Poetry Analysis: Persimmons Essay

â€Å"See through.† Surely, most people have experienced this feeling before, the feelings of being seen, but not truly â€Å"seen.† As if every part of their being, their roots, their culture, and history meant nothing and holds no value to anyone but themselves, just as the speaker is raised in a bi-lingual, bi-culture atmosphere although most of us may be forgotten throughout our lifetime from daily encounters or short terms relationships; semester long classmates and professors, the poem â€Å"Persimmons† by Li-Young Lee reveals to us with his brilliant use of imagery, symbolism, and other literary devices, emotions so rooted, that they almost escape words. In the poem, the reality revealed is that we will someday fade away from people and this world. But that the true beauty lies during the events in our lives and until the finale, we are the ones to hold the sweet, ripe â€Å"Persimmon,† a sacred and distinct â€Å"sun inside [each of us]†¦ golden [and] warm.† Li-Young Lee implements imagery and symbolism to underline the metamorphosis of the early life of the struggles of social placement of a young American Chinese boy to the deep passions of a young man. â€Å"Persimmons† teach us that even if we may go blind, just like the speakers father in the poem, it comes to show that our experiences of life, that despite not everyone will appreciate, or understand fully, that it is something that will forever remain etched in our souls. At first the poem starts out a bit scattered. There were several pieces that did not seem to follow the time and meaning, but while seemingly scattered, his memories do in fact connect in several ways. As one specific device, most of his recollections involve the symbol of the Chinese fruit, persimmons. The poem begins with an unpleasant memory from the speaker’s sixth grade classroom where he recalls being slapped on the head and ordered to â€Å"stand in the corner for not knowing the difference/between [the words] persimmon and precision†(3-5). Right at that moment the speaker’s attitude is that of confusion. In the first stanza, we learn that Mrs. Walker was the speaker’s teacher in sixth grade: In sixth grade Mrs. Walker Slapped the back of my head and made me stand in the corner for not knowing the difference between persimmon and precision. How to choose   persimmons. This is precision. (1-6) To Mrs. Walker, the point is simple; the young boy, whose native language is Chinese, simply cannot attain and grasp the elements of English. Clearly he confuses the words that are seen from Mrs. Walker’s point of view to have nothing in common, but maybe only holds similar sounds and that is all. But in the boy’s mind, the two words are connected in a way that Mrs. Walker will never grasp without delving deep. A particular literary device that Lee uses is the choice of enjambment at the word â€Å"choose,† (6) which breaks the first stanza and draws attention to the act of selection, and the process of making choices. Although in the first stanza it is seen that the speaker, as a child and as a student is stripped from the power to choose in the process and codes of the incident of his classroom assimilation, he regains power by justifying his linguistic conflations of the words â€Å"persimmon and precision,† (5) by connecting the words through their sim ilar sounds and by symbolic association: â€Å"How to choose/ persimmons. This is precision† (6– 7) and â€Å"fight and fright, wren and yarn† (31). While justifying the melting pot of his words, he also re-claims control by demonstrating his command of the English language. In the second stanza, however, Lee elaborates on the correct way of carefully selecting and eating a persimmon, and along with that it is affirmed that the speaker does in fact know the difference between the two words. The speaker reveals his understanding of â€Å"precision† in the diction being used by Lee to describe how to pick out and eat a persimmon; the words â€Å"soft,† â€Å"sweet,† â€Å"sniff,† and â€Å"brown-spotted, are given to the fruit characterizing it and transcending the physical sense of the Chinese fruit and transforming it into an important element, and symbol. Whereas the character of Mrs. Walker  would fall in the category of the â€Å"teachers† that one may meet throughout life. It can be anyone: from a school teacher, a semester –long college peer, a random onlooker, or society itself. However, these â€Å"teachers† not judge one’s personality, but are also ignorant. In defined terms; a person may be treated as a sheep, when in fact, they are the ones fenced in, not able to reach, see or feel further; they do not bother to survey into the deep and enigmatic waters of people, Self, and emotions, in this case, the boy’s mind. The teacher is not aware that his mind is full of different worlds; the world or emotions, and his rich culture. The only thing they perceive is that the boy may have a problem; that the boy has trouble with words, which in a way he does, but for him, the words that tend to â€Å"stick out of the page† for him are because of the assimilations that they induce: Ripe ones are soft and brown-spotted. Sniff the bottoms. The sweet one Will be fragrant. How to eat: Put the knife away, lay down the newspaper. Peel the skin tenderly, not to tear the meat. Chew the skin, suck it,  and swallow. Now, eat   the meat of the fruit,  so sweet,  all of it, to the heart. Can Mrs. Walker and anyone belonging to this pragmatic world even care to imagine the world within him? To the speaker a persimmon is precision, because one needs the ability of perceiving a precise persimmon and the persimmon itself is precision by its existence; a soft fruit, the shape, the smell of a ripe one is an art; not everyone has the talent to spot one and the proper knowledge of how to eat one, just like Mrs. Walker incorrectly prepares the persimmons for the class, as she uses a knife to â€Å"cut it up† (41) as if she were â€Å"cutting up† this demonstrates her violation of the Chinese culture of the speaker. The poem takes on a dramatic turn at the third stanza, where the speaker fast  forwards through time. Here the speaker describes the moment of a passionate experience with his lover. Here by Lee’s use of symbolism and contrasting word choice is significant because of specific time and place it is being used. In this moment, the speaker has forgotten his Chinese, this could represent the past problems of assimilation to have faded in the aspect of the triumph over the English language. Although he has perhaps gained societal acceptance as an Asian American, he has also gravely lost, where his loss out wins his gain; the loss of his native language, the loss of his culture. As a second interpretation would be that when the speaker forgets about the â€Å"Dew† and the fact that they are â€Å"Naked,† but recalls the â€Å"Crickets: chiu chiu† and that â€Å"Ni, wo: [means] you and me† represents his total captivation in the moment, the moment when tw o lovers unite, creating a union, one perhaps forgets that fact of nakedness, because perhaps in that beautiful moment, one does not feel naked, because their significant other is there, and they are all they need to feel covered, a moment were all barriers are broken, both feel free comfortable in the bareness, where he even forgets the background sound playing. By the use of symbolism, it is known that â€Å"Persimmon† is the main symbol, and so acts as a metaphor of the love scene, focusing on the passionate experience that marks the speaker for life. In the ninth stanza, a new scene is present and there is another shift in time, this time the speaker is a mature adult, visiting his parents, but also revisiting old memories, that arouse ancient feelings. In this particular stanza, Lee’s use of vivid imagery is openly present, where he describes the speakers elderly father who has gone blind: I rummage, looking for something I lost†¦. I find a box†¦. three paintings by my father: Hibiscus leaf and a white flower. Two cats preening. Two persimmons, so full they want to drop from the cloth. †¦.Which is this? †¦.Oh, the feel of the wolf tail on the silk, the strength, the tense precision in the wrist†¦. Eyes closed. These I painted blind. Some things never leave a person: Scent of the hair of one you love, The texture of persimmons, in your palm, the ripe weight. (62-88). Lee’s use of concrete details allows has a great impact and effect on this particular poem, because it draws the reader in, allowing them to engage and become more attune to the feelings the poet is trying to transmit: the sight of the Hibiscus, the movements of the â€Å"cat’s preening† (75). Although the speaker’s father has lost his eyesight, he can still â€Å"see† the world. When a person goes blind, they are shut out from the world, but the thing that stays with the person transcends the sense of vision; the smell, the texture, the weight of the persimmon that the father speaks of that will â€Å"never leave a person,† (85) that the feel of a ripe persimmon in the palm will remain a part of you , just like the speakers culture, his memories and experiences. This could also represent an important shift in the poems tone, in that the speakers finally accepts his culture or art of reminiscing of familiar emotions, both like being â€Å"back home.† His experiences, although not entirely positive, have helped him grow into the man he is now. Li-Young Lee, by using sensory imagery and â€Å"precise† diction along with the informal stanza structure, reveals to the reader that, despite the speakers his bi-cultural past, he has now realized, through his experiences, that some of the most important things will not always be â€Å"visible† and he is at peace with his culture. The obscurity of words that Lee demonstrates in this poem correlates with the obscure and that of which is not accepted in our materialistic, and practical world. But the bitter-sweet irony of it all is that at times, as soon as something like a marvelous feeling or thought is put into words, its mystical beauty may diminish. This poem is not only a self contained piece of poetry. It is art, a ticket to see, witness, and feel between our and the poet’s inner world. Li-Young Lee, knowing that words cannot directly express these feelings; he us es his poetry as a tool to evoke such feelings in us utilizing the informal poetic form and the advantage of symbolism and imagery, has allowed us to picture detailed, vivid scenes to show us how superficial and apathetic the world around us can be to the secretly immense, and passionate world in each of us. Citation Dmitry, Divov. â€Å"Analysis of Persimmons by Li-Young Lee.† Web. 25 Feb 2012. .

