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ECONOMIC CONCEPT:THE TIME VALUE OF MONEY – IS WAITING WORTH IT?
by 趙永祥 2015-04-04 06:52:27, 回應(0), 人氣(1567)



ECONOMIC CONCEPT: 


THE TIME VALUE OF MONEY – IS WAITING WORTH IT?


02 APR 2015 /
 
BY MATT SHAFER

time value of money

We have all heard the phrase “Time is Money.”  Intuitively, we all know that our time has value.   If we spend our time working, we know we get paid a certain amount per hour of work, sales or production of units, etc.   Exchanging our time for income is a familiar concept.  However, time itself has a value, which can be measured (expressed as a price) through competition in a free market. 

One thing we can assume is that a good or service (or money received from selling a good or service) is more valuable to us (and has more utility) today, rather than some later time.  In other words, present value is greater than future value for the same quantity of a good, service or money.  The idea, “a bird in the hand is worth two in the bush,” is not just about the relative certainty of the having the one bird versus the other two; it’s also about the time it would take to get the two birds after the one in hand is let go.

Remember, Economics is the study of the production, distribution and consumption of scarce resources (scarcity: a condition of limited resources and unlimited wants).  In light of scarcity, we are forced to decide what we want most, given the resources we do have, and make choices.  We must determine our unique preferences, make trade-offs and sacrifice one thing for another.  In other words, scarcity requires us to economize.

If we economize effectively, we maximize our satisfaction, given our limited resources.  We have discussed how the forces of supply and demand (as expressed through prices when there is competition) allocates scarce resources to their most valuable uses at any point in time.  However, producers and consumers of goods and services can also choose to enter into an economicbuying-a-carexchange now, or wait until a later time.  A producer could receive payment today in exchange for delivering the good or service later on.  Likewise, the good or service could be delivered today and the price paid later on (credit).  This is why you will typically pay a lower total price for a good or service when you pay in full, rather than make payments over time.  The Time Value of Money explains how individuals place a price on time, in such a way that scare resources are allocated efficiently over time.

So why are goods, services and money more valuable to us today than the same amount would be in the future? Because they can be used today to start benefiting the consumers and producers that receive them now.  But how much is this worth per unit of time?

First, let’s remember that all goods and service have a market value (as expressed in prices determined by supply and demand under competition).   Since the market value (the price) is expressed in terms of money, the value of goods and services can be quantified and expressed also in terms of money.  The difference in value of that money across time, measures the time value of money (and the value of the goods and services, and resources it represents).

MEASURING THE VALUE OF MONEY

If you have $1000 today, you could spend that money on a good or service, or you could save it for future purchases.   The value of that unspent money in the future, is the $1000 plus the interest you expect to earn from today until then.   If the market interest rate were 6%, you would expect your $1000 today to grow to $1060 in one year.  In this case, $1060 in one year is worth $1000 today.  At 6%, a year from now, $1000 is only worth $940 today. In other words, the same way you would grow money by earning interest, one can learn what the value of money was in the past, based on removing the same amount of interest.

value-of-$1000

The supply and demand for goods and services compete in terms of time, as well as quantity.  If my marginal utility of having new shoes today is high (higher than what I would receive later by saving the money), I may choose to spend my money (or even borrow some on credit), rather than save.   Someone else whose marginal utility for the same pair of shoes is lower (than the money they would have if saved until a later date), will wait to buy those shoes (and perhaps loan me money to buy mine on credit).  This supply and demand between having goods, services and money now versus later, determines the market interest rate (which is a good proxy for the time value [price] of money).

WAGES

The concept of time value can affect wages as well.   Workers that receive wages immediately as effort is performed, are paid less than workers who put in effort for some time before they are ever paid.   Take the case of doctors and their staff.  Doctors actually lose money for many years (by paying for education and then working in their practice until they build a clientele of patients).   In return, they expect to receive more money in wages later on, to compensate for the time value of money they have lost.   Aside from other reasons of relative supply and demand for a doctor’s labor, doctors would always be paid more than their assistant and staff, who have been paid wages all along.  If this were not the case, people would not want to become doctors, because the costs would not be worth the benefits (over time). This would lead to a shortage of doctors.  Likewise, if staff in a doctor’s office were paid the same as the doctor, there would be an excess supply of staff competing for those positions.  Remember, this excludes differences in skills, education and supply/demand for these roles.  Just based on the time value of money itself, doctors would be paid more than their staff.

value of an educationPut simply, doctors invested their money and time early, to acquire the skills that allows them to provide the service people need, tomorrow. Therefore, the time value of money says that those skills are worth far more over time; hence a patient or insurance company pays more for them tomorrow. While the staff, who did not invest the time and money to acquire those skills, but chose instead to learn along the way and be paid today, would not enjoy the same value tomorrow. Makes sense?

Just as individuals have difference preferences about which goods and services they consume, they also have preferences about when they consume them (and when they part with their money).  Producers make similar choices about what to produce, when to produce it, when to borrow money to produce it The Future of Your Wealthand when to sell it.

Time is indeed money!  Understanding this is important to The Future of Your Wealth.

附件:
1. ECONOMIC CONCEPT-THE TIME VALUE OF MONEY.pdf
有捨必有得，有得必有失
by 趙永祥 2015-04-04 06:44:13, 回應(0), 人氣(2044)


捨得是一種哲學，捨得是一種智慧，捨得是一種胸懷，捨得是一種境界。


捨得，有捨必有得，有得必有失。

小舍小得，大

舍大得，有捨有得，不捨不得。


懂得經營幸福的人，必有一顆肯捨得的心。

「捨得是一種哲學，捨得是一種智慧，捨得是一種胸懷，捨得是一種境界。捨得，有捨必有得，有得必有失。小舍小得，有捨有得，不捨不得。懂得經營幸福的人，必有一顆肯捨得的心。 [☀.¸¸. •歡迎轉貼、分享... 廣結善緣•.¸¸.☀.] 」
What's "strategic risks" and how to effectively manage?(2-April-2015)
by 趙永祥 2015-04-03 19:07:27, 回應(0), 人氣(1664)


Edward Chao

What's "strategic risks" and how to effectively manage?

Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.Top Contributor

What's strategy risks and how to effectively manage?

This session is intended to discuss about another risk which called "Strategic risks".

I. The definition and specific characteristics of "Strategic risks"

Strategic risks can be defined as the uncertainties and untapped opportunities embedded in your strategic intent and how well they are executed. As such, they are key matters for the board and impinge on the whole business, rather than just an isolated unit. A company voluntarily accepts some risk in order to generate superior returns from its strategy. A bank assumes credit risk, for example, when it lends money, many companies take on risks through their research and development activities.

