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Management Lessons (management + lesson)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	80%

Selected Abstracts

Management Lessons From Mayo Clinic: Inside One of the World's Most Admired Service Organizations by Leonard L. Berry and Kent D. Seltman

PERSONNEL PSYCHOLOGY, Issue 2 2009
Article first published online: 12 MAY 200
First page of article [source]

Risk Management Lessons from ,Knock-in Knock-out' Option Disaster,

ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 1 2010
Jaeuk Khil
G14; G01 Abstract Currency knock-in knock-out (KIKO) options had been widely used for hedging exchange rate risks in Korean financial markets. However, as the Korean won moved in an unexpected direction during the global financial crisis period of 2007 and 2008, the hedging instruments incurred huge losses to the option holders. In this paper, we analyze the event from the viewpoint of risk assessment and management. We find that, first, if the option holders had assessed the risk levels with and without the KIKO options by using standard risk measures like value-at-risk or conditional value-at-risk, then many KIKO option contracts would not have been justifiable from the beginning. Second, having a proper view on the exchange rate dynamics turned out to be crucial for risk assessment and management. If the companies had a proper view instead of a myopic view on the exchange rate movement, then the KIKO options might not have been chosen. Finally, ,hedge-and-forget' behavior proved to be very costly and reckless. If the companies had continuously assessed and managed their risks, then the losses from the KIKO options could have been significantly mitigated. Some relevant pricing issues are also investigated. We find that most KIKO option contracts under study might not be significantly overpriced. However, potential impacts of the possible mispricing could be considerable in some cases. Nonetheless, the risk management failure proved to be more important for the KIKO option losses than the possible mispricing problem. [source]

Isabella Beeton: Management Lessons from the Kitchen

BUSINESS STRATEGY REVIEW, Issue 3 2004
Robin Wensley
First page of article [source]

Risk management lessons from Long-Term Capital Management

EUROPEAN FINANCIAL MANAGEMENT, Issue 3 2000
Philippe Jorion
The 1998 failure of Long-Term Capital Management (LTCM) is said to have nearly blown up the world's financial system. For such a near-catastrophic event, the finance profession has precious little information to draw from. By piecing together publicly available information, this paper draws risk management lessons from LTCM. LTCM's strategies are analysed in terms of the fund's Value at Risk (VAR) and the amount of capital necessary to support its risk profile. The paper shows that LTCM had severely underestimated its risk due to its reliance on short-term history and risk concentration. LTCM also provides a good example of risk management taken to the extreme. Using the same covariance matrix to measure risk and to optimize positions inevitably leads to biases in the measurement of risk. This approach also induces the strategy to take positions that appear to generate ,arbitrage' profits based on recent history but also represent bets on extreme events, like selling options. Overall, LTCM's strategy exploited the intrinsic weaknesses of its risk management system. [source]