Maritas Bargain Essay

Marita’s Bargain to be Success In this essay I am going to discuss the topic about to become a success Marita’s bargain by Malcolm Gladwell. Malcolm Gladwell talk about a young twelve years old Hispanic girl named Marita who come from a poverty stricken community single parent family at home in the New York city from the Bronx who has been deprived the opportunity for a better education from low income minority settings surrounding her. In addition Gladwell also talks about how Marita was given an opportunity to attend a KIPP school making a life changing sacrifice and more advantage of it. KIPP is that kind of school who stands for knowledge is power program, a learning academy helping low income family kids educate themselves through hard work, effort, more practice, dedication their time, weekend studies and also long term of schooling unlike those in the low income neighborhoods. Marita’s family could not give her or help her what she needed, so what does equ ality exist in the U.S? According to Malcolm Gladwell KIPP schools were designed to help educate low income family children to better their skill in reading, writing and mathematics. The KIPP schools would be inconvenient for kids without transportation weekend school that kids was not accustomed to summer vacation would be shortened for the kids educational development keeping their minds growing while others was out of school during that time. I think student not having a fair share at equal opportunity in the school system shows that their is no equality within U.S, we not asking to take away from the affected areas. From my opinion Jonathan Kozol would say to Gladwell about Marita needed to go to the KIPP School cause of she needs to get a better education system who comes from low income and uneducated family  background. To be a success of a student firstly he or she needs a big support from school. KIPP is that kind of school where students can learn feel free. They take care of their students specially who are weak in reading, writing and mathematics. KIPP shows students correct path and dedicate their knowledge, time to give them a better education by shortened summer vacation become success of a student in his student life to get a better educate. Marita’s mom was like that parent who asked everyday her daughter after coming back from school. Would be Kozol knew it that’s why he recommended Marita needs to go to KIPP for a better educate. On the other hand I would like to say from my concept about according to Prudence L. Carter would say to Malcolm Gladwell that Marita needed to go to KIPP school and to shed parts of her cultural identity because the KIPP is stablished in the poor neighborhood and most of the students are from the same neighborhood who are poor as well by so many ways. As like as low income family, single parent, uneducated environment, identical contingency etceteras etceteras. â€Å"Marita has had to do the same because the cultural legacy she had been given does not match her circumstance either- not when middle- and upper-middle-class families are using weekends and summer vacation to push their children ahead. Her community does not give her what she needs† the story of success by Gladwell (266). I would like to say specially the reason of above for what she needs to go to KIPP. Because KIPP is that kind of school to be a success of Marita what she needs KIPP can give her. The KIPPâ€℠¢s intention or aim is to make their students skilled and success in reading, writing and also in mathematics. According to Gladwell, I think it is kind of necessary someone be forced to shed their cultural identity in order to receive a great education. For example, the U.S commissioner of education published a report by Edward Jarvis on the â€Å"Relation of Education to Insanity† (253). I would like to say here relation of a light to darkness. If there is no darkness the light is valueless. I mean light only need when the dark is present. As like as the same relation to each other cultural identity to get a great education. A child grow up in a culture and he or she learn a lot from here about good- bad, their relation with other, their circumstance,  family status in the society, their identity and so on. A culture is the source of knowledge so it is very important to a child for his or her future life what depend on also to get a better education too. Here from my opinion also according to Malcolm Gladell everybody must have access to great education, one that prepares them for college and allows them to go to school near their homes in order to maintain a sense of their family and cultural identity. For example, specially their mental circumstance in the school. Because of the students known their city where the grown up and can show their friends the cool places. They do not have to worry about new places, new friends, environments and so on. Also unknown places has different identity than the home town. The students feel absence their family, friends, assist when the get sick etceteras. If the students live with their family in their home city whatever they need to get a big support and also get motivate from behind to do better and get a great education to the school a family and cultural identity can make them skillful and can over come any problem to conquer success. At last, I am very sure that dealing with this issue is really hard especially under this circumstance who grown up and try to be success in their life. The perfect environment is the priority advantage to become success and can give us necessary instruments in perfect time whenever we need to get better education. Not only that to become a successful in life every student hove to hard work, over efforting, dedicate their time, focus on the work, punctuality and so on then success truly comes.

This is not actually Macro & Micro The class is called Economics of Essay

This is not actually Macro & Micro The class is called Economics of Developing Countries - Essay Example To achieve the desire to maintain standard of living, the country should focus on a) level of goods and services b) individuals purchase. The growth in population along with increase in economic growth, increase in GDP is not necessarily an indicator of improving standard of living based on per capita. The other factor, which may be taken into consideration, is the population growth, which has no match with the economic growth. The growth of population should match with the economic growth otherwise, it definitely defeats the very purpose of improvement of standard of living of the masses. A controversy prevails on the green revolution for sustainable improvement in the standard of living on the face of accelerated population growth. The Revolutionary period of industrialization in England, plays a vital role in increasing the per capita income by virtue of replacement of work force with the machines. If we look at the increased population of England during the era of 1700 to 1860 AD , we may find a lot about the major factors in increasing the production. The major factor of multiple production attributed to more production per worker combined with many more workers. 2. In developing countries, there may be both market failure and the government failure. True. The market failure depends on the failure of government in respect of manning the affairs of market. Unnecessary intervention by the concerned department of the government, will complex the issues. However, the government should take note of inefficient management in respect of allocation of goods and resources. Let the market forces manage the goods and resource in an efficient manner. Hence, the incumbent(s) of government should keep him/themselves away from intervening unnecessarily to ensure smooth function. 3. Transactions and information costs can prevent effective markets in developing countries especially in agriculture. True. The transaction cost provides a base in the design and impact of ICT, w hich has a far-reaching effect in the field of agriculture. The information system relied upon transaction costs approach. ICT can be used to cater the requirement of sustainable information thus empowers the information management. In taking the economic exchanges, ICT is an efficient tool for the transactional efficiency. There cannot be two opinions about the impact of ICT in managing the economic exchanges on a positive note. 4. Famine is more a problem of distribution than supply. False. At the time of famine, Government of Bengal’s strategy in line with Sen.’s philosophy was laudable. Well known Indian economist Sen., a noble laureate in Economic Science was keen in resolving the problems of down trodden. He was famous for his work on the causes of famine that provides practical solutions to prevent and limit the worst impact of shortages of food. Inability is to purchase food by the poor caused starvation. The starvation has nothing to do merely with distributio n and supply system only. Price control committee can control price to make it accessible to the general consumers and to prevent other market players to skim off more than their fare share. Further, public welfare scheme and supply of food through public distribution channel can play an effective role to lessen the gravity of famine. In addition, some degree of rationing under the mentioned scenario was desirable. Speculation and hoarding were two main factors of the famine. To provide population, the

Is Employer of Choice brand is self-applied Essay

Is Employer of Choice brand is self-applied - Essay Example Organizations should consider the hiring process as the first hurdle. The greatest challenge that awaits every employer is to retain employees. This way an organization will be able to hire smart, and retain the best (Leary-Joyce, 2004). There are several steps which can be put in place by an employer in order to become an employer of choice. Every employee wants to be in an environment that is conducive where rules are well defined. Hence, an employer has to create and maintain a policy structure which is comprehensive by investing time and resources. Clear policies that helps in defining employees conduct, entitlement and obligations is desirable as compared to a situation where decisions affecting employees are made in an unplanned way. Employers of choice need to follow their own rules, most employees prefer an employer, who observes rules in a consistent manner, and makes decisions in an unbiased and principled way. Valuable employees can leave an organization due to decisions t hat are considered to be inconsistent and when they perceive their employer to be unfair. Secondly, an employer of choice has to have trust on the employees. For one to be an employer of choice, one has to portray trust and faith among the employees.

Toyota SWOT Analysis Essay Example | Topics and Well Written Essays - 1000 words

Toyota SWOT Analysis - Essay Example Toyota’s mission statement, â€Å"To sustain profitable growth by providing the best possible customer experience and dealer support† embodies the reasons behind the company’s success: sustainability, quality and customer satisfaction (Hino, 2006). II. Organizational Strengths and Weaknesses A. The â€Å"Toyota Way† Strategy Toyota has successfully implemented their widely recognized â€Å"Toyota Way† strategy in all its global business operations. This strategy is based on operational excellence through a 4-P model; philosophy, process, people and problem solving. Philosophy is anchored on long-term thinking; process on waste elimination; people on respect, growth and challenge; and problem solving through the concept of continuous improvement. The resultant effect of this strategy is organizational performance and excellence due to sustenance of high quality that not only attracts customers but also makes them loyal (Liker, 2004). The â€Å"Toyot a way† is a clear strength since it is tailor-made for the company as evidenced by the fact that most of the other operational excellence strategies pursued by organizations around the world were developed from it including the popular â€Å"lean manufacturing†, â€Å"just in time† and â€Å"six sigma† philosophies. ... The â€Å"Toyota way† only works due to the successful uptake by the employees and the Toyota culture of hard work and continuous improvement is possible through the quality of employees present (Liker and Hoseus, 2008). Toyota’s excellent workforce is a major strength especially considering the fact that the company operates on principles based on continuous improvement, high quality and organizational performance appraisal which would prove strenuous and overwhelming to weak employees. It is not unknown for companies to adopt noble strategies and policies only for them to fail due to difficulties in adoption by the workforce. C. Product Quality Concerns Toyota’s large size as a company means that any errors in manufacturing result in numerous faulty vehicles availed to the market which leads to customer dissatisfaction and aloofness to future car models. This is particularly damaging to reputation as evidenced by the recent recalls of vehicles due to failed bre aking systems; concerns on safety are enough to cause virtually irreparable harm to a company such as Toyota. To maximize on quality, a Total Quality Management system should be carefully implemented besides much emphasis on batch testing since this is perhaps the only way Toyota can mass produce with quality assurance. D. Lack of Customer Involvement Toyota focuses a great deal on the internal aspects of its operations in terms of management and workforce performance optimization and fails to take into consideration the views and interests of the customers. This has resulted in some of its car models being ranked among the ugliest automobiles on roads; unenviable

Buddong System Case Study Example | Topics and Well Written Essays - 1000 words

Buddong System - Case Study Example Though the company headquartered in New South Wales, it became able to present its products in varied parts of the world in a very efficient way. It is mainly due to high-level of dedicated and committed employees, who always try to fulfil the requirements of the customers and leads to the betterment of the organization. Due to which, its range of profit margin and ROI tends to increase day by day to a significant extent as compared to others. Along with this, the level of reputation of the organization also enhances to a considerable extent as compared to others (Rosengren, 2000). However, due to certain communication and ethical issues and problems, Buddong system failed to maintain its sustainability, due to which its competitiveness also reduced considerably. Side by side, due to lack of proper communication among the members of the organization, the morale and dedication of the employees are declining day by day resulting in downfall of the entire organization in long run. Criti cal Analysis Ethical and Communication Issues Ethics is also described as the moral philosophy that helps an individual to perform the accurate things in accurate time. It also involves defending and recommendation accurate facts and opinions to the peers and other members of the organization so as to achieve the goals and objectives of the organization.... deas that help an organization or its members to improve its portfolio or profit margin along with the level of dedication and commitment to perform the work. Not only this, corporate ethics that helps to increase the strengths of the organization thereby reducing, its weaknesses in this competitive market among other rivals. Apart from this, appropriate ethical conducts also need to be followed within the organization within its entire hierarchical process so as to enhance the productivity of the organization in the market among other rivals. Only then, the level of sustainability of the organization (Buddong System) might get enhanced in the future run. However, after reading the case study, it may be analyzed that proper corporate ethics is not followed within the entire organizational hierarchy. The CEO of the Buddong System, Mr Ken Young advised his financial officer, Simon Cheng to present $ A 200,000 as a bribe to the officials of Absurdastan so as to extend its mode of operat ions. Along with this, it also helps in increasing its market position and brand image of the Buddong Systems in the market among other competitors. But, Simon Cheng was not at all happy with the decision of Ken Young as he always desired to follow ethical paths in each and every sort of situations. So that, he might remain ethical at the time of tough situation, that is extremely essential on the part of an officer or manager of an organization. This is because the officer or CEO of the organization is just as the driver or controller of an engine, who drives the car or organization in accurate way (Warren & Fassett, 2010). But if, he or she follows the wrong path then the entire organization might move in wrong way resulting in is downfall among all other organizations. So, it is