Strategic risk management is your organisation’s response to these uncertainties and opportunities. It involves a clear understanding of corporate strategy, the risks in adopting it and the risks in executing it. These risks may be triggered from inside or outside your organisation. Once they are understood, you can develop effective, integrated, strategic risk mitigation.


II. Strategic risk managements: How to manage strategic risks effectively?

In fact, strategic risks cannot be managed through a rules-based control model. Instead, you need a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur. Such a system would not stop companies from undertaking risky ventures; to the contrary, it would enable companies to take on higher-risk, higher-reward ventures than could competitors with less effective risk management. 

Take for example, one of the large companies, BP accepted the high risks of drilling several miles below the surface of the Gulf of Mexico because of the high value of the oil and gas it hoped to extract. Strategic risks are quite different from preventable risks because they are not inherently undesirable. A strategy with high expected returns generally requires the company to take on significant risks, and managing those risks is a key driver in capturing the potential gains. 

Far from holding back the business, strategic risk management is about augmenting strategic management and getting the full value from your strategy. In a typical instance, a conventional approach to setting and executing strategy might look at sales growth and service delivery. Rarely does it monitor the risks of a shortfall in demand.

Effective strategic risk management can be built around a clear understanding of how much risk your business is prepared to take to deliver its objectives, and a timely and reliable evaluation of how much risk it is actually taking.

Dr. Chao 
12-February-2015

Comments

  • Ken Hackshaw

    Ken

    Ken Hackshaw

    Director/Lead Consultant KHBC Limited- Managing Director Trinidad and Tobago Risk Management Institute (TTRMI)

    very interesting piece. Thanks for sharing

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Ken Hackshaw, 
    Welcome to join discussion.

    Kind regards.

    edward

  • Mohammed .

    Mohammed

    Mohammed .

    Director - Enterprise Risk Management

    Top Contributor

    Nice thoughts; Thanks Dr. Chao

     Edward Chao, Trevor L. like this
  • Trevor Lilley

    Trevor

    Trevor Lilley

    Operational Risk Manager available for contract or permanent opportunities in Operational Risk, SOX, and Audit/mgt

    I think you need to take this further in that strategic risks may also need to be considered against the cumulative impact of a detrimental event occurring. For example black swan type effect as the impact must be considered against the widest impact and subsequent contagion activity.

     Edward Chao likes this
  • Steven Kalavity

    Steven

    Steven Kalavity

    Geophysicist - Acquisition & Data Processing, ISO QMS

    Strategic risk management of complex enterprises requires timely and high fidelity data and knowledge sharing to allow rapid fact-based decision making. For example, the uncooperative and poor communication culture(s) at Macando hindered critical information from being shared so that the right/best decisions could be made. The technology and control processes had been developed to prevent catastrophe. It was not a technology issue, but a communication and management issue. System and process management presents the greatest risk and needs to be strategically considered.

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Steven Kalavity, 
    I agree with your comments 'Strategic risk management of complex enterprises requires timely and high fidelity data and knowledge sharing to allow rapid fact-based decision making.'

    I'm very appreciated that you join discussion.

    Kind regards.

    Edward

  • Steven Kalavity

    Steven

    Steven Kalavity

    Geophysicist - Acquisition & Data Processing, ISO QMS

    Thank you Edward. I appreciate your post.

     Edward Chao likes this
  • Dominic Pelletier,PMP, MBA

    Dominic

    Dominic Pelletier,PMP, MBA

    Project Manager at SaskPower

    Mr Chao

    I really like your post! There is lots to gain from risk management at all level within the organization. Risk will help you understand if gain will happen in pursuing a business model for example, acquiring a new business or as you mentioned in BP case, drilling scenario. But risk management is as always, subjective to the organization risk tolerance and doing risk management at higher level of the business, as @Steven mentioned, takes time and experience, which in most organization, one or both is missing.

    We do enterprise risk management but this is not nearly where it should be. But that is a starting point and hope we keep doing better in our organization

    Thanks for your post

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Dominic Pelletier, 
    According to my experiences, strategic risk management is your organisation’s response to these uncertainties and opportunities. It involves a clear understanding of corporate strategy, the risks in adopting it and the risks in executing it. These risks may be triggered from inside or outside your organisation.

    As you have mentioned in your comments which said 'management is as always, subjective to the organization risk tolerance and doing risk management at higher level of the business. We do enterprise risk management but this is not nearly where it should be.'

    Thanks for your comments and sharing in this discussion.

    Kind regards.

    Edward

     Steven K. likes this
  • Cliona O'Hanrahan

    Cliona

    Cliona O'Hanrahan

    Senior Project Manager specialising in Digital; Financial and Telecom Projects; Project Management SME across all areas

    Dear Dr Chao 
    First off thanks so much for the posting and great to read your thoughts of risk at this level. 
    All the best

     Edward Chao likes this
  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Strategic risk is 1/10th desire, and 9/10th implementation. Sometimes, a mediocre strategy well-executed may yield a far better result than a perfect one poorly done!

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Cliona O'Hanrahan, 
    It's my pleasure to provide practical and risk-related issues in Risk Management Online, LinkedIn. 
    Hoping we can share the experiences and viewpoints with each other. 
    Nice to meet you in Risk Management Online

    Kind regards.

    Edward.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Further Discussion on the issue 'What's "strategic risks" and how to effectively manage?'

    Strategic risks can be defined as the uncertainties and untapped opportunities embedded in your strategic intent and how well they are executed.

    In fact, different types of strategic risks in business may involve upstart competitors, new product failures, or new technology suddenly replacing existing technology in a marketplace. At various times, a sudden shift in consumer buying behavior may pose a serious strategic risk to manufacturers and retailers. Growth of a company’s sales base may also stagnate for a variety of reasons, and this might pose a challenge to a company’s continued profitability. As we know, one of the more common scenarios that can expose a company to strategic risks is the upstart competitor that experiences a mercurial rise in sales.

    Taking for some examples as follows. A company may have experienced decades-long market dominance in selling a type of software. A competitor then comes along with an innovative software product that consumers prefer over the first company's product. The resulting market erosion experienced by the first company may force that firm to invest heavily in innovation, in an effort to stay competitive with the newer firm.In a typical instance, a conventional approach to setting and executing strategy might look at sales growth and service delivery. Rarely does it monitor the risks of a shortfall in demand.

    'Strength of brand' may be a factor in how a company manages strategic risks. A company that has a strong brand among consumers is often better positioned to withstand intrusion from competition because it can continue to bring new products to the market that strategically make use of the brand’s reputation. If a company experiences a scandalous failure in a product launch that damages the brand’s reputation, for example, that type of strategic risk can affect its reputation for years.


