Biography Research Essay Example | Topics and Well Written Essays - 1750 words

Biography Research - Essay Example Nelson Mandela, indeed brought trouble to himself but in the human kind advantage. He indeed had problems in his life but only because he was not an ordinary man, but one with ambitions and ideals and above all, he had the strength to accomplish them. The discourse was addressed before his career to develop , but this was the evidence that Nelson Mandela didn’t have any hidden purposes. Nelson Mandela was born in a special family, belonging to the Thembu group, which existed before the British conquest. It can even be said that he was born in a royal family, because his father was a member of the royal council of Thembu, and Mandela himself should have inherited this position. After his father’s death, he was adopted by the Regent, Dalyndiela, in gratitude to his father loyalty. Belonging to such an important family he was initiated in the Thembu culture, and according to its traditions at age sixteen, he attended Clarkebury Boarding Institute, and proved that he was a brilliant student, graduating Junior High in two years, instead of three years. As a young man he couldn’t stay apart from different organizations or manifestations. From this early age he demonstrated an initiative and leadership sense. Thus he was chucked from the university, after involving in a boycott against university administration. In this period he meets Oliver Tambo, a prolific lawyer, who will become a very good friend and colleague. So far Nelson Mandela followed the Regent indications and thus of his culture, but his enterprising and innovative personality didn’t allow him to bound under some rules. So, after the Regent arranged some marriages to his real son and to Mandela , they both left in Johannesburg, working in a mine, and then at a law firm. Mandela was aware of the fact that education was very important ( thing strongly sustained by him much later in his campaigns ) so he graduated from University of South Africa and then attended to the Law University

Information report Essay Example | Topics and Well Written Essays - 500 words

Information report - Essay Example There are several languages used by the Indians such as Hindi and English. However, Hindi is the official and national language of the people (Manian 238). English is just a language of the few elites from other nations like the UK or the US. It, thus, became quite challenging for us to communicate with most people whom we required their labor. We needed workers who could handle some parts of our projects like removing dike from the construction sites to various landfills. India is also a place where hierarchy is considered an important political element. It plays a key role in governing the behaviors of people in India, as well as, the responsibility of every person in the Indian society. Hinduism and caste system in the region outline the roles of every person. I managed to notice that in our company, manual labor could only done by a â€Å"peon.† An absence of the peon will mean no manual work done. This is a waste of time for most construction firms in India, including ours. Carrying out a business activity in India, including engineering, requires one to know the basic etiquettes in greeting and meeting. Indians are well known with the use of Namaste in their greetings. In this case, people bring their palms together, mainly at the chest level with a slight head bow (Waters 109). Indians are also popular by modification and changing of names for individuals whom they consider their guests or visitors from abroad. Any guest bearing the name, Singh will be called Sikh (Bose 53). In addition to that, receiving and issue of any material in an Indian community must be done using the right hand; using the left hand is a show of disrespect to the other party. Generally doing business in India requires certain important considerations before and few days after the entry into the country. Since English is the international language used in commerce, it is recommended that translation service be

Antisocial Personality Disorder: Causes, Effects, Treatment

Antisocial Personality Disorder: Causes, Effects, Treatment Antisocial Personality Disorder Crystal Fulp Antisocial Personality Disorder Personality disorders affect many people in society, but are understood by few. Personality disorders are defined as a deeply ingrained, maladaptive and specific problem behavior or pattern. Such problem patterns typically manifest themselves by early adolescence and have an impairing impact on the person’s functioning in life with a particular emphasis on the impact that such disorders have on their relationships and quality of life (Comer, 2014). There are a total of ten personality disorders that have been categorized into three distinct clusters. Disorders under the first cluster (cluster A) are said to be odd personality disorders because they cause people to exhibit behaviors that can be seen as â€Å"odd† or â€Å"eccentric†. Disorders listed under the second cluster (cluster B) are said to be dramatic personality disorders because they cause people to exhibit overly dramatic, emotional, or aggressive behaviors. Disorders listed under the final cluster (cl uster C) are said to be anxious personality disorders because they cause people to behave in overly anxious or fearful ways (Comer, 2014). All ten of the personality disorders can be devastating, but the dramatic personality disorders are marked by behaviors that are overly dramatic, emotional, and/or aggressive. The dramatic personality disorders are more commonly diagnosed than any other personality disorder. However, the antisocial personality and borderline personality disorders have gained more attention from researchers because the actions of those diagnosed tend to effect more people (Comer, 2014). The remainder of this discussion will cover the Antisocial Personality Disorder in detail. The disorder will be defined along with the most common symptom configurations, which will lead to a discussion about the historical and current etiological causes of the disorder. The final portion of the discussion will cover treatment modalities. Definition of Disorder