Also the methods of bank risks neutralization are considered. It should be noted that these methods of neutralization can not only be used, but also supplement the list with new methods must be done, which in the future will protect the bank from the influence of undesirable factors. A conceptual approach to the assessment and neutralization of financial risks is proposed. This conceptual approach aims to ensure effective assessment of the level of risk with their subsequent neutralization Conclusions. Use of a conceptual approach will allow an effective risk assessment and decision-making to avoid or accept risk. Thanks to using this approach, the banking institution will be able to react swiftly to the presence of financial risks and to prevent the occurrence of negative consequences, which may lead to a violation of the financial stability of the bank.

FINANCIAL RISK MANAGEMENT IN ENTREPRENEURIAL ACTIVITY: CONCEPT, SYSTEM AND PRINCIPLE OF BUILDING

2020 ◽  
Vol 2 (4) ◽  
pp. 62-67
Author(s):  
M. M. KHAYTANOVA ◽  
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Entrepreneurial Activity ◽  
Financial Risks ◽  
Study Methods ◽  
Financial Risk Management ◽  
Concept System

The article reveals: theoretical justifications of the concept of “financial risk” in relation to the sphere of entrepreneurship; methods for its identification and processing. Financial risk management is the activity of identification, assessment, control and monitoring of risks. In the course of the study, methods for managing financial risks in entrepreneurial activity and their classification were identified.

scholarly journals Evaluating risks-based communities of Mafia companies: a complex networks perspective

2021 ◽  
Author(s):  
Nicola Giuseppe Castellano ◽  
Roy Cerqueti ◽  
Bruno Maria Franceschetti
Keyword(s):  
Organized Crime ◽  
Financial Risk ◽  
Data Driven ◽  
Size Analysis ◽  
Risk Indicator ◽  
Financial Risks ◽  
Risk Profiles ◽  
Crime Organization ◽  
Similarities And Differences ◽  
Risk Ratios

AbstractThis paper presents a data-driven complex network approach, to show similarities and differences—in terms of financial risks—between the companies involved in organized crime businesses and those who are not. At this aim, we construct and explore two networks under the assumption that highly connected companies hold similar financial risk profiles of large entity. Companies risk profiles are captured by a statistically consistent overall risk indicator, which is obtained by suitably aggregating four financial risk ratios. The community structures of the networks are analyzed under a statistical perspective, by implementing a rank-size analysis and by investigating the features of their distributions through entropic comparisons. The theoretical model is empirically validated through a high quality dataset of Italian companies. Results highlights remarkable differences between the considered sets of companies, with a higher heterogeneity and a general higher risk profiles in companies traceable back to a crime organization environment.

Derivation of the Explicit Solution of the Inverse Involute Function and its Applications

1992 ◽  
Author(s):  
Harry Hui Cheng
Keyword(s):  
Series Solution ◽  
Asymptotic Series ◽  
Explicit Solutions ◽  
Series Solutions ◽  
Perturbation Techniques ◽  
Pocket Calculator ◽  
Practical Applications ◽  
Involute Gears ◽  
Simple Expansion ◽  
Explicit Series Solutions

Abstract The involute function ε = tanϕ – ϕ or ε = invϕ, and the inverse involute function ϕ = inv−1(ε) arise in the tooth geometry calculations of involute gears, involute splines, and involute serrations. In this paper, the explicit series solutions of the inverse involute function are derived by perturbation techniques in the ranges of |ε| < 1.8, 1.8 < |ε| < 5, and |ε| > 5. These explicit solutions are compared with the exact solutions, and the expressions for estimated errors are also developed. Of particular interest in the applications are the simple expansion ϕ = inv−1(ε) = (3ε)1/3 – 2ε/5 which gives the angle ϕ (< 45°) with error less than 1.0% in the range of ε < 0.215, and the economized asymptotic series expansion ϕ = inv−1 (ε) = 1.440859ε1/3 – 0.3660584ε which gives ϕ with error less than 0.17% in the range of ε < 0.215. The four, seven, and nine term series solutions of ϕ = inv−1 (ε) are shown to have error less than 0.0018%, 4.89 * 10−6%, and 2.01 * 10−7% in the range of ε < 0.215, respectively. The computation of the series solution of the inverse involute function can be easily performed by using a pocket calculator, which should lead to its practical applications in the design and analysis of involute gears, splines, and serrations.

Sustainable Development and Risk Management

2021 ◽  
Vol 18 (4) ◽  
pp. 16-27
Author(s):  
E. Yu. Pertseva ◽  
V. Yu. Skobarev ◽  
E. E. Telenkov
Keyword(s):  
Risk Management ◽  
Development Strategy ◽  
Management System ◽  
Financial Risk ◽  
Workplace Safety ◽  
Financial Risks ◽  
Performance Targets ◽  
Company Value ◽  
Risk Management System

In the context of the increasing role of non-financial factors of company value creation, many organizations, when developing a development strategy, go beyond exclusively financial and economic goals and include workplace safety, energy efficiency, customer satisfaction and other non-financial goals in their performance targets. Achieving such goals involves risks, but today there is no common understanding of the composition of the relevant risks, their sources (factors of occurrence), approaches to assessing these risks, as well as universal corporate tools for managing them. In this article, we offer our vision of the place of the so-called “non-financial risks” in the risk management system and show the possibilities of integrating non-financial risk management into the risk management system and the management model of the organization.

scholarly journals Pelatihan Manajemen Keuangan bagi UMKM "Kelompok Binaan Handayani Catering" di Tengah Covid 19

2021 ◽  
Vol 4 (1) ◽  
pp. 60
Author(s):  
Ahmad Rudi Yulianto ◽  
Wahyu Setiawan
Keyword(s):  
Capacity Building ◽  
Community Service ◽  
Cash Flow ◽  
Financial Management ◽  
Financial Risk ◽  
Food Sector ◽  
Financial Reports ◽  
Business Sustainability ◽  
Building Activities ◽  
Financial Aspect

MSMEs are an economic driving sector that can contribute greatly to the Indonesian economy. One of the weaknesses of MSMEs is that they still lack knowledge and understanding of financial management, especially when coupled with the Covid-19 epidemic, MSMEs are experiencing various problems, so there needs to be strengthening of MSMEs through various skills so that MSMEs can survive during pandemics and post-pandemics. One of the business groups that is quite affected by Covid-19, is MSMEs engaged in the culinary or food sector, which are indicated to still have weaknesses in the financial aspect. Our MSME partners in community service are handayani catering assisted groups. The PKM team makes efforts to assist the assisted catering groups through mentoring, empowerment and capacity building activities in financial management, starting with providing financial records and bookkeeping as well as various ways to mitigate financial risk. The result of this activity was that the participants began to prepare financial reports and began to implement financial management, especially cash flow, which was previously less of a concern. Participants were greatly helped by the preparation of financial reports as an indicator of business sustainability and health.

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