Multinational Financial Management Speech or Presentation

Multinational Financial Management - Speech or Presentation Example The mezzanine loan will be enacted in order to achieve our expansion goals, in the amounts and for the reasons prescribed below. The asset-backed commercial paper will also be utilized in this plotted expansion effort, as prescribed below as well. With that, we need to discuss our corporate instruments of financial expansion and the elements that those financial instruments will incorporate.  Within the approaches chosen for fiscal expansion, we need to develop a one, three and five-year financial approach, with a ten-year revamping contingency, if still in operation strongly, toward our goal in expanding in order to become a multi-billion dollar, multinational organization. Right now, we are going to focus on the three to a five-year tier of our planned goals.  As the appointed treasurer of World Access Healthcare, Inc., the timing of this report and expansion is critical. Thus, let's begin to outline, chart and discuss potential financial avenues, in detail, as well as the outl ine or highlight their benefits in regard to expansion.  First, let's get familiar with the terminology at hand. An asset-backed commercial paper has a similar premise as a promissory note-a note in which a person (or business entity) gets promised payment by a company or corporate body in lieu of actual cash or currency payment during a rocky receivable period or a cash-poor time. However, an asset-backed commercial paper is strengthened more than that of a promissory note because it actually contains some actual capital or segues to that capital in some manner, such as through a receivables guarantee, or a cash asset assessment. In a receivables-backed, asset-backed commercial paper, your business basically states that it has in its the function, a proven receivable track record of meeting the note of asset-backed commercial paper, through receivables. This does two things. One, it allows the commercial note or paper to be stronger than just a financial paper contract. Also, it allows two key components of a contract to form which are an offer, backed by a consideration (a form of money). Two, it allows a company or financial institution to have more than a companies corporate reputation and past record of its receivables as a base in which they operate, further securing the asset-backed commercial paper (ABCP). Basically, this note, as described in detail and (Fritz, et al, Sept. 29, 2005, Reprinted from Ratings Direct) is credit extended with an asset back up feature in the form of a note. As aptly stated (Fritz, et al 2005), "ABCP conduits are typically established and administered by major commercial banks to provide flexible and competitive low-cost financing to their customers. " Utilizing the features of an asset-backed commercial paper, the venue that is needed for this transaction is a single seller conduit, which is,  "A single-seller ABCP conduit is a limited-purpose, bankruptcy-remote entity that issues CP as a way to finance the assets of a single originator. Such conduits are most suitable for asset originators with large pools."

Being a Leader Today Essay Example | Topics and Well Written Essays - 500 words

Being a Leader Today - Essay Example The leader builds an environment in which every member of the organization flourishes through idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. Idealized influence is creating positive impact of the leader on the individual in terms of confidence and trust, so that the followers seek to emulate their role model (Bono & Judge, 2004, p. 901; Simic, 1998, p. 52; Stone, Russell & Patterson, 2003, p. 3). The employee is impressed by the leadership style and follows the chosen path of the leader. Leaders are â€Å"admired, respected, and trusted† (Bass, Avolio, Jung & Berson, 2003, p. 208). The subordinated believe virtues of their leader so that any decision taken will be supported with minimal resistance even in the time of crisis. Charismatic leadership is one of the important attributes of this modern leadership style and is based on the expression of leaders as well as followers (Kelly, 2003). Lee Iacocca showed his charismatic leadership to revive Chrysler Corporation in the 1970s and 1980s (Kelly, 2003). Inspirational motivation is a broader view of idealized influence to make direct impact on whole organization. The leader inspires other team members to behave and perform in a certain way through speeches, conversations and other public displays (Simic, 1998, p. 52) and stimulating collaborative work approach. The formal and informal forms of his influence help in building flexible, yet successful organization with shared vision. The headman inculcates the required organizational culture and environment (Kelly, 2003; Stone, Russell & Patterson, 2003, p. 3) in each individual in such a manner that the employee would feel indispensable part of the business. Optimistic and enthusiastic attitude of the leader motivates the followers. US President John F. Kennedy’s dream to accomplish mission of putting a man on the moon by 1970 is a classic example of

PR And New Media Essay Example for Free

PR And New Media Essay Public relations (PR) are the management of internal and external communication environment of an organization to generate and sustain a positive image and goodwill. It often involves in activities like popularizing successes or exaggerating success, rejecting failures or hiding the weakness of company, announcement of new promotion campaigns, detailing new strategies involving public, media and investors. It should be mentioned that Public relations is also viewed as an art or technique to endorse, encourage, sponsor goodwill in the external environment like media and public. Thus, it is essential to incorporate a proper campaign related to public health program in the context of public health like the one the campaign targeted in this case: An anti-smoking health campaign for the UK department of Health, aimed at encouraging 35-45 year old smokers, primarily in disadvantaged areas, to access NHS smoking cessation services. This group is traditionally considered difficult to reach. Public health relates to all the threats for the general Health of the society, focusing on the resident’s and non-resident’s health analysis. Health can be defined as complete body, mind and social welfare, but not simply the failure to be suffering from a disease or infirmity. It can be stated that diet, religious nourishment and brain balance, determine someone’s health. Health can be environmental, epidemiological, and professional/Occupational. The nation’s resources should be spent in saving lives and improving living conditions. Research and development on public health is necessary to determine the cause of disease and cure or prevention for the diseases. Thus, a public health campaign is essential for UK in the context of Anti smoking awareness. Public relation is an important management function of any organization and in this issue of anti smoking campaign. It dictates the communication environment be it internal or external, of an organization. It is often done to create and maintain an optimistic image and goodwill of the organization. Public relation is also viewed as a process to support, encourage and sponsor goodwill. It effects in not only the external environment like media, investors and public but also the internal environment like employee and investors. As Mr. Robert L. Heath said Public Relations is a set of management, supervisory, and technical functions that foster an organizations ability to strategically listen to, appreciate, and respond to those persons whose mutually beneficial relationships with the organization are necessary if it is to achieve its missions and values. (Wiki, 2007) With changing world perception, public relation starts from collection of data, identifying challenges and problem areas, and finally making strategies for implementing goals. So when it comes to health it Public Relation becomes more so important. It is not only health awareness but also controlling various health factors like cancer, tropical diseases etc. Here methodologies used for Public Relations are press releases, press kits, advertisements in newspaper, satellite feeds, web casts, wire service distribution of information and internet placement. Other indirect tools can be include entertainment product placement (television, events, celebrity), product launches, press conferences, media seminars, producing events, speechwriting and establishing partnerships. The most important aspect here is use of right media for right purpose. Anti-smoking health campaign for the UK department of Health One of the main challenges in facing the world is smoking. Every year hundreds of thousands of people around the world die from diseases caused by smoking, directly or indirectly. One in two lifetime smokers have been seen to die from this habit. Half of these deaths will occur in middle age usually in the age group of 35-45. Tobacco smoke itself is the reason of number of  cancers. The resultant mixture of nicotine and carbon monoxide, in each cigarette smoke can temporarily increase ones heart rate and blood pressure, straining the heart and blood vessels. This causes heart attacks and stroke. It slows your blood flow, cutting off oxygen to your feet and hands to the brain. Some smokers end up having their limbs amputated. Tar coats on lungs like soot in a chimney and causes cancer. A 20-a-day smoker on average breathes in up to a full cup (210 g) of tar in a year. Carbon monoxide can cause depletion of muscles, brain and body tissue of oxygen, making the whole body and especially the heart work harder. Over time, airways swell up and let less air into your lungs. Heart disease and strokes are seen to be more common among smokers than non-smokers. It also causes fat deposits to narrow and block blood vessels, which lead to heart attack. (QSS, 2007) The National Health Service (NHS) a publicly funded healthcare system in Great Britain provides healthcare to everyone normally resident in the UK. It is funded exclusively through income tax, and provides many services are free of charge to the patient. Other than normal healthcare NHS has been required to take on pro-active socially directive policies, for example, in respect of smoking and obesity. Here National Health Service can involve new media in its Public relation activities. The National Health Service of Great Britain has been using stop smoking clinics for quite some time now. It has been called a success after figures showed significant progress in disadvantaged areas. The study found 8.8% of smokers in poorer areas had quit at the four-week mark, compared with 7.8% elsewhere. The comparison is particularly relevant as smoking is a key factor in health inequalities with those from deprived backgrounds more likely to smoke. Smoking cessation clinics, offering counseling and treatment in the form of nicotine replacement therapy, were set up in 1999. (News.BBC, 2007) The age group of 35-45 for smokers is of particular interest to NHS. This age group primarily consists of new mothers and fathers to middle aged people. This age-group has been found particularly difficult to reach because of job related problems. In study it has been found children whose parents smoke during pregnancy or in the early years of childhood are more likely to smokers than those whose parents are not. This age group is also the most stressed among other groups leading or finding excuse in smoking. It has been found that quitting trends of smoking has been lower in populations in disadvantaged areas. NHS can use different methodologies with the help of new media to propagate these services. Disadvantaged areas or not internet and television are more or less available to most people on UK. On of the better techniques that can be use by NHS can be blogs, news feeds, social networking sites, news sites, patient review sites, experience or photo sharing sites, even games or interactive media. These can offer the latest insights to new technologies available for stop smoking. These pod casts can also be use to tell the participating audiences about camps going around and take updates from them about their current status of smoking habits on weekly basis as is normally done. This also ensures that the privacy for the participating audiences and even participate in some activities anonymously. NHS can optimize use of blogs and social networks for maximize positive exposure. It can harness the potential of the full range of new media channels like live-feeds, podcasts, life casts of smokers quitting smoking. Here patients can create their own content, writing their experiences of quitting; posting pictures and videos, and can also offer their experiences to other fellow counterparts. Patients can be allowed questions to a panel of elite professionals and gain valuable insights into how they wish to be cured and continue after the quit smoking exercise has been done. At the same time, evaluated results can also seen and effectively the impact of PR strategy with the help of Public Relation Strategy can found and if needed be altered. However, there is a significant advantage of the new media. New Media works best among a focus group of like-minded people. Visitors should be spreading the word to friends that will be interested in the topic, not to everyone else. Thus, in this context, the target audience (aged 35-45) would be accessed easily once the advertisement is properly carried out. When visitors are not even sure about the significance or meaning of targeting, how can they be made to act as advocates? The reward should be relevant to the target audience. The size of the reward should not be so large that customers resort to cheating. Again, the advertiser should control the response by ensuring that products are carried to specific groups interested in it. CNET regularly gives away technical content free to users. In return, subscribers need to take a link to CNET. This feature allows users to put up technical content in their websites. Participants in the program will naturally be placing the stories to visitors who will be concerned with trade or industry news. The relevance of the giveaway (free content) effortlessly brings in the target audience. The costs of improper planning, analysis and the wrong products can tip the scales instantaneously on a campaign. Though viral marketing is a relatively low cost advertising strategy, the wrong move could disable a company or product. A lot more is anticipated on this subject. However, to incorporate user-generated content into this communication plan it is important to process a well-formulated feedback plan from the visitors on the subject. For the purpose, a questioner on the subject would be presented and the response would collect, as it would prove to be the benchmark of this project and determinant of its success and failure. Nevertheless, a high amount of feedback returns would be almost synonymous for the success of this campaign. However, here is a shortcoming of the new media, it is the small working groups, and often numerous numbers of such sites can make difficultly for NHS. New Media tactics are designed to spread rapidly. One tells two friends who tell two others and so on till the numbers reach a highly critical mass. This is the same principle working in real time direct marketing programs. In the ambience of the web, growth is instant and so is the reaction. A good joke spreads to thousands in one day because it is so convenient to click Forward, and hit Send.   Such is the potential of a New Media program. We have often seen those â€Å"distress† messages operating similarly. When dealing with a web site the respondents might have to enter a site, registering, download a large file, buy things or request free deals. A 100-fold increase in traffic might result in just one day, providing the message is compelling enough and the proposition is motivating. More to the point is whether the advertiser’s server is ready to take this flood.   Is staff ready for this onslaught? If proactive plans are not in place, then the huge response will most likely end up in a backlash. However, other media programs would also be instrumental in the issue. Measures would be taken to fulfill the approach under various parameters. A multiple mode of public relation applications would be used like radio, print media, TV and live campaigns. Programs related to public heath would be aired on radio and TV to make the mass aware of the smoking hazard and the protection needed against these smoking related diseases. Live campaigns and kiosks would be incorporated in public spaces and within vulnerable communities to create awareness. Special units would also be prepared to persuade the health ministry with participants from all walks of life with possible influential backgrounds. It is important to create awareness both in the parameters of public and administrative strata and without the help of both the overall objectives of the public health program would not be fruitful. Conclusion In conclusion it can well be stated that crisis in western capitalism generated the operation of an interventionist welfare state has been resolved by transferring the burden of crisis to some groups among welfare state consumers, as earlier   discussion of the realignment of welfare policy in accordance to public healthcare programs formulation, specifically related to the anti-smoking issue. This shift to a theoretical model whereby the welfare state is seen as in process of ‘modernisation’ or as in ‘transition’ may well have supplanted earlier crisis theory at a time when the real crisis for the welfare state, in the case of public healthcare program formulation at least, may finally arrived. Bibliography: Croteau, D and Hoynes, W; (2003); Media Society: Industries, Images and Audiences (third edition) Pine Forge Press: Thousand Oakes Economist; (2007); Story; economist.com; Retrieved on 04.03.2008 from http://www.economist.com/surveys/displaystory.cfm?story_id=6794156 Flew, Terry; (2002); New Media: An Introduction; Oxford University Press, UK Manovich, Lev; (2001) The Language of New Media; MIT Press, Cambridge and London News.BBC; (2007); Health; news.bbc.co.uk; Retrieved on 04.03.2008 from http://news.bbc.co.uk/1/hi/health/7127193.stm QSS; (2007); Harmful Smoking Effects; quit-smoking-stop.com; Retrieved on 04.03.2008 from http://www.quit-smoking-stop.com/harmful-smoking-effects.html Wiki; (2007); Public Relations; wikipedia; Retrieved on 04.03.2008 from http://en.wikipedia.org/wiki/Public_relations