    Kind regrds.

    Edward 
    26-March-2015

     Steven K. likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Further Discussion on the issue 'What's "strategic risks" and how to effectively manage?'

    Up to now, strategic risk has become a major focus in risk-control managements, about 81% of surveyed companies now explicitly managing strategic risk – rather than limiting their focus to traditional risk areas such as operational, financial and compliance risk. Also, many companies are taking a broad view of strategic risk that doesn’t just focus on challenges that might cause a particular strategy to fail, but on any major risks that could affect a company’s long-term positioning and performance.


    Kind regards.

    Edward 
    26-March-2015

     Trevor L., Steven K. like this
  • Mokoena Portia

    Mokoena

    Mokoena Portia

    Risk Specialist at UNISA

    A very informative read Edward. I like your topic. Organisations normally have strategic objectives but one wonders sometimes if these were set with risk management in mind. It becomes a challenge when risk management comes as an after thaught.

     Steven K., Edward Chao like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    'How to manage strategic risks effectively' has been popularly discussed in finan-related industry for many years.

    Under risk managements' researchers or institutions, strategic risks cannot be managed through a rules-based control model. Instead, you need a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur. Such a system would not stop companies from undertaking risky ventures; to the contrary, it would enable companies to take on higher-risk, higher-reward ventures than could competitors with less effective risk management.

    In addition, 'strength of brand' may be a factor in how a company manages strategic risks. A company that has a strong brand among consumers is often better positioned to withstand intrusion from competition because it can continue to bring new products to the market that strategically make use of the brand’s reputation.

    Edward

    29-March-2015

  • Cliona O'Hanrahan

    Cliona

    Cliona O'Hanrahan

    Senior Project Manager specialising in Digital; Financial and Telecom Projects; Project Management SME across all areas

    Hi Edward mostly I would agree with your comments but we are facing a very fast based competitive environment where a lot of companies are not really assessing their risk in getting their products out. Actually I think and especially with digital projects where and if the business case is carefully outlined this does minimise risk in this area. Another really cool way of assessing risk at some level is through web analytics which can show what to be avoided going forward. I believe that yes in the very big and expensive infrastructure or legacy project risks must be assessed properly however in the small digital faced projects it really requires you as a project manager to run with the pack and get that product out the door. Where I do look at risk is during the UX process and I believe that this is a great way to position this exercise

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Hi, Cliona, thanks for your reply. I agree with your viewpoints concerning about assessing risks methods 'Another really cool way of assessing risk at some level is through web analytics which can show what to be avoided going forward and where you do look at risk is during the UX process'.

    Strategic risk management of complex enterprises requires timely and high fidelity data and knowledge sharing to allow rapid fact-based decision making. In addition, strategic risks cannot be managed through a rules-based control model. Instead, you need a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur.

    Thanks for your joining this issue's discussion.

    Edward.

     Steven K. likes this
  • Didier Verstichel

    Didier

    Didier Verstichel

    Senior Executive ICT, available for a new challenge

    One needs to be careful with the use and abuse of the words « Strategy / Strategic ». With a stretch of the mind, it is feasible to find a (minute) link between risk of whatever nature and the Strategy. It is a matter of risk taxonomy for which there is no standard. The BP case is a good example. As per their website “Operational risk is the potential for financial loss because of human, process or technology error.” Is a strategic risk a risk arising from the strategy execution or a risk affecting the strategy? In my use of the semantic, it is the latter, not the former. BP was hit by an operational risk. Take for instance an organisation which strategy is to expand its operations in the BRICA countries. Are those strategic risks or geo-political risks?

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Didier Verstichel, 
    Very thankful for your comments.

    You have mentioned 'that The BP case is a good example. As per their website “Operational risk is the potential for financial loss because of human, process or technology error.” Is a strategic risk a risk arising from the strategy execution or a risk affecting the strategy?'

    In fact, risk management is as always, subjective to the organization risk tolerance and doing risk management at higher level of the business. Furthermore, strategic risk management is your organisation’s response to these uncertainties and opportunities. It involves a clear understanding of corporate strategy, the risks in adopting it and the risks in executing it. These risks may be triggered from inside or outside your organisation.

    I'm very appreciated with your comments. 
    Thanks for joining this issue discussion.

    Kind regards.

    Edward

    • Delete 5 
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2015 Modern Talking Best Mix
by 趙永祥 2015-03-29 13:13:43, 回應(0), 人氣(1392)




2015 Modern Talking Best Mix 

https://www.youtube.com/watch?v=TZlxr8t95IU



What's preventable risks and how to effectively manage? (26-March-2015)
by 趙永祥 2015-03-28 07:15:06, 回應(0), 人氣(1999)


Edward Chao

What's preventable risks and how to effectively manage?

Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.Top Contributor

What's preventable risks and how to effectively manage?

According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Our field research shows that risks fall into one of three categories. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Type I: Preventable risks.

These are what I call "internal risks" which is arising from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. 

To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. But in general, companies should seek to eliminate these risks since they get no strategic benefits from taking them on. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.
This risk type is best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. Since considerable literature already exists on the rules-based compliance approach, we refer interested readers to the sidebar “Identifying and Managing Preventable Risks” had been popular discussed and apparently best practiced in most industry.


Dr. Chao
5-Feb.-2015

Comments

  • John

    John Grubbs

    Student at Bowling Green State University

    It's interesting to think that there is this "preventable risk". In my experience, I've found risk to be only manageable as there is risk in everything we do, especially when it come to human nature

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John Grubbs, 
    This risk type is what I call "internal risks" which is arising from within the organization, that are controllable and ought to be eliminated or avoided. In addition, best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. 

    Thanks for your comments. 

    Dr. Chao

     John G. likes this
  • Mark Powell

    Mark

    Mark Powell

    Consultant - Rescuer of Doomed Projects; Solver of Impossible Problems; Inspired by Sharing How to Do It All

    Edward, 

    I think the terminology you have chosen for native English speakers is a bit unfortunate. 

    I understand what you are saying, but the term "preventable" does not connote to native English speakers the definition you have assigned to it. 

    Mark Powell

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Mark Powell, 
    Thanks for your response. 
    This terminology perhaps not suitable to native English speakers, it's another definition concerning about the "internal risks" which is arised from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. 
    Perhaps, you can give me better suggestions concerning about this terminology. 

    Best regards. 