Symptom Configuration Antisocial personality disorder is defined as exhibiting a pervasive pattern of behavior where someone disregards and violates the rights of others (APA 2013). This disorder can only be diagnosed if the patient/client exhibits behaviors that satisfy certain criterion. The criterion used to diagnose this disorder is as follows: Source: (APA, 2013) The essential feature of Antisocial Personality Disorder is exhibiting a complete disregard for the rights of others that lead to a violation of the aforementioned rights (APA, 2013). People with Antisocial personality disorder are very deceitful and manipulative. They will go to extravagant lengths in order to control others or get them to do what it is they want them to do. These people also exhibit an inability to plan ahead and a lack a moral conscience. Simply put, these people do not feel remorse if their actions cause any harm or discomfort to other people. They tend to rationalize their behaviors by saying, â€Å"They were stupid for doing that, so they deserved what they got† or something similar (Comer, 2014). People with this disorder may also exhibit consistent irresponsible behaviors such as failing to obtain and keep employment, paying child support, paying off debts, or even appropriately caring for themselves or others (including their own children or spouses). It’s important to note that these behaviors must not be confused with the antisocial behaviors exclusive to schizophrenia or bipolar disorder (APA, 2014). It’s also common for people who suffer from this disorder to be more likely to exhibit criminal behavior than others. In fact, a study found that at least thirty percent of incarcerated individuals exhibit symptoms consistent with Antisocial Personality Disorder (Comer, 2014). They are also much more likely to abuse alcohol or other controlled substances. In fact, people with Antisocial Personality Disorder are much more likely to participate in risky behaviors than the average population (Comer, 2014) Antisocial Personality Disorder: A Case Example It can be hard to imagine what this disorder would look like in the real world. Imagine a twenty-two year old man named Jacob. Jacob is currently serving a five year sentence in a minimum security penitentiary for assault and felony larceny. Jacob has a long disciplinary record both inside and outside of the prison. Since he’s been incarcerated he’s been involved in numerous physical altercations and is known to be irritable and prone to exhibiting aggressive behavior when it’s not appropriate. He’s also been cited for possessing drugs and alcohol inside the prison (Black, 1999; Comer, 2014; Oliviera-Souz et al., 2008). Jacob is being referred to the prison psychologist because of his most recent offense. In the past month he has been found guilty of an assault during which he beat a fellow inmate with a lunch tray. When the psychologist asked Jacob why he reacted that way he said, â€Å"He shouldn’t have been in my way. He got what he deserved.† Jacob didn’t exhibit any guilt or remorse for what he had done. Fallowing this discussion Jacob told the psychologist about his actions as a teenager. Jacob admitted to being involved in criminal activities and consuming alcohol while underage. He also admitted to breaking into places and selling controlled substances. He went on to talk about how he used to hurt animals. When asked if he felt bad about it he responded that he didn’t and viewed it as more of a game than anything else (Black, 1999; Comer, 2014; Oliviera-Souz et al., 2008). Over the next few months, the psychologist notices that Jacob often acts without thinking of the consequences and treats his criminality as a game of wit. He’s also highly irresponsible and lacks a moral conscience as indicated by his past and present crimes. The psychologist concludes that Jacob is exhibiting behaviors consistent with Antisocial Personality Disorder and refers to him to the prison’s treatment program (Black, 1999; Comer, 2014; Oliviera-Souz et al., 2008). Causes of Antisocial Personality Disorder General Information about Causes There doesn’t seem to be a single cause of Antisocial Personality Disorder. In fact, there seem to be many different possibilities presented from many different angles, especially in relations to genetics and certain environmental factors. For the sake of time, this discussion will focus on the behavioral/cognitive and biological perspectives on this disorder. However, it seems important to note that lower socioeconomic status has been correlated with the development of this disorder (APA, 2013). Common Biological Perspectives Genetics plays an important role in the development of Antisocial Personal Disorder. People who had parents who were diagnosed with Antisocial Personality Disorder are much more likely to develop the disorder themselves (APA, 2013). Researchers have also found serotonin levels to be correlated with Antisocial Personality Disorder (Black, 2014). However, this finding really isn’t that surprising when one considers that significantly lower serotonin levels have been found in regards to other psychological disorders such as depression (Comer, 2014). Behavior/Cognitive Causes of Antisocial Personality Disorder There are many possible behavioral causes of Antisocial Personality disorder. However, behavioral researchers believe that there is a correlation between antisocial personality behaviors and modeling. Simply put, these researchers believe that children can learn antisocial behaviors from their parents (Comer, 2014). After all, children learn from watching the people around them and then imitating that behavior (as indicated by Bandura’s Social Learning Theory). Furthermore, researchers have also found a correlation between antisocial behaviors and people who had lived in violent households. It has been found that children who lived in households where violence and aggression was a common occurrence are more likely to exhibit antisocial behaviors than children who didn’t grow up in violent and/aggressive households. Children who lived with parents who abused alcohol and/or controlled substances have also been found to be more likely to exhibit antisocial behaviors (Black , 2014). It’s