Fundamentals of Accounting Essay Example for Free

Fundamentals of Accounting Essay For â€Å"Goods for Sales† inventory is usually divided into 1. Raw Materials : a) Natural Raw Materials: Cotton, Wools and etc. b) Synthetic Raw Materials: Acrylic, Viscose, Nylon, Polyester, etc. 2. Work in Process (WIP) : It’s starting with making Fibre from raw materials (Natural and Synthetic). Following by the process of spinning with the produced Fibre and come out with Yarn as the final product in spinning. Furthermore, Yarn will be processed into Grey Fabric by the process of weaving. Lastly, Processed Fabric is to be done from Grey Fabric. Processed Fabric will be used for Technical Textiles, Readymade Garments and Home Textiles. These products will contribute to further production of final goods. 3. Finished Goods : Finished goods will be categorised under the brand of PADINI, SEED, PADINI AUTHENTICS, PCo, PDI, MIKI, VINCCI and so on. For example of finished goods are: sweater, skirt, knit vest, cotton pant, dress, shirt, belt, bag, tie, jeans, blouse, scarf, jacket, trousers, blazer and so forth. 1.2 Process of Manufacturing Raw materials that can be divided into two distinct categories: those derived from natural materials (cotton, et cetera) and synthetic materials (polyester, et cetera). Fibre will be produced by compounding raw materials into one. Fibre then will undergo the process of spinning to become yarn. The production process begins with yarn purchasing and progresses through knitting, dyeing, and finishing. The processed fabric is then ready for further production. Process of Manufacturing (after processed fabric) is given below in details: No. Design It is given by buyers to manufacturers containing sketches including measurements of particular styles Manual/Computerized 02 Basic Block Basic block is an individual component of garments without any style of design Manual/Computerized 03 Working Pattern When a pattern is made for a particular style with net dimension regarding the basic block along with allowance then it is called working pattern. Manual/Computerized 04 Sample Garments After making a sample, it is sent to buyer for approval to rectify the faults Manual 05 Approved Sample After rectify the faults, sample is again sent to buyers. Manual 06 Costing Fabric Costing, Making Charged, Trimmings, Profit Manual 07 Production Pattern Making allowance with net dimension for bulk production Manual/Computerized 08 Grading Different in sizes. S, M, L, XL, XXL Manual/Computerized 09 Marker Making Marker is a thin paper which contains all the components for different sizes for a particular style of garments Manual/Computerized 10 Fabric Spreading To spread the fabrics on table properly for cutting Manual/Computerized 11 Cutting To cut fabric according to marker dimension Manual/Computerized 12 Sorting Bundling Sort out the fabric according to size and for each size make in individual bundles Manual 13 Sewing To assemble a full garments Manual 14 Ironing Finishing After sewing we will get a complete garment which is treated with steam ironing also several finishing processes are done for example extra loose thread cutting Manual 15 Inspection Should be approved as initial sample Manual 16 Packing Treated by Polyethylene bag Manual 1.3 Inventories Valuation Method Cost is determined using the first-in-first-out method for Padini Holdings Berhad for the financial year ended 30 June. p. 62 Note: *Full page copy of Financial Statement for this particular section will show at Appendix. 1.4 Amount of Closing Inventories The amount of closing inventories as reported in the financial statement for Padini Holdings Berhad was RM192, 285, 000 for the financial year ended 30 June. p. 80 Note: *Full page copy of Financial Statement for this particular section will show at Appendix. References: 1) http://www.indiamart.com/kishco-silver/products.html 2) http://crisil.com/pdf/research/CRISIL-Research-cust-bulletin_jan12.pdf 3) http://en.wikipedia.org/wiki/Textile_industry 4) http://www.bloomberg.com/quote/PAD:MK 5) http://tlc.howstuffworks.com/home/how-is-fabric-created1.htm