    Dr. Chao

  • Mark Powell

    Mark

    Mark Powell

    Consultant - Rescuer of Doomed Projects; Solver of Impossible Problems; Inspired by Sharing How to Do It All

    Edward, 

    To me, your term "internal risks" seems to capture what you have described so far quite well. 

    All of your examples are what I would naturally think of as a company's internal risks. 

    Mark Powell

     Edward Chao likes this
  • Sherif Dawood , MBCI, MBA, ITILv3, M.Sc.

    Sherif Dawood

    Sherif Dawood , MBCI, MBA, ITILv3, M.Sc.

    Manager - Enterprise Risk Management, Strategy Management and Planning Department, VIVA Bahrain, STC Group

    Second Mark's opinion 
    We can have preventive controls as part of the control structure for managing certain risk, but we can never guarantee the prevention of the risk. If there is a risk, there will be always a residual risk till the risk becomes irrelevant

     Edward Chao likes this
  • William Thorlay

    William

    William Thorlay

    Senior Consultant for Engineering and Reliability

    Dr. Chao, 
    I think your definition on "internal risks" is well understood. On the other hand, I have to agree with Mr. Grubbs when he says that risk is something inherent to everything we do. As far as human behaviour is concern, human reliability is becoming more and more applied within the organizations worldwide.

     Edward Chao likes this
  • Tracy Dcruz

    Tracy

    Tracy Dcruz

    Business Executive at VS PAY

    We could provide payment gateway for many high risk industries like Gaming, Casino, Forex Pharmacy, Nutra, Binary, Replica, Pet shops, Tour and travel operators, Gaming, Gambling, Lotto and lottery, Headshops, Medical marijuana and many more. 
    We hope to be able to get you an account, with surety and this will be much more reliable which will have you being paid within shorter period for your transactions on credit card. 
    Tracy Dcruz Skype id: connect2vspay email id: sales@vspayglobal.com

     Edward Chao likes this
  • Stephen McManus

    Stephen

    Stephen McManus

    Owner, i Lead Projects, L.L.C.

    When discussing risks, whether internal or external, the use of "preventable" would equate to avoid the risk....this means the risk probability and/or the impact must go to zero. 

    In practice, it is often almost impossible to prevent risks from occurring or having an impact if they do occur without having a significant trade-off on one of the other constraints or objectives a project is trying to meet. So in practice there should be two questions regarding a significant risk and the desire to "prevent" the risk. 

    1st - Is it more important to do the project or not experience the risk? 
    2nd -If a prevent or avoid response is put in place, is the cost or benefit worth the trade-off of project objectives not being fully met. 

    Finally, in practice we most often have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk....what is the risk appetite of the key stakeholders.

     David D., Edward Chao like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Stephen McManus, 

    What you have indicated that "in practice we most often have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk", I agree with your viewpoints. 
    The decision-makers has the responsibility to analyze the keypoints whether the cost or benefit is worth the trade-off of project objectives not being fully met. 

    According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. 

    Finally, you have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk. 

    Thanks for your comments. 

    Dr. Chao 
    10-Feb.-2015

     David D. likes this
  • Michael Allocco, PE, CSP

    Michael

    Michael Allocco, PE, CSP

    System Safety SME

    MOST RISKS ARE PREVENTABLE GIVEN…. 
    The understanding of a (system) accident life cycle: 
    • Implement safety axioms to assure that risks are identified, eliminated or controlled to acceptable levels; 
    • Apply proactive, predictive, and reactive methods to understand hazards and associated risks; 
    • Consider how an adverse propagation can start? A poor decision associated with the system (integrated human, machine and environment); 
    • The decision results in a latent, dormant, hidden (hazards) situation; 
    • The hidden situation is triggered by a condition or situation (other hazards); 
    • Adverse sequences can be complex to simple; 
    • The elements of the system support the adverse progression(s): conditions and/or actions; 
    • The adverse process may progress unless detected, or progression continues and harm may result; 
    • If causality or contingency action is unsuccessful additional harm can result; 
    • Eventually the system needs to be brought back to a stable state.

     Edward Chao, David D. like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Michael Allocco, 
    The statements you have pointed out makes sense, and thanks for your reply with sincerity. 

    Dr. Chao

  • Pierre Lommerse

    Pierre

    Pierre Lommerse

    High-level business analytics professional with a focus on risk management, compliance and governance

    Dear Edward, 

    I tend to say risk is the only certainty in your life the difference is how you cope with it, other thought is doing business is consciously taking risk. 
    When we discuss the risk factor we have to keep in mind it is not risk management but overall management, think of the loop identify, assess, accept/not accept, control. So when we discuss the “internal risks” we have to be aware of them. My experience is that one of the biggest risks is, motivation, being proud to be part of the organization etc.

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  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Pierre Lommerse, 
    I'm very appreciated with your reply. According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. Thanks for your comments again. 

    Dr. Chao

  • John Mallino

    John

    John Mallino

    Sr. System Safety Engineer at BAE Systems

    Preventable risks are risks that can be engineered out of the design. With that said, if asked which specific risks are preventable. I would say OSHA top ten most cited violations. No excuse for these risks to be active at your job site. 
    http://www.safetyandhealthmagazine.com/articles/11136-osha-announces-top-10-most-cited-violations-for-2014

     Edward Chao likes this
  • David Brady

    David

    David Brady

    President, DBrady Risk Associates

    John M got it right. The only way to make a risk preventable is to eliminate it altogether, either removing it by re-engineering or or changing the process if possible, e.g. if the risk is flying then drive or take the train. Although remember that eliminating a risk may introduce a secondary risk.

     Edward Chao likes this

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Edward, 
    Glad to see your comments have brought up numerous valid replies. In my experience these 'internal risks', while being largely preventable or able to be mitigated (or at least should be so) can also be very insidious because many of them can arise from the company 'culture'. But when a company's 'culture' is flawed identifying and mitigating those risks can be a daunting task because people may not even realise the risk exists, let alone where it stems from - 'it's how we do business'. In these companies (read 'large organisations') those people in positions of authority have generally reached those positions because they understand how to 'work the system' and that knowledge and understanding becomes their power base. When you start to identify and address those internal risks be prepared for some potentially serious pushbacks because someone's power base is suddenly being threatened. 
    Interested to see if anyone else shares these views. 
    John

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  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John O'Sullivan, 
    First, I'm very appreciated with your reply. 

    Secondly, according to your past experiences which said in your comments,'internal risks', while being largely preventable or able to be mitigated (or at least should be so) can also be very insidious because many of them can arise from the company 'culture'. But when a company's 'culture' is flawed identifying and mitigating those risks can be a daunting task because people may not even realise the risk exists. 
    In fact, the culture seems to play an important factor in 'internal risks', which can also be very insidious because many of them can arise from the company 'culture'. 