also important to note that child abuse has been correlated with the development of antisocial personality disorder. Simply put, children who are abused are much more likely to exhibit antisocial behaviors than children who weren’t abused (Black, 2014). This research indicates that parental modeling and disturbed or volatile environments could be connected with the development of Antisocial Personality Disorder. Cognitive theorists point to society’s individualism and egocentrism as a possible cause. People with Antisocial Personality Disorder have attitudes that continually trivialize the needs of others (Elwood et al., 2004). There is an argument among cognitive researchers that these attitudes are much more prevalent in society than people believe them to be (Comer, 2014). Differential Diagnosis Considerations for Antisocial Personality Disorder Personality Traits People with Antisocial Personality Disorder exhibit very specific personality traits. These personality traits serve to help them achieve their ends at whatever cost as they are only concerned with their own wants/needs. People with this disorder have been known to exhibit a complete lack of empathy (APA, 2013). They may also be callous and cynical. People with this disorder may also have an inflated or arrogant self appraisal along with being cocky and opinionated. These people tend to have a superficial charm that draws people and can appear to be very intelligent and informed to others (APA, 2013) Ages and Populations Effected In order to be diagnosed with Antisocial Personality Disorder one must be at least eighteen years of age, however, antisocial behaviors consistent with conduct disorders must be present prior to fifteen years of age. Antisocial behaviors consistent with conducts disorders include aggression towards people or animals, theft, deceitfulness, destruction of property, or rule violations (APA, 2013). These behaviors violate the social norms of adolescence’s aged fifteen and under and as such a history of such behaviors is required to diagnose someone with Antisocial Personality Disorder. This disorder typically develops by late adolescence or early adulthood. One interesting phenomena related to this disorder is that the symptoms usually even out by forty years of age. That would mean that this disorder begins to develop in one’s adolescence, peek in their mid-twenties and thirties, and decrease in intensity by age forty. It’s also important to note that men are much m ore likely to be diagnosed with this disorder than women (APA, 2013). Dual Diagnosis Patterns Diagnosing Antisocial Personality Disorder can be very tricky under the best circumstances. A diagnosis is only given to someone who is at least eighteen years of age and has a history of behaviors indicative of conduct disorders. In the event that an adult doesn’t meet the criteria to be diagnosed with Antisocial Personality Disorder they may be diagnosed with a conduct disorder (APA, 2013). Diagnosing this disorder is made even more difficult when substance abuse is involved. In these cases, a diagnosis is only given if there is a history of antisocial behaviors in the client/patient’s adolescence and childhood. If both the substance abuse and the antisocial personality behaviors existed together in childhood then it’s necessary to evaluate the client/patient for both substance abuse disorder and antisocial personality disorder (APA, 2013). Clinicians should also keep in mind that the features of Antisocial Personality Disorder are similar to that of Schizophrenia and Bipolar Disorder. This diagnosis can only be given if the antisocial behaviors aren’t exclusive to either schizophrenia or bipolar disorder. To that end, the criterion for this disorder can be easily confused with other disorders, so it’s important to pay close attention to the patient’s history (or lack thereof) of antisocial behaviors (APA, 2013). Treatment Modalities for Antisocial Personality Disorder Treating personality disorders can be very difficult to do. In relation to Antisocial Personality Disorder the available treatments range from being completely ineffective to only moderately effective, this doesn’t result in an overly positive prognosis (Comer, 2014). There are currently three treatments available for this disorder. One form of treatment is medications. Certain therapies have also been shown to be somewhat effective in treating this disorder, specifically cognitive-behavior therapy (CBT) and psychotherapy (Comer, 2014). Using medications to treat any psychological disorder is a trial and error process at best. Using psychotropic drugs to treat Antisocial Personality Disorder is no different. At this point, the Food and Drug Administration (ADA) has not approved any drug to be used to treat this disorder specifically (Mayo Clinic, 2013). However, psychiatrists have found that some drugs can help alleviate the symptoms of this disorder. These drugs tend to be the atypical (newer) antipsychotic drugs. These drugs have been found to be moderately effective in some clients/patients (Comer, 2014). Psychotherapy, otherwise known as talk therapy can also be used to help treat this disorder; however, this treatment approach isn’t effective in all situation and patients/clients. In fact, this treatment approach will only be effective if the patient/client realizes and/or admits that they contribute to their own problems. This type of therapy can be administered in a clinical one-on-one setting or in a group setting (Mayo Clinic, 2013). Cognitive-Behavior Therapy (CBT) has been shown to be moderately effective in the treatment of Antisocial Personality Disorder (Hoermann, Zupannick, Dombeck, 2014). Cognitive/behavior theorists argue that the only way to change dysfunctional behavior is to change the dysfunctional thought behind it. After all, according to cognitive-behavior theories one’s cognitions lead to their behaviors be them good or bad. CBT not only focuses on changing dysfunctional thoughts, but it also seeks to challenge the dysfunctional core beliefs underlying their dysfunctional thought patterns (Hoermann, Zupannick, Dombeck, 2014). CBT therapists work with people on accurately interpreting the world around them and then changing