Analysis of Risk Management in Banking Activity

Analysis of Risk Management in Banking Activity The Case of Mauritian Banks Financial deregulation, globalization and liberalization have heightened considerable banking risks. Moreover, banks necessitate effective risk management strategies to promote banking welfare, protect outside agencies transacting with banks and to ensure stable banking operations. Risk managers need to focus on the diversity of risks and secure the interests of the overall banking sector. Risk Management is nowadays segregated where there is inconsistency in reporting, insufficient evaluation and low quality of management and becomes ineffective due to lack of pertinent information and improper analysis of the risk factors (Prabir Sen, 2009). Nonetheless, banks are unable to keep equilibrium in the situations of risks with huge losses and slight possibility of occurrence and risks of minimal losses with propensity of occurrence.   According to Talmimi and Hussein, Mazroezi and Mohammed (2007), risk management enables profits maximization and entails restrictions in risky activities. Risks can be averted by ordinary banking procedures, can be shifted to other institutions and can be managed actively in banks (Oldfield and Santemero, 1997). 1.1 Objectives of the Study The core objectives of the study are: To probe into the methodologies and aspects of the risk identification, assessment, monitoring, management and mitigation in Mauritian banks. To ascertain the effects of risk management on Mauritian banks. To determine to which extent risk management strategies like Basel II, derivatives, stress testing and Asset and Liability Management are applicable in Mauritian banks. To analyze the factors which improve Risk Management Practices in Mauritian banks and the perspectives about Banking Risk Management. To explore the reasons for managing risks in Mauritian banks. 1.2 Statement of the Problem There is an increasing awareness that the gradual intensification of banking risks impacts adversely on banking transactions which raises the concerns for risk management. The basis concern of this study is whether the Mauritian banks are using diverse risk management tactics and whether they are able to cope with the present and prospective challenges of risks and risk management requirements. 1.3 Significance and Contribution of the Study Bank managers can be conversant with divergent risk management techniques, their implications, effects and their relevance in banks through the practical aspects of risk management application. Bank managers can analyze the mechanisms resulting in the increasing level of risk exposures. Business administrators and management practitioners can use this study as guide to design efficient measures to mitigate risks in the process of developing marketing tactics. 1.4 Structure of the Project Chapter 2 elaborates on the literature review related to the risk management. Chapter 3 uncovers the general overview of Mauritian Banking Sector. Chapter 4 focuses on the detailed research methodology that has been used. Chapter 5 discusses the analysis and interpretation of the Mauritian banking risk management information. Chapter 6 probes on the recommendations to improve Risk Management practices in Mauritian banks. Chapter 7 concludes the whole findings of the project. PART 1- THEORETICAL ASPECTS 2.1 Introduction The advent of technology, globalization and the competition has encouraged banks in risk taking activities exposing banks to risks. Regulatory and supervisory institutions have emphasized the need for banks to enhance their risk management practices. Risks arise from the probabilities of the occurrence of losses and usually emerge from the internal and external banking transactions. 2.2 Banking Failures determinants The past decades have encountered numerous bank turbulences where high costs have been incurred on both local and overseas level (Gaytà ¡n and Johnson 2002, p.1), hindering the credit facilities, minimizing investment and consumption and generating bankruptcy cases (Demirguc-Kunt and Detragiache, 1998a, p.81). According to them, the expensive monetary policy was used to force the sound banks to sustain the failures of insolvent banks which dissuade risk management. Fluctuations in interest rates post abolition of Brettons Woods System, higher banking competition, the non existence of intermediation margins, unskillful lending and investment tactics (Hellwig 1995, p.724-726 ) , the diminishing role of the oligopoly rents as stated by Gehrig (1995 cited Hellwig 1995, p.726 ), the lower level of capital reserves in banks, companies high reliance on banks for external finance mentioned by Rajan and Zingales (1998 cited Randall S. Kroszner 2007),systemic shocks caused by credit risks, the inability to diversify loans, trade deterioration and decrease in asset prices caused bank failures argued by Gorton (1988 cited Demirguc-Kunt and Detragiache1998b, p.85). Moreover, regime changes like financial repression, liberalization and severe macroeconomic conditions encourage the entry of inexperienced players and preference for the acquisition of useless loans stated by Honohan (1997 cited Gaytan and Johnson 2002, p.4) have generated banking turbulences.   Non-performing loans increase where the asset returns are less than the returns to be paid on liabilities. Banks borrow in international currency and lend in local currency where the latter depreciates if the foreign exchange currency risk is shifted to local borrowers if they loaned in foreign currency. Banks buy insurance protection which encourages risk taking activities in the absence of prudential supervision and regulation. Bank managers engage in fraudulent actions by taking a portion of money for their personal use (Demirguc-Kunt and Detragiache 1998c, p.85-87). Diamond and Dybrig (1983 cited Demirguc and Detragiache 1988d, p.86) argued that banks portfolio assets can worsen and depositors believe that other depositors are removing their money. Obstfeld and Rogoff (1995 cited Demirguc and Detragiache 1988e, p.87) mentioned that an anticipated devaluation could occasion bank runs in local banks and these deposits are shifted overseas and render the domestic banks without l iquidity. 2.3 Banking risks alsamakis et al (1996 cited Young 2001, p.57) argued that risks can be classified as pure risks and speculative risks. Pure risks which embody market risks, credit risks, interest rate risks, liquidity risks, country risk and settlement risk are associated with the probability of occurrence of loss or no loss and can be curtailed by risk management strategies. However, speculative risks comprising of operational risks, technology risk, reputational risk, compliance risk, legal risk and insurance risks involve an opportunity for gain or loss which can be hedged. 2.3.1 Credit Risks These major risks occur in banks when the borrower defaults on his obligation to reimburse the principal amount and the interest charged of the loan. Credit risks consist of three types of risks like (Arunkumar and Kotreshwar 2005, p.9): Transaction risk emerges from the fluctuations in the credit type and capital depending on how the bank underwrites individual loan transactions. Intrinsic Risk is risk prevailing in some institutions and on granting credit to some firms. Concentration risk is the average of transaction and intrinsic risk within the portfolio and encourages granting of loans to one borrower or one firm. 2.3.2 Interest rate risks Koch (1995 cited Beets and Styger 2001, p.9) defined interest rate risk as the future changes in a banks net interest income and market value of equity due to changes in the market interest rates. Kropas (1998 cited Martirosianien) enumerated three types of interest rate risks like: Reappraisal risk stems from the diverse periods of assets and liabilities Profitableness curve risk entailselements affecting the reappraisal risk. Basic point risk concernsflawed association between the receivable and payable interest rate. Option risk is where the benefits of options can adversely affect the banks equity. 2.3.3 Liquidity risks Liquidity risks occur when the banks are unable to meet the demands of the depositors because of lack of funds and the illiquid assets resulting eventually in bank insolvency. Credit, strategic, interest rate and reputation risks build up liquidity risks (Gaulia and Maserinskieno 2006, p.49). 2 types of liquidity risks are (ADB Report 2008, p.9): Funding liquidity risk is the potentiality to obtain money via the sale of bank property and by borrowing. Trading Liquidity risk arises from making a constant entry in market activities and dealings. 2.3.4 Market risks These risks arise when the value of the financial products changes negatively and consist of currency risk, interest rate risk, equity or debt security price risk (Gaulia and Maserinskieno 2006, p.49). 2.3.5 Operational Risks Basel Committee (2004) which imposes a capital charge defined operational risks as the risk of direct or indirect losses resulting from inadequate or failed internal processes, people, and systems, or from external events. This definition includes legal risk, but excludes strategic and reputational risk. 2.3.6 Reputational Risks These risks emerge when the number of clients decreases as they hold negative perspectives about the quality of services offered by the banks. 2.3.7 Strategic risks Strategic risks arise when bad decisions and projects are undertaken to develop a special system in banks due to the lack of resources, technological tools and the expert staff. 2.3.8 Foreign Exchange Risks These risks come when the prices of the currency fluctuate when engaging in foreign activities. There are 3 types of foreign exchange currency risks. (Deloitte Treasury and Capital Markets 2006) Transaction risk entails the future of original cash flows like imports and exports. Translation risk is concerned with the disparities between foreign exchange encountered when again transforming a foreign exchange value into the functional currency of the company concerned. Translation risks are usually converted into transaction risks on a late basis as earnings are repatriated or assets and liabilities are realized. Economic risk arises when indirectly exposed to buying and selling of goods from someone who buys goods overseas. 2.3.9 Systemic risks The bank cannot collect money from an organization it is dealing owing to the political, economic and social conditions prevailing in the country where the organization is situated. Country risk includes political, economic risk and transfer risk (National Bank of Serbia). 2.3.10 Legal Risks Legal Risks are losses incurred when the bank is sanctioned by a court for the non-compliance with the lawful rules and regulations and on not fulfilling its obligations towards the other parties (National Bank of Serbia). 2.3.11 Financial Fraud There is mismanagement of money and fraudulent actions from the members of the banks who embezzle some deposited money and when there is lack of security controls. 2.4 Bank risk management methods Greenspan (2004 cited in Lam 2007, p.3) said that It would be a mistake to conclude..that the only way to succeed in banking is through ever-greater size and diversity. Indeed, better risk management may be the only truly necessary element of success in banking. 2.4.1 Risk Management in Banking Sector Flaker (2006, p.4-8) proposes three methods: 2.4.1.1 Risk Identification The board must set the risk profile of the bank and identify the risk-return tradeoff. The bank should understand and identify types of risks exposures, their sources and their effects on the overall banking stability. 2.4.1.2 Risk management and reduction Risk management and minimization embody the following: (1) Allow loans after considering their financial status of the borrowers. (2) Comparison of the expected risks with the actual ones to diminish the loan losses in a bigger portfolio. (3) Loan losses will decrease due to diverse borrowers in the lending transactions. (4) Actual risks can be compensated through the opposite movement of other risks in particular financial activities. (5) Insurance negotiations can be used to protect against diverse risks. 2.4.1.3 Risk Management System This flexible system encompasses the combined structure of identification, evaluation and risk mitigation techniques. The Board must set up a strong risk culture and an effective governance structure where the risk management system aligns with the existing structure of the bank. Risk management procedures are possible when retaining higher level of capital to cushion the risks. Furthermore, the risk management functions comprises of: (1) Delegation of responsibilities to each banking segment (2) Auditing system to deal with the internal control processes and proper execution of risk controls (Nikolis, 2009). (3) Ongoing reviews, reporting, updating and the control of risk management system must be executed to ensure that they tailor with the banking aims (4) Training courses gaining know-how about the design of the risk management system and risk models must be offered to avert banking failures. (5) Establish rules and regulations and take necessary actions to those who contravene with them regarding risk management practices. (6) Participation of the banks, regulatory and supervisory bodies where information is disseminated externally and internally in the banks (Kroszner, 2007). 2.4.2 Asset and Liability Management Asset and Liability Management entails the design of organizational and governance models which define the risk approaches subject to the banking operations (ADB 2008, p.10). 2.4.2.1 ALM operations are as follows (ADB 2008, p.10-12): ALM ensures a risk and return management process where the combination of expertise and risk appetite is needed. ALM unit manages bank risks either through a passive or aggressive approach thus increasing its value. ALM unit investigates upon the static and dynamic mismatch; sensitivity of net interest income; and, market value under multiple scenarios -including under high stress. The net interest income evaluates the sophisticated banks operating results. It does not project the effects of risk compared to the economic value which can identify banking risks but is inaccessible to most banks. 5. Funds Transfer Pricing eradicates the interest rate risks by securing a spread in loan and deposits by allocating a transfer rate that mirror the repricing and cash flows of the balance sheet. Liquidity risks can be managed like diversification of financing sources, correlate the liquidity risks with other risks and use stress testing analysis. 