    Thirdly, when we discuss the risk factor we have to keep in mind it is not risk management but overall management, think of the loop identify, assess, accept/not accept, control. So when we discuss the “internal risks” we have to be aware of them.Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. 

    Finally, I'm very appreciated with your professional comments. 

    Sincerely, 
    Edward

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Thanks Edward, 

    From a Quality point of view the causes of these types of risks (ie variations in output) would usually be termed 'common causes'. Any unexpected, uncontrolled or unauthorised variation in output results in risk. The only way to fix them is by fundamentally changing the 'system' or, in some situations, the system's implementation. Common causes arise when 'everyone is doing it'.

    John

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John O'Sullivan, 
    I'm very appreciated with your comments. 
    I agree with your viewpoints, the better way to fix 'internal risks' is by fundamentally changing the 'system' or, in some situations, the system's implementation. 
    You provide another solution to fix the 'internal risks'. 

    Sincerely, 
    Edward

  • James Andrae

    James

    James Andrae

    Risk Management Specialist

    Edward 
    I agree with your comments in general, and yes the examples you identified are internal and "preventable" through a variety of actions. (there is no sure fire mitigation for rogue trading). 
    In Australia we have taken the risk management of physical injury to a new level. I worked for a company that went into the Guinness book of records when it achieved a million hours without any injuries. Preventable risks that have direct impact on the bottom line and lives. 
    While nothing is perfect and some solutions do open the door to other risks, it is none the less the most important exercise and question for a risk manager to undertake. This is the heart of the process to determine Board risk appetite declarations, Risk Policies, Corporate structures etc, etc... 
    I prefer to approach an organisation as a blank sheet, identify risks and put them in 3 columns and then spend some time analysing what is the understanding of each risk by the relevant staff. I'm sure you are doing this process since you started at the same point I did . 
    The bottom line is the identification of the universe of risks I have to have, I want to have, and I don't want to have. Then devise a strategy to address these. 
    Of course it is a very involved processes and you need to move at least 3 to 6 iterations to ensure no new risks are accidentally introduced and what residual risks remain and so on. 
    If done right, the rewards are astronomical, and most importantly it sets the culture. Everyone has to get on board and risk management is embedded in the hearts and minds just through the exercise. 
    Qualitative benefits are numerous, least of all, the insights gained. 
    I once worked for a company that wanted to address 1 preventable risk. 
    The cash flow risk. They wanted greater certainty of revenue. In attempting to mitigate this risk, it created new risks, some of which were an even higher order of risk. But once we went through the process and mapped it out down to the most minute issues stressed in 6 different ways, the CEO was so impressed this strategic thinking became the norm for every action undertaken You cannot ask for a better culture. 
    Happy to provide further details in private if you want to contact me.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear James Andrae, 

    I'm very appreciated with your professional comments about the topic:"What's preventable risks and how to effectively manage?". According to your viewpoints, the bottom line is the identification of the universe of risks I have to have, I want to have, and I don't want to have. Then devise a strategy to address these. I agree with your viewpoints stated. Your past experiences in two companies which gave me some hints in solving preventable risk. You are an expertise in facing risks, therefore you know how to solve in better way. According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. 

    To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. In addition, companies should seek to eliminate these risks since they get no strategic benefits from taking them on in general. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. 

    Happy to receive your comments and if possible, we can discuss more details on risk managements in private if you don't mind. 

    Best regards. 

    Edward

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Edward, 
    I believe one principle is worth always remembering when dealing with risk, regardless of the type, source or severity of that risk. and that is: 
    Regardless of what business you THINK you are in, you are in the PEOPLE business. 
    Cheers, 
    John

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John, 
    Thanks for your reply. 
    You have mentioned that when dealing with risk, "Regardless of what business you THINK you are in, you are in the PEOPLE business." It is useful for me how to treat the risk happened in the coming future. 

    In my experiences running on project managements, I usually think that risk management can include the following activities 
    1.Planning how risk will be managed in the particular project. Plans should include risk management tasks, responsibilities, activities and budget. 
    2.Assigning a risk officer – a team member other than a project manager who is responsible for foreseeing potential project problems. Typical characteristic of risk officer is a healthy skepticism. 
    3.Maintaining live project risk database. Each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. 
    4.Creating anonymous risk reporting channel. Each team member should have the possibility to report risks that he/she foresees in the project. 

    Very thankful for your comments again. 

    Best regards. 

    Edward

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    There are two questions regarding a significant risk and the desire to "prevent" the risk. 
    The first question has to be considered is "Is it more important to do the project or not experience the risk?", the second is "if a prevent or avoid response is put in place, is the cost or benefit worth the trade-off of project objectives not being fully met." (Sited from Stephen McManus) I think that it's necessary for us to think about the process how to prevent the coming risk and the best solution. 

    As what I suggest in the former comments 'Maintaining live project risk database.' 
    In fact, each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. 

    Edward.

Edward Chao

"Risk Transfer" is often used in place of "Risk Sharing" in the mistaken belief(27-March-2015)
by 趙永祥 2015-03-28 07:08:59, 回應(0), 人氣(2076)

                                    Risk Management Online

Edward Chao

"Risk Transfer" is often used in place of "Risk Sharing" in the mistaken belief Manager's Choice

Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.Top Contributor

The term of 'risk sharing' is briefly defined as "sharing with another party the burden of loss or the benefit of gain, from a risk, and the measures to reduce a risk."

The term of 'risk transfer' is often used in place of risk sharing in the mistaken belief that you can transfer a risk to a third party through insurance or outsourcing. In practice if the insurance company or contractor go bankrupt or end up in court, the original risk is likely to still revert to the first party. As such in the terminology of practitioners and scholars alike, the purchase of an insurance contract is often described as a "transfer of risk." However, technically speaking, the buyer of the contract generally retains legal responsibility for the losses "transferred", meaning that insurance may be described more accurately as a post-event compensatory mechanism. For example, a personal injuries insurance policy does not transfer the risk of a car accident to the insurance company. 

The risk still lies with the policy holder namely the person who has been in the accident. The insurance policy simply provides that if an accident (the event) occurs involving the policy holder then some compensation may be payable to the policy holder that is commensurate to the suffering/damage.

Some ways of managing risk fall into multiple categories. Risk retention pools are technically retaining the risk for the group, but spreading it over the whole group involves transfer among individual members of the group. This is different from traditional insurance, in that no premium is exchanged between members of the group up front, but instead losses are assessed to all members of the group.