or redirecting dysfunctional thought patterns (Hoermann, Zupannick, Dombeck, 2014). For people with Antisocial Personality Disorder, CBT would involve trying to help these patients/clients develop impulse control and a moral conscience (Comer, 2014). The problem with treating this disorder is that the people who have it aren’t very likely to seek treatment out for themselves because they don’t see their behavior as a problem (Comer, 2014). In fact, most people with this disorder that are in treatment originally went to see a mental health professional for a different reason entirely. There are also a large number of people with this disorder who don’t receive treatment until forced to by the criminal justice system as a part of their probation/parole or incarceration programs (Comer, 2014). Antisocial Personality Disorder Construct Antisocial Personality Disorder is one of the most commonly researched personality disorders, but there is still much to be discovered (Comer, 2014). For instance, the DSM-V states that the symptoms of this disorder tend to level out by forty years of age (APA, 2013). Why does that occur? Do certain neurochemicals, such as serotonin behave differently by age forty? The DSM-V also states that the criminality present in those with this disorder can sometimes be confused with â€Å"normal† criminal behavior (criminal behavior not associated with this disorder specifically). Other than the criterion listed, what criterion can clinicians use to help differentiate the two? This may be my own point of view only, but the criterion used to diagnose this disorder seems convoluted and easily confused with the criterion for other mental disorders (APA, 2013). Conclusion Antisocial Personality Disorder is a very serious personality disorder that can have devastating consequences for those who have it. This disorder makes it hard to do basic things, such as form and maintain healthy relationships and stay within the boundaries of both society and the law (APA, 2014). Unfortunately, most people don’t realize that it’s a problem until they are either incarcerated or forced into treatment by judges. Even then most people don’t consider it to be a problem and the disorder in general is made difficult to treat because of the personality traits and attitudes of the people who have it (Comer, 2014). What is clear is that more research needs to be done in the hope that further research can uncover a more suitable treatment method that will greatly increase the quality of life for people who have this disorder. References American Psychiatric Association, American Psychiatric Association (2013). Diagnostic and statistical manual of mental disorders: DSM-5. Washington, D.C: American Psychiatric Association. Black,D.W., Larson,C.L. (1999). Bad boys, bad men: Confronting antisocial personality disorder. New York: Oxford University Press. Black,D. (2014). What Causes Antisocial Personality Disorder? RetrievedApril15, 2014, from http://psychcentral.com/lib/what-causes-antisocial-personality-disorder/000652 Comer,R.J. (2014). Abnormal psychology. New York, NY: Worth Pub. Elwood,C.E., Poythress,N.G., Douglas,K.S. (2004). Evaluation of the Hare P-SCAN in a non-clinical population. Personality and Individual Differences. doi:10.1016/S0191-8869(03)00156-9 Hoermann,S., Zupannick,C., Dombeck,M. (2005). Cognitive-Behavioral Therapy for Personality Disorders (CBT). RetrievedApril15, 2014, from http://sevencounties.org/poc/view_doc.php?type=docid=41578cn=8 Mayo Clinic (2013, April 12). Antisocial personality disorder Treatments and drugs. RetrievedApril15, 2014, from http://www.mayoclinic.org/diseases-conditions/antisocial-personality-disorder/basics/treatment/con-20027920 Oliveira-Souza,R.D., Moll,J., Ignà ¡cio,F.A., Hare,R.D. (2008). Psychopathy in a Civil Psychiatric Outpatient Sample. Criminal Justice and Behavior, 35(4). doi:10.1177/0093854807310853

Atheists are also Gods Instruments Verse Analysis :: essays research papers

Atheists are God's instruments, and not only them, but everything as well. Note what the Apostle Paul has written in the Bible: "For he saith unto Moses, 'I will have mercy on whom I will have mercy, and I will have compassion on whom I will have compassion.' So then it is not of him that willeth, nor of him that runneth, but of God that sheweth mercy. For the scripture saith unto Pharaoh, 'Even for this same purpose have I raised thee up, that I might shew my power in thee, and that my name might be declared throughout all the Earth.' Therefore hath he mercy on whom he will have mercy, and whom he will he hardeneth." Romans 9:15-18. There are other verses, but for now let us evaluate the above passage from the King James Version: 1. God has mercy on those whom He wants to have mercy on. He has compassion/love on those whom He wants to love. 2. Man can try to do something, but it is God who has made the decisions and it is God who pre-destinated all things. 3. God pre-destined all things of what will happen to them. 4. The Egyptian Pharaoh was created for God's purposes. The purposes were: God showed His power and God's name was declared throughout all the Earth. 5. Pharaoh probably did not know God's true intentions. Even if Pharaoh knew what it was, he was still unable to resist what has been pre-destined by the Creator. Let us take a closer look at what happened in the book of Exodus: "And Moses and Aaron went in unto Pharaoh, and they did so as the Lord had commanded: and Aaron cast down his rod before Pharaoh, and before his servants, and it became a serpent. Then Pharaoh also called the wise men and the sorcerers: now the magicians of Egypt, they also did in like manner with their enchantments. For they cast down every man his rod, and they became serpents: but Aaron's rod swallowed up their rods. And he hardened Pharaoh's heart, that he hearkened not unto them, as the Lord has said. And the Lord said unto Moses, 'Pharaoh's heart is hardened, he refuseth to let the people go.'" Exodus 7:10-14. 1. Pharaoh saw the power of the Lord, and refused to submit even when Aaron's rod swallowed the magician's rods. 2. God himself hardened the heart of Pharaoh. See also Exodus 8:15 and other verses which show that Pharaoh's heart was hardened.