2.4.3 Stress testing Practices Stress testing is another risk management strategy where Stress testing is a generic term used to describe various techniques and procedures employed by financial institutions to estimate their potential vulnerability to exceptional but plausible event (Kalfaoglou 2007, p.1). It uses statistical data analysis to risk management techniques, interpret and control the unfavorable outcomes. JP Morgan Chase has integrated stress testing equipment to manage and analyze the sources of possible banking risks, implement tests on the value of its portfolio, analyze its risk profile and contemplate the effects while applying diverse scenarios. An effective risk management scheme, stress testing project and bank staff expertise are requisite to tackle the statistical and economical fundamentals of stress testing with a data measurement tool. Board of directors should monitor the inputs of stress testing system (Seminar on Stress Testing Best Practices Risk Management Implications for Egyptian Banks 2007, p.2-3). Furthermore, the 2 types of stress testing strategies in banks like: (1) Simple Sensitivity Test deals with the rapid fluctuations of the portfolio value due to a risk factor on a short term basis. (2) Scenario analysis is used by large complex banks and is associated with a realistic and econometrics approach towards shifts in portfolio value due to changes in many risk factors. 2.4.4 Basel II Basel II published in June 2004, promotes banking supervision and emphasizes the specified capital requirements to cushion against potential losses. Basel II uses qualitative and quantitative requirements to monitor risk management strategies, to ensure compliance with regulations and reinforce corporate governance structure. The risk based supervision has enabled the supervisors to concentrate on the origins of banking risks. 2.4.4.1 Pillars of Basel II Pillar 1 entails capital needed for credit risk, market risk and operational risk. Moreover, banks under this regime must have a capital adequacy of 8 %. The methods for the computation of the capital charge to measure operational and credit risks (Ma, 2003)are: Basic Indicator Approach The size and capital requirements of the operational risk are estimated as a fixed proportion of the banks net interest income and non-interest income, measured as the average over the last three years. The Standardized Approach –The activities of the banks are allocated risk ratios weights related proportionally to the quantity distributed to every category. The aggregate capital requirements are the addition of all the requirements for the categories. Advanced Measurement Approach Computation of credit and market risks and the capital requirements are founded on the banks internal system for the measurement and management of operational risk for large banks An Internal Rating Based System The BIS stated that capital requirements must be founded on a qualitative and quantitative analysis of credit risk and must be used for diverse bank units. Founded IRB approach indicates that large banks should calculate probability default related to a borrowers grade to demonstrate the capital requirement level. However, under advanced IRB approach, these banks with an internal capital allocation can furnish the loss given default and exposure at defaults which are processed. Pillar 2 A supervisor must ensure that the bank has the adequate capital requirements to deal with risks. Banks estimate the internal capital adequacy by adopting quantitative and qualitative techniques. On-site investigation and ongoing reviews probe in capital adequacy. Pillar 3- Market discipline framework provides with detailed information about the banks risk profile to evaluate and report capital adequacy where risk exposures can be analyzed through quantitative and qualitative approach regularly. The risk based capital ratios and qualitative information about the internal procedures are needed for capital adequacy purposes. 2.4.5 Derivatives olatility of financial market, the liberalization and deregulation in the 1980s and 1970s has founded derivative markets (Hehn no date a, p.100). Derivatives are financial tools (like futures, commodities futures, options, swaps, forwards) whose returns, values and performance are derived from the returns, values and performance of the underlying assets. Hedging is covering against potential risk through an opposite position in the derivative markets. Bank International Settlements (2004 cited Bernadette A. Minton et al 2008, p.2) noticed that the quantity for derivatives has leveled from $698 billion in 2001 to $ 57,894 billion in 2007. Proper derivatives trading can insure against market risks and interest rate risks without retaining additional capital requirements in the balance sheet (Kaudman no date a, p.85). The determinants of derivatives use are banking size, balance sheet constituents, aggregate risk exposures, profitability, performance and risk taking incentives. Jason and Taylor (1994 cited in Hundman b, p.86) argued that speculation used with derivatives to make profitable returns can engenders more interest rate risks. Moreover, Tsetsekos and Varangis (1997 cited Roopnarine and Watson 2005a, p.9) argued that financial derivatives promote increase in resource allocation and increase the productivity of investments projects. Jorion (1995 cited Roopnarine and Watson 2005b, p.9) argued that in price discovery, market participants are offered information on balance prices that mirror the present demand on the supplies which enable effective decision making and reveal the position of the cash prices. Besides, liquid funds are increased and transaction costs are reduced and the futures market reflects the large transactions at prevailing prices (Roopnarine and Watson 2005c, p.10).   However, derivatives have generated enormous failures in Barings Collapse, Merill Lynch and Procter Gambler (Hehn b, p.101). Bank staff must be trained and educated about derivatives use. Derivatives trading can be constrained with the liquidity problems and legal uncertainties that emerged from the market price movement which is argued by Bhaumik (1998 cited Roopnarine and Watson 2005d, p.11). Pricing of assets becomes difficult if there is insufficient information about the derivatives use. Principal agent problem is aggravated (Roopnarine and Watson 2005e, p.12). The derivatives market must be regulated properly to avert fraudulent actions and insolvency. Partnoy and Skeel (2006 cited Minton et al. 2008a, p.2) claimed that derivatives intensify systemic risks as banks do not control the lending activities. Hunter and Marshall (1999 cited Roopnarine and Watson 2005f, p.28) argued that derivative markets attract investors whose private information are assimilated in the observable p rices and diminish the bid ask spread. The underlying cash prices reduce the transaction costs and the demand for money thereby affecting the operations of the monetary policy. Bedendo and Bruno (2009a, p.2-4) argued that credit transfer tools like securitization, credit derivatives and loan sales reduce regulatory capital requirements, motivate lending and enhance the banking liquidity positions. Moreover, they remedy the issues of information asymmetries as stated by Greenbaum and Thakor (1987 cited in Bedendo and Bruno 2009b, p.2). Duffee and Zhou (2001 cited Minton et al. 2008b, p.11) mentioned that credit derivatives are used if the loan sales or securitization techniques become expensive due to moral hazard problem and can shift default risk where information advantage is insignificant and retain some portion of risks where information advantage is huge. Banks use credit transfer tools as they have little access to inter-bank funding, huge funding expenses, low capital and want loan transfer (Bedendo and Bruno 2009c, p.8-9). CRT tools encourage banks to use originate-to-distribute models via aggressive lending occasions (Bedendo and Bruno 2009d, p.10) . Pricing of CRT tools is preferred by large banks having higher skills. Some loans sales have loan characteristics like small size, asymmetric issues and standardization convenient for securitization (Bedendo and Bruno 2009e, p.11). PART 2- EMPIRICAL REVIEW There is a growing literature that examines the relationship of banking risks with other many economic and financial variables. Moreover, this section describes the diversity of banking literature where different types of risk management strategies were tested and criticized. Even the links between different types of risks were experimented using banking information and models derived from other authors empirical work. Peek and Rosengren (1996) found that the large users of derivatives for speculation purposes are the troubled organizations using derivative information of 25 active banks in the United States from 1990 to 1994 in the US dummy regression model.   Banks are unable to track the risky aspects of these derivatives and guide their risk profile because of insufficient derivative information which could jeopardize the overall banking system. The onsite targeted examinations can enable banks to window dress their derivatives. Regulatory rules and formal transactions must be imposed on the banks taking unfavorable speculation and to constrain the moral hazard problem related to the derivative transactions. The use of speculative derivatives constitutes a stringent criminal penalty for breaching the established rules and regulations. Cebenoyan and Strahan (2001) used data of the sale and purchase of bank loans and those loans sold or purchased without recourse from all domestic commercial banks in the US from 1987 to 1993 in a regression model. They found that banks that engage in loan sales market to manage credit risks retained minimum level of capital which can be modified. Moreover, these banks retained more risky loans since they managed credit risks and were exposed to an unsafe position despite they endured lower level of risks compared to the other banks who manage risks without the loan sales market. Banks that employed the risk management techniques are more inclined to engage in risk taking activities. In fact, banks that manage credit risks lend to more risky loans depicting that complex risk management practices enhanced the bank credit position rather than minimizing the risks. Gatev et al (2006) investigated upon the presence of liquidity risk from both sides of bank balance sheets using some aspects of the Kashyap, Rajan and Stein (2002) model (that liquidity risks originating from the two fundamental businesses of banking promotes a diversification benefit) to analyze the link between deposit taking and commitment lending for large, publicly traded banks using regression analysis. Pooling deposits and commitment lending insure against banking liquidity risks and deposits activities insure against liquidity risk from idle loan activities. Bank stock-return volatility increases with idle loan transactions which is insignificant for banks with huge amount of depository dealings. The deposit-lending risk management becomes more reinforced when there is low level of liquidity and when troubled market participants deposit money in banks. Shao and Yeager (2007) used information of large publicly traded U.S BHCs from 1997 to 2005 using regression models to find the link between credit derivatives and their risk, return and lending issues. Banks buy credit derivatives to hedge against risks, to increase their equity and to compensate for the risky loan losses. However, they sell credit derivatives exposing themselves to risks to gain a premium charge. Moreover, the credit derivatives users enjoyed minimal returns and increase risks which are compensated. Their findings implied that on a general basis, the impact of credit derivatives on risk relies on the risk management strategies. Holod and Kitsul (2008) used panel data of stock returns from 53 U.S BHCs from 1986 to 2007. They found that after 1996, poor capitalized banks engaged in active trading transactions are more exposed to systemic risks compared to well capitalized banks. Banks cannot always have enough capital to cushion the market risks and must sell their illiquid assets or invest in the financial markets to compensate for the lack of capital to adhere to the market-based capital requirements. Capital requirements in Basel II do not help to reduce banking risks totally but contribute towards increasing systematic risks. Topi (2008) used a model of Allen and Gale (2004) where banks offer deposit contracts to ex ante identical, risk averse depositors who face heterogenous liquidity shocks for Bank of Finland which shows that the liquidity can impact on the banks motivations to minimize the default losses. The bank runs encourage the banks to avert the credit losses after the sub-prime mortgage crisis. However, the bank runs without a signal of the credit risks will reduce the banks willingness to curb the incidence of credit losses. The central bank can mitigate the propensity of liquidity stress for solvent banks rather than insolvent banks. In addition, this research provides an area for further research where the policy interventions and financial market innovations can be integrated in the model to identify the impact on banks motivations. Achou and Tenguh (2008) used regression model for Qatar Central Bank by executing a time-series analysis of financial data from 2001-2005 to examine the correlation between profitability and loan losses. They showed that effective credit risk management improves the financial result of the bank with the aim to secure the banking property and to work in the welfare of the market participants. Besides, their study revealed that credit risk management infrastructures are used to minimize the credit losses. Banks with efficient credit risk management system have insignificant loan default ratios, good revenues, minimal non-performing loans and are able to tackle credit losses. Minton et al. (2008) investigated the use of credit derivatives using U.S BHCs (assets overtakes $ 1 billion) and non-missing data on credit derivatives use from 1999 to 2005. Few companies use credit derivatives for dealer activities rather than for hedging against default losses. Credit derivatives use is constrained because the liquidity of credit derivatives market is favorable for investment grade companies since they can use derivatives to insure against the default losses. Therefore, the illiquidity of credit derivatives market affects the non-investment grade companies as they need confidential information for loans where higher cost of hedging will dissuade banks to hedge. Nevertheless, the bank borrowers get loans at a cheap price and banks are more on a competitive stance with the capital markets to provide loan facilities if the credit derivatives can help bank to retain capital. Credit derivatives can only promote the financial health of banks if they generate lesser ban king risks. The sub-prime crisis prior to 2007 has shown that the dealer activities via the credit derivatives contain many risks and in 2008 generated systemic risks. This study provides an avenue to assess the risks posed by credit derivatives when engaging in dealers transactions dealers. Bedendo and Bruno (2009) differentiated between the application of loan sales, securitization and credit derivatives for a sample of US large domestic commercial banks (total assets greater than one billion USD) for June 2002-2008   They found that the most CRT users employ conservative tools and large international banking corporations utilize credit derivatives. They detected that highly capitalized banks with less risky portfolios purchase credit derivative protection to hedge against capital inadequacy.   