Dr. Chao (Faculty teaching in Nan Hua university, Taiwan)
9-Feb.-2015

Comments

  • James Andrae

    James

    James Andrae

    Risk Management Specialist

    This is spot on. In the 90s & (prior to GFC) companies "transferred" risks by buying or selling credit derivatives, only to discover that this strategy was only as good as the ability of the last holder to pay up on a claim. And so started the mini crash of developing countries especially Asia. The risks were at best transferred but created new ones in their wake. The credit worthiness of the counterparty. The best risk transferred is the one you don't have to begin with. It is all in the contract Ts & Cs. Get that right, accept what you have left and then look to optimise exposures.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear James 
    I agree with your comments. In fact,the buyer of the contract generally retains legal responsibility for the losses "transferred", meaning that insurance may be described more accurately as a post-event compensatory mechanism. The best risk transferred is the one you don't have to begin with, but you have to take continuous care on it. 

    Thanks for your comments. 

    Edward

  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    That's why I prefer to use the term risk mitigation or response (which may not necessarily mean the risk can be totally eliminated) because in reality you can't really transfer risk (as risk is like energy) - it merely transforms into another form of risk, unless you are no longer the owner (or have the exposure anymore)!

     Karen M., Edward Chao like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Guan Seng Khoo, 
    Perhaps, risk mitigation or response is a better term to explain the meaning of "Risk Transfer", thanks for your comments in this issue. 

    Sincerely, 
    Edward.

     Guan Seng Khoo, PhD likes this
  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Gam sia, Gam sia! I'm Hokkien (by dialect). Keong Hee Huat Chye!

  • Donald J. Riggin, CPCU, ARM

    Donald J.

    Donald J. Riggin, CPCU, ARM

    CEO, ART of Captives Consulting LLC

    Folks, while I like philosophical discussions as much as the next guy, let's temper that with a dose of old fashioned horse sense. Guan Seng Khoo (above) said, "in reality you can't really transfer risk." I respectfully disagree. In reality, risk is transferred all the time. In theory, (as in quantum physics), risk may or may not be transferred. Or, it might be both transferred, and not transferred at the exact same time! (Was this one of Zeno's 4 paradoxes? Probably not.) 

    "Risk transfer" is the only reasonable and acceptable description of the insurance transaction. It means moving a risk of financial loss, of whatever quantity or quality, from one balance sheet to another balance sheet. Moreover, the transaction is memorialized in a contract commonly accepted by both parties - the insurance policy. 

    Yes, technically the transferred risk still lies with the policyholder, but in law that plays no part whatsoever. When counterparties (insurer and client) are engaged in a legal dispute, the notion that the client technically retains the risk is ignored for good reason. The payment of premiums (consideration) as prescribed by the contract issuer (insurance company) renders this technical argument moot for lack of applicability and materiality. 

    Of course the insurance company could go bankrupt; technically, the insurer is a credit risk to its customers, but the likelihood of that occurring is usually extremely low. And even with enormous amounts of counterparty/credit risk, the transaction is still one of risk transfer; the quality (or lack thereof) of the risk-taking party doesn't change that fact. It might be a bad risk transfer, but a risk transfer it remains. Remember, counterparty risk is a matter of credit risk management, that's all. If the risk transfer fails for one reason or another, the risk holder will deal with it. 

    The term, risk transfer, has been used in US Tax Court and US Supreme Court cases to describe an important concept. Risk transfer and risk distribution, are the generally accepted circumstances required for an insurance transaction to exist. (Insurance is not defined in US law.)

    Finally, 2 of the above posters said this: "the best risk transferred is the one you don't have to begin with." Huh? If you're right, every business in the world should cease operations, because that's the only way to not have a risk to begin with. I could go on…

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    According to businessdictionary website said that there have two definitions on "Risk Transfer"

    * management strategy in which an insurable risk is shifted to another party (the insurer) by means of an insurance policy.

    * shifting through non-insurance means, such as a warranty. See also transfer of risk rule.

    (http://www.businessdictionary.com/definition/risk-transfer.html#ixzz3TkiQV3Mc)

    "Risk Transfer" had been commonly accepted in the underlying tenet behind insurance transactions. The purpose of this action is to take a specific risk, which is detailed in the insurance contract, and pass it from one party who does not wish to have this risk (the insured) to a party who is willing to take on the risk for a fee, or premium (the insurer).


    For example, whenever someone purchases home insurance, he or she is essentially paying an insurance company to take the risk involved with owning a home. In the event that something does happen to the house, such as property damage from a fire or natural disaster, the insurance company will be responsible for dealing with any resulting consequences.

    Risk transfer is a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. One example is the purchase of an insurance policy, by which a specified risk of loss is passed from the policyholder to the insurer. Other examples include hold-harmless clauses, contractual requirements to provide insurance coverage for another party's benefit and reinsurance. When done effectively, risk transfer allocates risk equitably, placing responsibility for risk on designated parties consistent with their ability to control and insure against that risk. Liability should ideally rest with whichever party has the most control over the sources 
    of potential liability.

    In addition, in today's financial marketplace, insurance instruments have grown more and more intricate and complex, but the transfer of risk is the one requirement that is always met in any insurance contract.

    According your recognition, the term, 'risk transfer' has been used in US Tax Court and US Supreme Court cases to describe an important concept. Risk transfer and risk distribution, are the generally accepted circumstances required for an insurance transaction to exist. I fully understand and agree. In our normal life, risk transfer is occurred in transaction behavior, the transaction is still one of risk transfer; the quality (or lack thereof) of the risk-taking party doesn't change that fact. We can understand that 'risk transfer' can be viewed as the reduction of risk to a position by buying an insurance policy or taking an offsetting position. For example, a person may reduce the risk of loss due to medical expenses by buying health insurance. Likewise, a person may reduce the risk of loss to a long position by entering an equal but opposite short position.

    I'm very appreciated with your professional viewpoints. Thanks for your comments about this issue,

    Sincerely, 
    Edward

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  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Thank you both. As long as all of us are comfortable with the "local" definition, without getting too detailed or preoccupied with the semantics, e.g., often CDSs create the illusion of risk "transfer", when in reality, risk transformation has its unintended consequences................, I'm happy to agree and disagree!

     James Andrae likes this
  • Donald J. Riggin, CPCU, ARM

    Donald J.

    Donald J. Riggin, CPCU, ARM

    CEO, ART of Captives Consulting LLC

    Indeed, an interesting discussion. At the end of the day it's just semantics, as Guan Seng Khoo has observed. I'm quite familiar with the non-insurance methods of transferring risk, but I think that risk transfer, regardless of technique, is just one thing: Moving negative financial outcomes from one party to another. 