Is it worse to have too little money or too worse money

Give reasons and examples to support your view. Globally, people can be divided into two groups, the poor and the rich. The basic difference between them is that people with little money are not able to satisfy their needs and people with too much money are able to satisfy both of their wants and needs. People with too little money lack basic needs such as proper food, shelter, toilets etc. This is because they do not have sufficient revenue to afford them.They struggle everyday to earn money so that by the end of the day, they are tallest able to eat In order to survive. It's an international issue and there are more poor people than the rich. This is because the resources to consume humans basic needs are scarce. Therefore, lesser people get the opportunity to use them. Every child deserves to enjoy their life and gain knowledge when they are kids. However, as poor people have too little money to afford entertainment and education for their kids, their kids end up being depressed a nd illiterate in future.Consequently, the chance for the poor people to become rich In future decreases. People with too little money do not have freedom. They do have their own choice that when, how and how long to work. For example, if a man is currently at his friend's wedding and he suddenly gets a phone call saying that he urgently needs to go back to work. The man will have no choice but to go back to work and this type of problem Is one of the most common issues for a poor man. Moreover, people with less money spend most of their life in stress as they are always worried whether then get enough money to survive or not.There Is a common saying that having too much money causes a man to go under erasure and stress as he has a lot of workload. Thus, they go under the state of depression. However this is not factual. Rich men do have a lot of mental pressure and strain but they can easily get rid of it. As they have too much money, they can easily afford weekend parties; spend mo ney In casino, smoke weed and drink to get rid of stress. If a man has too much money, he definitely has too much presage as people admire him for opting a lot of effort to reach at this position. Money is powerful for getting people to do a job.If you want to paint your car, you cannot force painter to do it. However, you can offer him a good amount of money to paint It for you. Therefore money Is power. There Is more chance of rich men's son to succeed than the poor. This is because the rich man has plenty of money to afford the best 1 OFF prospects for the rich man to get richer. To conclude, it's very hard to survive with too less money. And the government needs to end taxes on poor people and support them with their finance. So as a result in future, poor might be able to gradually get richer and will be able to fulfill their demands.

Enterprise Risk Management

Enterprise / Operational Risk Management IT Audit Manager City National Bank California State Polytechnic University, Pomona Enterprise risk management (ERM) is a relatively new discipline that focuses on identifying, analyzing, monitoring, and controlling all major risk classes (e. g. , credit, market, liquidity, operational risk classes). Operational risk management (ORM) is a subset of ERM that focuses on identifying, analyzing, monitoring, and controlling operational risk. The purpose of this paper is to explain what enterprise risk management is and how operational risk management fits into the ERM framework. In our conclusion, we discuss what is likely to happen in the ERM / ORM environment over the next 5 years. Introduction As the Internet has come of age, companies have been rethinking their business models, core strategies, and target customer bases. â€Å"Getting wired,† provides businesses with new opportunities, but brings new risks and uncertainty into the equation. Mismanagement of risk can carry an enormous cost. In recent years, business has experienced numerous, related risk reversals that have resulted in considerable financial loss, decrease in shareholder value, damage to company reputations, dismissals of senior management, and, in some cases, the very dissolution of the business. This increasingly risky environment, in which risk mismanagement can have dire consequences, mandates that management adopt a new more proactive perspective on risk management. What is Enterprise / Operational Risk Management? Clearly, there is a correlation between effective risk management and a well-managed business. Over time, a business that cannot manage risk effectively will not prosper and, perhaps fail. A disastrous product recall could be the company’s last. Rogue traders lacking oversight and adequate controls have destroyed old well-established institutions in a very short time. But, historically, risk management in even the most successful businesses has tended to be in â€Å"silos†Ã¢â‚¬â€the insurance risk, the technology risk, the financial risk, the environmental risk, all managed independently in separate compartments. Coordination of risk management has usually been non-existent, and identification of emerging risks has been sluggish. This paper espouses a recent concept—enterprise-wide risk management—in which the management of risks is integrated and coordinated across the entire organization. A culture of risk awareness is created. Companies across a wide crosssection of industries are beginning to implement this effective new methodology. 1 Enterprise / Operational Risk Management At first glimpse, there is much similarity between operational risk management and other classes of risk (e. . , credit, market, liquidity risk, etc. ) and the tools and techniques applied to them. In fact, the principles applied are nearly identical. Both ORM and ERM must identify, measure, mitigate and monitor risk. However, at a more detailed level, there are numerous differences, ranging from the risk classes themselves to the skills needed to work with operational risk. Operational risk management is just beginning to define the next phase of evolution of corporate risk management. Should firms be able to develop successful ORM programs, the next step will be for these firms to integrate ORM with all other classes of risks into truly enterprise-wide risk management frameworks. See Exhibit 1 for an example of an ERM / ORM organizational structure representative of the banking industry: ERM Organization Chart CEO Group Risk Director (ERM) Economic Capital (Planning) & Risk Transfer Group Risk Executive Committee Change Program Credit Risk * Market Risk* Operational Risk (ORM)* Corporate Compliance IT Security and Business Continuity Corporate Risk Evaluation (Audit) †¢ Note – the major categories of risk to which financial services firms expose themselves are credit risk, market risk and operational risk. Not surprisingly, financial services firms’ largest risk concentrations—credit risk and market risk are most effectively managed. Exhibit 1 2 Why Enterprise / Operational Risk Management? There are many reasons ERM / ORM functions are being established within corporations. following are a few of the reasons these functions are being established. Organizational Oversight Two groups have recently emphasized the importance of risk management at the organization’s highest levels. In October 1999, the National Association of Corporate Directors released its Report of the Blue Ribbon Commission on Audit Committees, which recommends that audit committees â€Å"define and use timely, focused information that is responsive to important performance measures and to the key risks they oversee. † The report states that the chair of the audit committee should develop an agenda that includes â€Å"a periodic review of risk by each significant business unit. In January 2000, the Financial Executives Institute released the results of a survey on audit committee effectiveness. Respondents, primarily chief financial officers and corporate controllers, ranked â€Å"key areas of business and financial risk† as most important for audit committee oversight. In light of events surrounding recent corporate scandals (e. g. , Enr on, etc. ), and the increasing executive and regulatory focus on risk management, the percentage of companies with formal ERM methods is increasing and audit committees are becoming more involved in corporate oversight. The UK and Canada have set forth specific legal requirements for audit committee oversight of risk evaluation, mitigation, and management which are widely accepted as best practices in the U. S. Magnitude of Problem The magnitude of loss and impact of operational risk and losses to date is difficult to ignore. Based on years of industry loss record-keeping from public sources, large operational risk-related financial services losses have averaged well in excess of $15 billion annually for the past 20 years, but this only reflects the large public and visible losses. Research has yielded nearly 100 individual relevant losses greater than $500 million each, and over 300 individual losses greater than $100 million each. 1 Exhibit 2 is a listing of major operational losses. Interestingly enough, the majority of these losses have occurred in financial services, which explains the industry’s leading focus on operational risk management especially in the area of asset-liability modeling and treasury management models to manage risks in the highly volatile capital markets activity of derivative trading and speculation. The 1 Hoffman, Douglas G. , Managing Operational Risk (New York: John Wiley & Sons, 2002), p. xvi. 3 Top Operational Risk Losses Company Numerous Financial Institutions and Others BCCI Sumitomo Corporation Tokyo Shinkin Bank Banca Nazionale del Lavoro Daiwa Bank Barings Non-Financial Institutions: LTCM Texaco, Inc. Cendant Corporation Dow Corning St. Francis Assisi Foundation Mettlgesellschaft Owens Corning Fiber Glass Orange Count y Atlantic Richfield Kashima Oil Showa Shell Prudential Securities Drexel Burnham Lambert General Motors Phar Mor Loss Amount $20 million. Initial Estimates $17 billion $2. 9 billion $2. 3 billion $1. 8 billion $1. 1 billion $1 billion $4 billion $3 billion $2. 9 billion $2 billion $2 billion $1. billion $1. 7 billion $1. 6 billion $1. 5 billion $1. 5 billion $1. 5 billion $1. 4 billion $1. 3 billion $1. 2 billion $1. 1 billion Date 2001 1991 1996 19901991 1992 19831995 1995 1998 1984 19851998 1994 1999 19911993 1980s1990s 1994 19861990 1994 19891993 1994 19981993 1996 1992 Description Terrorists hijacked four commercial airliners and crashed them into the World Trade Center. Over 2000 lives lost. Countless businesses impacted. Regulators seized about 75 percent of The Bank of Credit and Commerce International’s $17 billion in assets in a major fraud. Sumitomo Corporation incurred huge losses through excessive trading of copper. The manager of the Imasato branch forged 19 deposit certificates, which were used to raise money for stock deals. Former employees plead guilty to conspiring to arrange $5 billion in unauthorized loans to Iraq. Loss due to unauthorized trading by an employee. This catastrophic loss has become a benchmark for operational risk. Losses due to lack of dual control and checks and balances. Huge market losses due to inadequate model management and inadequate controls at Long Term Capital Management. Pennzoil sued Texaco alleging that Texaco â€Å"wrongfully interfered† in its merger deal with Getty. Largest and longest-running accounting fraud in history. Former executives conspired to inflate earnings. The company agreed to pay settlements to 18 women who indicated breast implants made them ill. Insurance fraud case in which Martin Frankel allegedly stole as much as $2 billion from this foundation. Loss due to liquidation of oil supply contracts. Settlement of asbestos-related claims. Largest people risk class case in financial history. Largest investment loss ever registered by a municipality. Settlement of North Slope oil royalties dispute with Alaska. Disguised losses on FX forward contracts. Major oil refiner in Japan faced losses from forward currency contracts. Settled charges of securities fraud with state and federal regulators. Former employees filed a class action suit charging the company with fraud, breach of duty and negligence. Heavy losses suffered due to 3 strikes. A former president of the firm defrauded in an embezzlement scheme. Exhibit 2 Source: Hoffman; Managing Operational Risk 4 Increasing Business Risks With the increasing speed of change for all companies in this new era, senior management must deal with many complex risks that have substantial consequences for the organization. A few forces currently creating uncertainty are: †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Technology and the Internet Increased worldwide competition Free trade and investment worldwide Complex financial instruments Deregulation of key industries Changes in