Moreover, banks with riskier loan portfoli Analysis of Risk Management in Banking Activity Analysis of Risk Management in Banking Activity The Case of Mauritian Banks Financial deregulation, globalization and liberalization have heightened considerable banking risks. Moreover, banks necessitate effective risk management strategies to promote banking welfare, protect outside agencies transacting with banks and to ensure stable banking operations. Risk managers need to focus on the diversity of risks and secure the interests of the overall banking sector. Risk Management is nowadays segregated where there is inconsistency in reporting, insufficient evaluation and low quality of management and becomes ineffective due to lack of pertinent information and improper analysis of the risk factors (Prabir Sen, 2009). Nonetheless, banks are unable to keep equilibrium in the situations of risks with huge losses and slight possibility of occurrence and risks of minimal losses with propensity of occurrence.   According to Talmimi and Hussein, Mazroezi and Mohammed (2007), risk management enables profits maximization and entails restrictions in risky activities. Risks can be averted by ordinary banking procedures, can be shifted to other institutions and can be managed actively in banks (Oldfield and Santemero, 1997). 1.1 Objectives of the Study The core objectives of the study are: To probe into the methodologies and aspects of the risk identification, assessment, monitoring, management and mitigation in Mauritian banks. To ascertain the effects of risk management on Mauritian banks. To determine to which extent risk management strategies like Basel II, derivatives, stress testing and Asset and Liability Management are applicable in Mauritian banks. To analyze the factors which improve Risk Management Practices in Mauritian banks and the perspectives about Banking Risk Management. To explore the reasons for managing risks in Mauritian banks. 1.2 Statement of the Problem There is an increasing awareness that the gradual intensification of banking risks impacts adversely on banking transactions which raises the concerns for risk management. The basis concern of this study is whether the Mauritian banks are using diverse risk management tactics and whether they are able to cope with the present and prospective challenges of risks and risk management requirements. 1.3 Significance and Contribution of the Study Bank managers can be conversant with divergent risk management techniques, their implications, effects and their relevance in banks through the practical aspects of risk management application. Bank managers can analyze the mechanisms resulting in the increasing level of risk exposures. Business administrators and management practitioners can use this study as guide to design efficient measures to mitigate risks in the process of developing marketing tactics. 1.4 Structure of the Project Chapter 2 elaborates on the literature review related to the risk management. Chapter 3 uncovers the general overview of Mauritian Banking Sector. Chapter 4 focuses on the detailed research methodology that has been used. Chapter 5 discusses the analysis and interpretation of the Mauritian banking risk management information. Chapter 6 probes on the recommendations to improve Risk Management practices in Mauritian banks. Chapter 7 concludes the whole findings of the project. PART 1- THEORETICAL ASPECTS 2.1 Introduction The advent of technology, globalization and the competition has encouraged banks in risk taking activities exposing banks to risks. Regulatory and supervisory institutions have emphasized the need for banks to enhance their risk management practices. Risks arise from the probabilities of the occurrence of losses and usually emerge from the internal and external banking transactions. 2.2 Banking Failures determinants The past decades have encountered numerous bank turbulences where high costs have been incurred on both local and overseas level (Gaytà ¡n and Johnson 2002, p.1), hindering the credit facilities, minimizing investment and consumption and generating bankruptcy cases (Demirguc-Kunt and Detragiache, 1998a, p.81). According to them, the expensive monetary policy was used to force the sound banks to sustain the failures of insolvent banks which dissuade risk management. Fluctuations in interest rates post abolition of Brettons Woods System, higher banking competition, the non existence of intermediation margins, unskillful lending and investment tactics (Hellwig 1995, p.724-726 ) , the diminishing role of the oligopoly rents as stated by Gehrig (1995 cited Hellwig 1995, p.726 ), the lower level of capital reserves in banks, companies high reliance on banks for external finance mentioned by Rajan and Zingales (1998 cited Randall S. Kroszner 2007),systemic shocks caused by credit risks, the inability to diversify loans, trade deterioration and decrease in asset prices caused bank failures argued by Gorton (1988 cited Demirguc-Kunt and Detragiache1998b, p.85). Moreover, regime changes like financial repression, liberalization and severe macroeconomic conditions encourage the entry of inexperienced players and preference for the acquisition of useless loans stated by Honohan (1997 cited Gaytan and Johnson 2002, p.4) have generated banking turbulences.   Non-performing loans increase where the asset returns are less than the returns to be paid on liabilities. Banks borrow in international currency and lend in local currency where the latter depreciates if the foreign exchange currency risk is shifted to local borrowers if they loaned in foreign currency. Banks buy insurance protection which encourages risk taking activities in the absence of prudential supervision and regulation. Bank managers engage in fraudulent actions by taking a portion of money for their personal use (Demirguc-Kunt and Detragiache 1998c, p.85-87). Diamond and Dybrig (1983 cited Demirguc and Detragiache 1988d, p.86) argued that banks portfolio assets can worsen and depositors believe that other depositors are removing their money. Obstfeld and Rogoff (1995 cited Demirguc and Detragiache 1988e, p.87) mentioned that an anticipated devaluation could occasion bank runs in local banks and these deposits are shifted overseas and render the domestic banks without l iquidity. 2.3 Banking risks alsamakis et al (1996 cited Young 2001, p.57) argued that risks can be classified as pure risks and speculative risks. Pure risks which embody market risks, credit risks, interest rate risks, liquidity risks, country risk and settlement risk are associated with the probability of occurrence of loss or no loss and can be curtailed by risk management strategies. However, speculative risks comprising of operational risks, technology risk, reputational risk, compliance risk, legal risk and insurance risks involve an opportunity for gain or loss which can be hedged. 2.3.1 Credit Risks These major risks occur in banks when the borrower defaults on his obligation to reimburse the principal amount and the interest charged of the loan. Credit risks consist of three types of risks like (Arunkumar and Kotreshwar 2005, p.9): Transaction risk emerges from the fluctuations in the credit type and capital depending on how the bank underwrites individual loan transactions. Intrinsic Risk is risk prevailing in some institutions and on granting credit to some firms. Concentration risk is the average of transaction and intrinsic risk within the portfolio and encourages granting of loans to one borrower or one firm. 2.3.2 Interest rate risks Koch (1995 cited Beets and Styger 2001, p.9) defined interest rate risk as the future changes in a banks net interest income and market value of equity due to changes in the market interest rates. Kropas (1998 cited Martirosianien) enumerated three types of interest rate risks like: Reappraisal risk stems from the diverse periods of assets and liabilities Profitableness curve risk entailselements affecting the reappraisal risk. Basic point risk concernsflawed association between the receivable and payable interest rate. Option risk is where the benefits of options can adversely affect the banks equity. 2.3.3 Liquidity risks Liquidity risks occur when the banks are unable to meet the demands of the depositors because of lack of funds and the illiquid assets resulting eventually in bank insolvency. Credit, strategic, interest rate and reputation risks build up liquidity risks (Gaulia and Maserinskieno 2006, p.49). 2 types of liquidity risks are (ADB Report 2008, p.9): Funding liquidity risk is the potentiality to obtain money via the sale of bank property and by borrowing. Trading Liquidity risk arises from making a constant entry in market activities and dealings. 2.3.4 Market risks These risks arise when the value of the financial products changes negatively and consist of currency risk, interest rate risk, equity or debt security price risk (Gaulia and Maserinskieno 2006, p.49). 2.3.5 Operational Risks Basel Committee (2004) which imposes a capital charge defined operational risks as the risk of direct or indirect losses resulting from inadequate or failed internal processes, people, and systems, or from external events. This definition includes legal risk, but excludes strategic and reputational risk. 2.3.6 Reputational Risks These risks emerge when the number of clients decreases as they hold negative perspectives about the quality of services offered by the banks. 2.3.7 Strategic risks Strategic risks arise when bad decisions and projects are undertaken to develop a special system in banks due to the lack of resources, technological tools and the expert staff. 2.3.8 Foreign Exchange Risks These risks come when the prices of the currency fluctuate when engaging in foreign activities. There are 3 types of foreign exchange currency risks. (Deloitte Treasury and Capital Markets 2006) Transaction risk entails the future of original cash flows like imports and exports. Translation risk is concerned with the disparities between foreign exchange encountered when again transforming a foreign exchange value into the functional currency of the company concerned. Translation risks are usually converted into transaction risks on a late basis as earnings are repatriated or assets and liabilities are realized. Economic risk arises when indirectly exposed to buying and selling of goods from someone who buys goods overseas. 2.3.9 Systemic risks The bank cannot collect money from an organization it is dealing owing to the political, economic and social conditions prevailing in the country where the organization is situated. Country risk includes political, economic risk and transfer risk (National Bank of Serbia). 2.3.10 Legal Risks Legal Risks are losses incurred when the bank is sanctioned by a court for the non-compliance with the lawful rules and regulations and on not fulfilling its obligations towards the other parties (National Bank of Serbia). 2.3.11 Financial Fraud There is mismanagement of money and fraudulent actions from the members of the banks who embezzle some deposited money and when there is lack of security controls. 2.4 Bank risk management methods Greenspan (2004 cited in Lam 2007, p.3) said that It would be a mistake to conclude..that the only way to succeed in banking is through ever-greater size and diversity. Indeed, better risk management may be the only truly necessary element of success in banking. 2.4.1 Risk Management in Banking Sector Flaker (2006, p.4-8) proposes three methods: 2.4.1.1 Risk Identification The board must set the risk profile of the bank and identify the risk-return tradeoff. The bank should understand and identify types of risks exposures, their sources and their effects on the overall banking stability. 2.4.1.2 Risk management and reduction Risk management and minimization embody the following: (1) Allow loans after considering their financial status of the borrowers. (2) Comparison of the expected risks with the actual ones to diminish the loan losses in a bigger portfolio. (3) Loan losses will decrease due to diverse borrowers in the lending transactions. (4) Actual risks can be compensated through the opposite movement of other risks in particular financial activities. (5) Insurance negotiations can be used to protect against diverse risks. 2.4.1.3 Risk Management System This flexible system encompasses the combined structure of identification, evaluation and risk mitigation techniques. The Board must set up a strong risk culture and an effective governance structure where the risk management system aligns with the existing structure of the bank. Risk management procedures are possible when retaining higher level of capital to cushion the risks. Furthermore, the risk management functions comprises of: (1) Delegation of responsibilities to each banking segment (2) Auditing system to deal with the internal control processes and proper execution of risk controls (Nikolis, 2009). (3) Ongoing reviews, reporting, updating and the control of risk management system must be executed to ensure that they tailor with the banking aims (4) Training courses gaining know-how about the design of the risk management system and risk models must be offered to avert banking failures. (5) Establish rules and regulations and take necessary actions to those who contravene with them regarding risk management practices. (6) Participation of the banks, regulatory and supervisory bodies where information is disseminated externally and internally in the banks (Kroszner, 2007). 2.4.2 Asset and Liability Management Asset and Liability Management entails the design of organizational and governance models which define the risk approaches subject to the banking operations (ADB 2008, p.10). 2.4.2.1 ALM operations are as follows (ADB 2008, p.10-12): ALM ensures a risk and return management process where the combination of expertise and risk appetite is needed. ALM unit manages bank risks either through a passive or aggressive approach thus increasing its value. ALM unit investigates upon the static and dynamic mismatch; sensitivity of net interest income; and, market value under multiple scenarios -including under high stress. The net interest income evaluates the sophisticated banks operating results. It does not project the effects of risk compared to the economic value which can identify banking risks but is inaccessible to most banks. 5. Funds Transfer Pricing eradicates the interest rate risks by securing a spread in loan and deposits by allocating a transfer rate that mirror the repricing and cash flows of the balance sheet. Liquidity risks can be managed like diversification of financing sources, correlate the liquidity risks with other risks and use stress testing analysis. 