    Think of the concept of risk having 2 separate and distinct properties, (1) potentially negative financial outcomes, and (2) one of the consequences of life: business activities, property ownership, driving a car, crossing the street, getting out of bed, and so on. All we can do is mitigate some of the negative financial consequences; insurance being the most prevalent risk transfer tool. The first property of risk is binary; the risk is either retained or transferred. Even the most onerous legal disputes between insurer and client as to whether or not a loss is compensable eventually settle if favor of one of the two litigants, (except Jaundyce v. Jaundyce).

    Regarding the illusion of risk as mentioned above; it's an illusion because in reality some risk transfer schemes are just as likely to fail as to not fail, such as a CDS. But a CDS, just like an insurance policy, does indeed transfer the financial consequences of risk to a counterparty, but its value as a risk transfer tool is a matter of degree. Compared to the security available through a highly rated insurance company, a CDS's volatility and susceptibility to market risk greatly reduces its efficacy as a pure risk transfer tool. If the risk transferor isn't aware of this, well, that's his problem.

     Guan Seng Khoo, PhD, Edward Chao and 1 other like this
  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Thanks Donald. I guess where I'm coming from is when the term is used outside of the insurance industry as in the typical COSO ERM or ISO 31K framework, where it's often used in the context of risk "reduction", which I don't believe in, or in banking, when instruments in the banking book are transformed into the trading book, e.g., via securitization. 

    But thanks again to everyone for sharing here. Have a marvellous week.

     James Andrae likes this

  • Kathryn M

    Kathryn M Tominey

    Owner, Red Mountain Consulting, LLC

    Just a thought, legalisms aside, if you lack capability to perform mission (product or service) essential work and outsource you are still accountable to clients and shareholders. Many CEOs & mgt teams are indifferent to this as long as they collect their annual bonus - based on very short term results.

    You do remember why we had to bailout AIG don't you? Making book via naked CDSs without understanding underlying products which had ratings - arguably fradulent ratings - suggesting high quality.

    Anyone putting that much effort into acquiring financial insurance is sending a message about how much they believe in their product.

     Edward Chao, James Andrae like this
  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Thanks, Kathryn, that's what I was alluding to in my CDS' comment, together with the roles played by monolines, e.g. AMBAC, etc.

  • James Andrae

    James

    James Andrae

    Risk Management Specialist

    Donald, very solid legal points. I love a good philosophical discussion. It is as always a matter of semantics and perspective. Our experiences may be different, I don't believe it makes either of us more right or wrong. It does however open the mind to other perspectives which is always a good thing. 

    Insurance while a risk transfer mechanism actually creates other risks as you alluded. Credit, Legal, Cost, Timing. Kathryn above raised very important valid points. Perspectives, agendas, rorts, etc. 

    Risk Management should always try to minimise reliance on the legal process if things go wrong. (This is why I spend way too much time analysing contracts). While the process marches along, in the meantime a company may be seriously negatively affected, face bankruptcy at the extreme, share price fluctuations, credit downgrades etc. Bonuses not paid, people fired. 
    It always becomes a matter of size of the insurance claim, 100K not much of a problem, $100M is often open to "debate" in the court system. My experience is that CEOs and Boards don't like the court process and always look for heads to roll. 

    From a risk management perspective that's not good enough because of the domino effect on business' other activities that assume cash flows will be made whole in the proper time. Very few companies have a few "lazy" hundred million just hanging around. I repeat the best risk you have is the one you don't have and there are numerous examples from physical power plants to the financial markets. 
    In the financial markets, peculation aside, hedging can cause new and some unforseen linked risks. There is a famous issue now about a company being trading a commodity and having 40 - 50% of the liquidity in that market. They got it right, but could not get out of their trades. Greed. The best risk is the risk you don't have. Don't expect the market to accept losses when you are the major provider of liquidity. Stick to a lower threshold. If a company is that big that it needs 50% of the market liquidity then it need to review its operational risk management to account for the lack of reliance on the market hedges. 

    The GFC and Asian Crisis were in essence, liquidity and counterparty credit issues on the whole.

    Power plants often have unexpected failures, these are insurable events. The major condition is the proper maintenance of the plant. One man's process is another man's negligence. We can understand that the insurance company will rightly want to verify everything before maybe paying. There are cases where a 1 week shutdown took 2 years and longer to pay. The claims are mostly for physical damage and financial loss. This could easily climb to $100M+ depending. Repairing a power plant may cost $5M the losses on a SWAP could be any amount perhaps a further $95M. No COB is keen on this sort of risk. 
    The best risk is the one you don't have. Solution don't over commit power plant transaction SWAPS such that if it failed apart from the burden of repairs you will also have the financial SWAP payments to make. There is nothing lost except for speculative revenue and that could go either way. 
    Building infrastructure creates volumes of possible risks to the owner. Power plants can be built by the power company or by an external engineering firm. This transfers most of the risks but some do remain. Two major risks are that the generator will not work to specifications, or be completed on time. The power company contract specifies Ts&Cs that if not met they simply don't accept the new generator. So the "lemon" risk as well as others are not theirs. The best risk is the one you don't have. 
    While your points are valid Market Risk Managers do not live in a post risk world but in a pre risk world.

     Guan Seng Khoo, PhD, Edward Chao like this
  • James Andrae

    James

    James Andrae

    Risk Management Specialist

    It took some companies over 7 years to get paid 6c on the dollar after Enron failed. Reliance on the legal system, while just, did not make the participants whole. Insurance failures were kept commercially private so we will never know if the losses were covered or not. The best risk you have is the one you don't have. When the CEO and CFO of a fortune 50 company resign suddenly. Smart risk managers closed out positions and watched the debacle with amusement and got bonus. 
    If entering into a trade with a counterparty is reliant on a CDS for risk mitigation, then the best risk is the one you don't have. 1 don't enter into the trade to begin with. 2 Don't pay any bonus until the expiry or closure of the contract. Implement #2 and a whole lot of needless exposures are removed because the traders now have some skin in the game. 
    You stated “If the risk transferor isn't aware of this, well, that's his problem”. In a perfect world with perfect knowledge maybe. The global financial system is based on the blind hope that the other guy will “play by the rules” and be there to make you whole regardless of whether it is an insurance contract or swap. Blind hope because you can never see the true picture of the other counterparty, and, well, let’s leave the Credit Agency discussion to one side. It’s not only the illusion of risk but of transfer. The Transferors prior to the GFC had no idea who was really on the other end of the majority of the CDS deals. How was it their fault? 
    Market risk managers understand these limitations and on the whole tend to limit exposures as much as possible. 
    Of course you can't have no risks. You can even die in your bed sleeping. 
    But you should understand the domino factors in all risks and come back with the trade off scenarios and limit these whenever possible. 
    The point I think Edward is raising is to test whether risk managers understand that no risk is ever truly transferred or mitigated completely, so how do we live with that reality, post GFC. 
    I am certain that if the Central Banks and Finance Ministers had not stepped into the GFC, the global meltdown could have sent economies spiralling worse than the Great Depression. That was the risk they did not want to have. 
    They saved the world from calamity but also let some companies that could not be absorbed, fail.
    This was the wake up call. Edward is asking if we have altered our thinking since.