organizational structures from downsizing, reengineering, and mergers Increasing customer expectations for products and services More and larger mergers Collectively, these forces are stimulating considerable change and creating an increasing risk in the business environment. Regulatory The international regulators clearly intend to encourage banks to develop their own proprietary risk measurement models to assess regulatory, as well as economic, capital. The advantage for banks should be a substantial reduction in regulatory capital, and a more accurate allocation of capital vis-a-vis the actual risk confronted. In December 2001, the Basel Committee on Banking Supervision submitted a paper â€Å"Sound Practices for the Management and Supervision of Operational Risk† for comment by the banking industry. In developing these sound practices the Committee recommended that banks have risk management systems in place to identify, measure, monitor and control operational risks. While the guidance in this paper is intended to apply to internationally active banks, plans are to eventually apply this guidance to those banks deemed significant on the basis of size, complexity, or systemic importance and to smaller, less complex banks. Regulators will eventually conduct regular independent evaluations of a bank’s strategies, policies, procedures and practices addressing operational risks. The paper indicates an independent evaluation of operational risk will incorporate a review of the following six bank areas:2 †¢ †¢ Process for assessing overall capital adequacy for operational risk in relation to its risk profile and its internal capital targets; Risk management process and overall control environment effectiveness with respect to operational risk exposures; 2 Basel Committee on Banking Supervision, Sound Practices for the Management and Supervision of Operational Risk, (Basel, Switzerland: Basel Committee on Banking Supervision, 2001), p. 1. 5 †¢ †¢ †¢ †¢ Systems for monitoring and reporting operational risk exposures and other data quality considerations; Procedures for timely and effective resolution of operational risk exposures and events; Process of internal controls, reviews and audit to ensure integrity of the overall risk management process; and Effectiveness of operational risk mitigation efforts. Market Factors Market factor s also play an important role in motivating organizations to consider ERM / ORM. Comprehensive shareholder value management and ERM / ORM are very much linked. Today’s financial markets place substantial premiums for consistently meeting earnings expectations. Not meeting expectations can result in severe and rapid decline in shareholder value. Research conducted by Tillinghast-Towers Perrin found that with all else being equal, organizations that achieved more consistent earnings than their peers were rewarded with materially higher market valuations. 3 Therefore, for corporate executives, managing key risks to earnings is an important element of shareholder value management. The traditional view of risk management has often focused on property and iability related issues or internal controls. However, â€Å"traditional† risk events such as lawsuits and natural disasters may have little or no impact on destroying shareholder value compared to other strategic and operational exposures—such as customer demand shortfall, competitive pressures, and cost overruns. One explanation for this is that traditional risk hazards ar e relatively well understood and managed today—not that they don’t matter. Managers now have the opportunity to apply tools and techniques for traditional risks to all risks that affect the strategic and financial objectives of the organization. For non-publicly traded organizations, ERM / ORM is valuable for many of the same reasons. Rather than from the perspective of shareholder value, ERM / ORM would provide managers with a comprehensive overview of other important items such as cash flow risks or stakeholder risks. Regardless of the organizational form, ERM / ORM can be an important management tool. Corporate Governance Defense against operational risk and losses flows from the highest level of the organization—the board of directors and executive management. The board, the management team that they hire, and the policies that they develop, all set the tone for a company. As guardians of shareholder value, boards of directors must be acutely attuned to market reaction to negative news. In fact, they can find themselves castigated by the public if the reaction is severe enough. As representatives of the shareholders, boards of directors are responsible for policy 3 Tillinghast-Towers Perrin, Enterprise Risk Management: Trends and Emerging Practices. (The Institute of Internal Auditors Research Foundation, 2001), p. xxvi. 6 matters relative to corporate governance, including but not limited to setting the stage for the framework and foundation for enterprise risk management. Right now, operational risk management is a â€Å"hot topic† of discussion for regulators and in boardrooms across the US. In the wake of the 2001 releases from the Basel Risk Management Committee, banks now have further insight as to the regulatory position on the need for regulatory capital for operational risk. Meanwhile, shareholders are aware that there are means to identify, measure, manage, and mitigate operational risk that add up to billions of dollars every year and include frequent, low-level losses and also infrequent but catastrophic losses that have actually wiped out firms, such as Barings, and others. Regulators and shareholders have already signaled that they will hold directors and executives accountable for managing operational risk. Best-Practice Senior managers need to encourage the development of integrated systems that aggregate various market, credit, liquidity, operational and other risks generated by business units in a consistent framework across the institution. Consistency may become a necessary condition to regulatory approval of internal risk management models. An environment where each business unit calculates their risk separately with different rules will not provide a meaningful oversight of firm-wide risk. The increasing complexity of products, linkages between markets, and potential benefits offered by overall portfolio effects are pushing organizations toward standardizing and integrating risk management. Conclusion It seems clear that ERM / ORM is more than another