2.4.3 Stress testing Practices Stress testing is another risk management strategy where Stress testing is a generic term used to describe various techniques and procedures employed by financial institutions to estimate their potential vulnerability to exceptional but plausible event (Kalfaoglou 2007, p.1). It uses statistical data analysis to risk management techniques, interpret and control the unfavorable outcomes. JP Morgan Chase has integrated stress testing equipment to manage and analyze the sources of possible banking risks, implement tests on the value of its portfolio, analyze its risk profile and contemplate the effects while applying diverse scenarios. An effective risk management scheme, stress testing project and bank staff expertise are requisite to tackle the statistical and economical fundamentals of stress testing with a data measurement tool. Board of directors should monitor the inputs of stress testing system (Seminar on Stress Testing Best Practices Risk Management Implications for Egyptian Banks 2007, p.2-3). Furthermore, the 2 types of stress testing strategies in banks like: (1) Simple Sensitivity Test deals with the rapid fluctuations of the portfolio value due to a risk factor on a short term basis. (2) Scenario analysis is used by large complex banks and is associated with a realistic and econometrics approach towards shifts in portfolio value due to changes in many risk factors. 2.4.4 Basel II Basel II published in June 2004, promotes banking supervision and emphasizes the specified capital requirements to cushion against potential losses. Basel II uses qualitative and quantitative requirements to monitor risk management strategies, to ensure compliance with regulations and reinforce corporate governance structure. The risk based supervision has enabled the supervisors to concentrate on the origins of banking risks. 2.4.4.1 Pillars of Basel II Pillar 1 entails capital needed for credit risk, market risk and operational risk. Moreover, banks under this regime must have a capital adequacy of 8 %. The methods for the computation of the capital charge to measure operational and credit risks (Ma, 2003)are: Basic Indicator Approach The size and capital requirements of the operational risk are estimated as a fixed proportion of the banks net interest income and non-interest income, measured as the average over the last three years. The Standardized Approach –The activities of the banks are allocated risk ratios weights related proportionally to the quantity distributed to every category. The aggregate capital requirements are the addition of all the requirements for the categories. Advanced Measurement Approach Computation of credit and market risks and the capital requirements are founded on the banks internal system for the measurement and management of operational risk for large banks An Internal Rating Based System The BIS stated that capital requirements must be founded on a qualitative and quantitative analysis of credit risk and must be used for diverse bank units. Founded IRB approach indicates that large banks should calculate probability default related to a borrowers grade to demonstrate the capital requirement level. However, under advanced IRB approach, these banks with an internal capital allocation can furnish the loss given default and exposure at defaults which are processed. Pillar 2 A supervisor must ensure that the bank has the adequate capital requirements to deal with risks. Banks estimate the internal capital adequacy by adopting quantitative and qualitative techniques. On-site investigation and ongoing reviews probe in capital adequacy. Pillar 3- Market discipline framework provides with detailed information about the banks risk profile to evaluate and report capital adequacy where risk exposures can be analyzed through quantitative and qualitative approach regularly. The risk based capital ratios and qualitative information about the internal procedures are needed for capital adequacy purposes. 2.4.5 Derivatives olatility of financial market, the liberalization and deregulation in the 1980s and 1970s has founded derivative markets (Hehn no date a, p.100). Derivatives are financial tools (like futures, commodities futures, options, swaps, forwards) whose returns, values and performance are derived from the returns, values and performance of the underlying assets. Hedging is covering against potential risk through an opposite position in the derivative markets. Bank International Settlements (2004 cited Bernadette A. Minton et al 2008, p.2) noticed that the quantity for derivatives has leveled from $698 billion in 2001 to $ 57,894 billion in 2007. Proper derivatives trading can insure against market risks and interest rate risks without retaining additional capital requirements in the balance sheet (Kaudman no date a, p.85). The determinants of derivatives use are banking size, balance sheet constituents, aggregate risk exposures, profitability, performance and risk taking incentives. Jason and Taylor (1994 cited in Hundman b, p.86) argued that speculation used with derivatives to make profitable returns can engenders more interest rate risks. Moreover, Tsetsekos and Varangis (1997 cited Roopnarine and Watson 2005a, p.9) argued that financial derivatives promote increase in resource allocation and increase the productivity of investments projects. Jorion (1995 cited Roopnarine and Watson 2005b, p.9) argued that in price discovery, market participants are offered information on balance prices that mirror the present demand on the supplies which enable effective decision making and reveal the position of the cash prices. Besides, liquid funds are increased and transaction costs are reduced and the futures market reflects the large transactions at prevailing prices (Roopnarine and Watson 2005c, p.10).   However, derivatives have generated enormous failures in Barings Collapse, Merill Lynch and Procter Gambler (Hehn b, p.101). Bank staff must be trained and educated about derivatives use. Derivatives trading can be constrained with the liquidity problems and legal uncertainties that emerged from the market price movement which is argued by Bhaumik (1998 cited Roopnarine and Watson 2005d, p.11). Pricing of assets becomes difficult if there is insufficient information about the derivatives use. Principal agent problem is aggravated (Roopnarine and Watson 2005e, p.12). The derivatives market must be regulated properly to avert fraudulent actions and insolvency. Partnoy and Skeel (2006 cited Minton et al. 2008a, p.2) claimed that derivatives intensify systemic risks as banks do not control the lending activities. Hunter and Marshall (1999 cited Roopnarine and Watson 2005f, p.28) argued that derivative markets attract investors whose private information are assimilated in the observable p rices and diminish the bid ask spread. The underlying cash prices reduce the transaction costs and the demand for money thereby affecting the operations of the monetary policy. Bedendo and Bruno (2009a, p.2-4) argued that credit transfer tools like securitization, credit derivatives and loan sales reduce regulatory capital requirements, motivate lending and enhance the banking liquidity positions. Moreover, they remedy the issues of information asymmetries as stated by Greenbaum and Thakor (1987 cited in Bedendo and Bruno 2009b, p.2). Duffee and Zhou (2001 cited Minton et al. 2008b, p.11) mentioned that credit derivatives are used if the loan sales or securitization techniques become expensive due to moral hazard problem and can shift default risk where information advantage is insignificant and retain some portion of risks where information advantage is huge. Banks use credit transfer tools as they have little access to inter-bank funding, huge funding expenses, low capital and want loan transfer (Bedendo and Bruno 2009c, p.8-9). CRT tools encourage banks to use originate-to-distribute models via aggressive lending occasions (Bedendo and Bruno 2009d, p.10) . Pricing of CRT tools is preferred by large banks having higher skills. Some loans sales have loan characteristics like small size, asymmetric issues and standardization convenient for securitization (Bedendo and Bruno 2009e, p.11). PART 2- EMPIRICAL REVIEW There is a growing literature that examines the relationship of banking risks with other many economic and financial variables. Moreover, this section describes the diversity of banking literature where different types of risk management strategies were tested and criticized. Even the links between different types of risks were experimented using banking information and models derived from other authors empirical work. Peek and Rosengren (1996) found that the large users of derivatives for speculation purposes are the troubled organizations using derivative information of 25 active banks in the United States from 1990 to 1994 in the US dummy regression model.   Banks are unable to track the risky aspects of these derivatives and guide their risk profile because of insufficient derivative information which could jeopardize the overall banking system. The onsite targeted examinations can enable banks to window dress their derivatives. Regulatory rules and formal transactions must be imposed on the banks taking unfavorable speculation and to constrain the moral hazard problem related to the derivative transactions. The use of speculative derivatives constitutes a stringent criminal penalty for breaching the established rules and regulations. Cebenoyan and Strahan (2001) used data of the sale and purchase of bank loans and those loans sold or purchased without recourse from all domestic commercial banks in the US from 1987 to 1993 in a regression model. They found that banks that engage in loan sales market to manage credit risks retained minimum level of capital which can be modified. Moreover, these banks retained more risky loans since they managed credit risks and were exposed to an unsafe position despite they endured lower level of risks compared to the other banks who manage risks without the loan sales market. Banks that employed the risk management techniques are more inclined to engage in risk taking activities. In fact, banks that manage credit risks lend to more risky loans depicting that complex risk management practices enhanced the bank credit position rather than minimizing the risks. Gatev et al (2006) investigated upon the presence of liquidity risk from both sides of bank balance sheets using some aspects of the Kashyap, Rajan and Stein (2002) model (that liquidity risks originating from the two fundamental businesses of banking promotes a diversification benefit) to analyze the link between deposit taking and commitment lending for large, publicly traded banks using regression analysis. Pooling deposits and commitment lending insure against banking liquidity risks and deposits activities insure against liquidity risk from idle loan activities. Bank stock-return volatility increases with idle loan transactions which is insignificant for banks with huge amount of depository dealings. The deposit-lending risk management becomes more reinforced when there is low level of liquidity and when troubled market participants deposit money in banks. Shao and Yeager (2007) used information of large publicly traded U.S BHCs from 1997 to 2005 using regression models to find the link between credit derivatives and their risk, return and lending issues. Banks buy credit derivatives to hedge against risks, to increase their equity and to compensate for the risky loan losses. However, they sell credit derivatives exposing themselves to risks to gain a premium charge. Moreover, the credit derivatives users enjoyed minimal returns and increase risks which are compensated. Their findings implied that on a general basis, the impact of credit derivatives on risk relies on the risk management strategies. Holod and Kitsul (2008) used panel data of stock returns from 53 U.S BHCs from 1986 to 2007. They found that after 1996, poor capitalized banks engaged in active trading transactions are more exposed to systemic risks compared to well capitalized banks. Banks cannot always have enough capital to cushion the market risks and must sell their illiquid assets or invest in the financial markets to compensate for the lack of capital to adhere to the market-based capital requirements. Capital requirements in Basel II do not help to reduce banking risks totally but contribute towards increasing systematic risks. Topi (2008) used a model of Allen and Gale (2004) where banks offer deposit contracts to ex ante identical, risk averse depositors who face heterogenous liquidity shocks for Bank of Finland which shows that the liquidity can impact on the banks motivations to minimize the default losses. The bank runs encourage the banks to avert the credit losses after the sub-prime mortgage crisis. However, the bank runs without a signal of the credit risks will reduce the banks willingness to curb the incidence of credit losses. The central bank can mitigate the propensity of liquidity stress for solvent banks rather than insolvent banks. In addition, this research provides an area for further research where the policy interventions and financial market innovations can be integrated in the model to identify the impact on banks motivations. Achou and Tenguh (2008) used regression model for Qatar Central Bank by executing a time-series analysis of financial data from 2001-2005 to examine the correlation between profitability and loan losses. They showed that effective credit risk management improves the financial result of the bank with the aim to secure the banking property and to work in the welfare of the market participants. Besides, their study revealed that credit risk management infrastructures are used to minimize the credit losses. Banks with efficient credit risk management system have insignificant loan default ratios, good revenues, minimal non-performing loans and are able to tackle credit losses. Minton et al. (2008) investigated the use of credit derivatives using U.S BHCs (assets overtakes $ 1 billion) and non-missing data on credit derivatives use from 1999 to 2005. Few companies use credit derivatives for dealer activities rather than for hedging against default losses. Credit derivatives use is constrained because the liquidity of credit derivatives market is favorable for investment grade companies since they can use derivatives to insure against the default losses. Therefore, the illiquidity of credit derivatives market affects the non-investment grade companies as they need confidential information for loans where higher cost of hedging will dissuade banks to hedge. Nevertheless, the bank borrowers get loans at a cheap price and banks are more on a competitive stance with the capital markets to provide loan facilities if the credit derivatives can help bank to retain capital. Credit derivatives can only promote the financial health of banks if they generate lesser ban king risks. The sub-prime crisis prior to 2007 has shown that the dealer activities via the credit derivatives contain many risks and in 2008 generated systemic risks. This study provides an avenue to assess the risks posed by credit derivatives when engaging in dealers transactions dealers. Bedendo and Bruno (2009) differentiated between the application of loan sales, securitization and credit derivatives for a sample of US large domestic commercial banks (total assets greater than one billion USD) for June 2002-2008   They found that the most CRT users employ conservative tools and large international banking corporations utilize credit derivatives. They detected that highly capitalized banks with less risky portfolios purchase credit derivative protection to hedge against capital inadequacy.   Moreover, banks with riskier loan portfoli