management fad or academic theory. We believe that ERM / ORM will become part of the management process for organizations in the future. Had ERM / ORM processes been in place during the past two decades, a number of the operational risk debacles that took place may not have occurred or would have been of lesser magnitude. Companies are beginning to see the benefit of protecting themselves from all types of potential risk exposures. By identifying and mapping risk exposures throughout the organization, a company can concentrate on mitigating those exposures that can do the most damage. With an understanding of risks, their severity, and their frequency, a company can turn to solutions; be it retaining, transferring, sharing, or avoiding a particular risk. Our thoughts on what will happen in the ERM / ORM environment in the next 5 years are: In the next 5 years, it is likely that companies will no longer view risk management as a specialized and isolated activity: the management of insurance or foreign exchange risks, for instance. The new approach will 7 keep managers and employees at all levels sensitized to and concerned about risk management. Risk management will be coordinated with senior management oversight and everyone in the organization will view risk management as part of his or her job. The risk management process will be continuous and broadly focused. All business risks and opportunities will be covered. In the next 5 years, the use of bottom-up risk assessments will be a standard process used to identify risks throughout the organization. The self-assessment process will involve everyone in the company and require individual units to focus and report on the threats to their individual business objectives. Through the selfassessment process, the organization will be able to understand loss potential and risk control by business, by profit center and by product. The individual line manager will begin to understand the loss potential in his or her own processing system. In the next 5 years, the use of top-down scenario analysis will be another standard method used to identify risks throughout the organization. Top down scenario analysis will determine the risk potential for the entire firm, the entire business, organization, or portfolio of business. By its very nature, it is a high-level representation and cannot get into the bottom-up transaction-by-transaction risk analysis. For example, because Microsoft has a campus of more than 50 buildings in the Seattle area, earthquakes are a risk. 4 In the past, Microsoft looked at silos of risk. For example, they would have looked at property insurance when they considered the risks of an earthquake and thought about protecting equipment and buildings. However, using scenario analysis they are now taking a more holistic perspective in considering the risk of an earthquake. The Microsoft risk management group has analyzed this disaster scenario with its advisors and has attempted to quantify its real cost, taking into account how risks are correlated. In the process, the group identified risks in addition to property damage, such as the following: †¢ †¢ †¢ †¢ †¢ †¢ 4 Director and officer liability if some people think management was not properly prepared. Key personnel risk Capital market risk because of the firm’s inability to trade. Worker compensation or employee benefit risk. Supplier risk for those in the area of the earthquake. Risk related to loss of market share because the business is interrupted. Michel Crouhy, Dan Galai, and Robert Mark, Making Enterprise Risk Management Payoff (New York: McGraw-Hill, 2001), pp 132-133. 8 †¢ †¢ Research and development risks because those activities are interrupted and product delays occur. Product support risks because the company cannot respond to customer inquiries. By using scenario analysis, management has identified a number of risks that it might not have otherwise and Microsoft is now in a better position to manage these risks. The future ERM / ORM tools such as risk assessment and scenario analysis will assist companies in identifying and mitigating the majority of these risks. In the next 5 years, companies will be using internal and external loss databases to capture occurrences that may cause losses to the company and the actual losses themselves. This data will be used in quantitative models that will project the potential losses from the various risk exposures. This data will be used to manage the amount of risk a company may be willing to take. In the next 5 years, companies will allocate capital to individual business units based on operational risk. By linking operational risk capital charges to the sources of that risk, individuals with risk optimizing behavior will be rewarded and those without proper risk practices will be penalized. In the next 5 years, internal audit will become even more focused on how risks are managed and controlled throughout the company on a continuous basis. Internal audit will be responsible for reporting on integrity, accuracy, and reasonableness of the company's entire risk management process. In addition, Internal Audit will be involved in ensuring the appropriateness of the company's capital assessment and allocation processes. Furthermore, audit will influence continual improvement of risk management and controls through the sharing of best practices. In the next 5 years, management will be looking for individuals who are skilled in risk management. Professional designations such as the Bank Administration Institute's Certified Risk Professional (CRP) and the Information and Audit and Control Association's Certified Information Security Manager (CISM) will demonstrate proficiency in the risk management area and will be in demand. In the next 5 years, external auditors will be required to report on the efficiency and effectiveness of a company’s risk management program. These companies will be required to disclose the scope and nature of risk reporting and/or measurement systems in their annual reports. Overall, companies will be better positioned in the next 5 years to deal with the broad scope of enterprise-wide risks. By implementing the ERM / ORM process now, companies will begin to maximize their overall risk profile for competitive advantage. 9 Bibliography Barton, Thomas L. ; Shenkir, William G. ; Walker, Paul L. Making Enterprise Risk Management Pay Off. New Jersey: Financial Times / Prentice Hall, 2002. 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