     Guan Seng Khoo, PhD, Edward Chao like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear James, 
    I'm very appreciated and respect that you always point out the key concepts and useful viewpoints within your comments on a issue. I got some hints and implications from your comments. I also agree with Donald's comments which said above, 'the concept of risk having 2 separate and distinct properties, (1) potentially negative financial outcomes, and (2) one of the consequences of life: business activities, property ownership, driving a car, crossing the street, getting out of bed, and so on. All we can do is mitigate some of the negative financial consequences; insurance being the most prevalent risk transfer tool.' 

    I fully agree that your comments which said that "the best risk you have is the one you don't have and there are numerous examples from physical power plants to the financial markets." In addition, the global financial system is based on the blind hope that the other guy will “play by the rules” and be there to make you whole regardless of whether it is an insurance contract or swap. 

    In fact, the domino factors in all risks and come back with the trade off scenarios and limit these whenever possible. According to my recognition, risk transfer is a risk management and control strategy that involves the contractual shifting of a pure risk from one party to another. I sometimes discuss with the professional risk-control managers whether risk managers understand that no risk is ever truly transferred or mitigated completely but I find that some managers will ignore cultural and human factors which plays important roles in risk managements. 

    Thanks for Donald,Kathryn, Guan Seng Khoo, and your professional comments in this issue. 

    Thanks all of you with sincerity. 

    Sincerely, 
    Edward

  • Kathryn M

    Kathryn M Tominey

    Owner, Red Mountain Consulting, LLC

    Guan - don't "allude" use plain clear language to expose these frauds, ratings firms enablers and issuers too lazy to do their homework. The impact of naked CDSs unregulated, invisible thanks to Sen. Phil Gramm, Robert Rubin & Larry Summers leadership. At least Art Levine was man enough to admit, publically, that he was wrong to oppose Brooksley's efforts to just look at derivatives.

    Buffett's latest letter really lays into the operators pushing transactions because fees are easy money.

     Edward Chao likes this
  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Kathryn, I've written one whole document and blogged on the issues in some of my publications & presentations in conferences for Riskbooks, etc. Hence, I merely don't wish to be long-winded here, esp. for readers who are familiar with the GFC. But, thanks anyway for raising it more granularly.

  • Syed Adeel Hussain

    Syed Adeel

    Syed Adeel Hussain

    Banking, Islamic Finance and Risk Management Trainer and Consultant (Also Open to Offshore Consulting Roles)

    We as risk managers have to distinguish among Risk Controls, Risk Financing and Risk Retention Techniques. Risk Transfer is a Risk Financing Method, where you pay someone else to pay for your Unexpected Large Losses!

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Syed Adeel Hussain, 

    Your comments provide simple concepts but useful in understanding. 

    I'm very appreciated. 

    Edward

     Syed Adeel H. likes this
  • Abdulwadud Mohammed, ERMCP

    Abdulwadud

    Abdulwadud Mohammed, ERMCP

    Structured trade & Commodity management at ACE Global Depository

    Very insightful write up.

    Insurance is embedded in risk management.

    Real risk management is the prevention of loss. Insurance also practise risk management. Here, the company attempts to regulate the risk it underwrites as per probability of a claim crystallizing(no insurance company would underwrite a risk with 100% claim probability) or claims it pays upon crystallization.

    Like the author said, in the event that an insurance company defaults on payment upon crystallization of claim, the liability remains with the insured.

    Transferring or sharing risk should be combined with strong emphasis on prevention by embedding ERM in an organizational set up or adopting relevant credit support tools (a wide array is offered by Ace Depository) for banks, traders and financiers, in preventing actual loss.

    Prevention of actual loss rather than seeking to be indemnified upon loss is better for any business moving forward.

     Edward Chao likes this
  • Michael Allocco, PE, CSP

    Michael

    Michael Allocco, PE, CSP

    System Safety SME

    RISK TRANSFER… 
    It is possible to transfer (most) risk to a 2nd party, should the appropriate risk controls be applied:
    • A specialized contractor (2nd party) may be used to conduct a specialized risk task or operation; 
    • Contractual risk controls can transfer most of the risk to the 2nd party; 
    • The 1st party assures that the 2nd party implements and enforces the appropriate risk controls; 
    • There may be some limited co-liability (co-negligence) in the chain depending on the risk controls contractually defined and enforced.

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Michael, Thanks for your comments. You provide the necessary considerations concerning about the appropriate risk controls and transfer. 

    Edward.

  • Michael Allocco, PE, CSP

    Michael

    Michael Allocco, PE, CSP

    System Safety SME

    Your welcome....

  • Kathryn M

    Kathryn M Tominey

    Owner, Red Mountain Consulting, LLC

    Guan - how diplomatic you are, an excellent quality in risk mgt right up to when a 2x4 is needed to focus their attention.

    Oh, am I using correct convention for the part of your name to address you?

  • Guan Seng Khoo, PhD

    Guan Seng

    Guan Seng Khoo, PhD

    Head, ERM, GRC at Alberta Investment Management Corporation (AIMCo)

    Well, Kathryn, I've always been guilty of making short commentaries on LinkedIn, and often inadvertently created "cross-communications across different frequencies" with other parties on other discussion threads. If I interpret you correctly - part of my Asian heritage, where tai ji is often practised - notice how Americans like boxing (more "push") vs the Japanese sumo (more "pull"). I practise a hybrid of push-pull with a bias towards "pulling"!!! Nice to make your acquaintance tho' as a fellow scientist - I was a computational chemist once upon a time!

  • Stjepan Anic

    Stjepan

    Stjepan Anic

    CEO at Optom

    Yes, it's really an apostrriori compensation mechanism rather than a pure risk transfer, and my experiance has thought me that repeated clearifications of various terms used in finance and risk management is often needed in order to maintain an understandable big-picture-view of the subject.

     Edward Chao likes this
  • Syed Adeel Hussain

    Syed Adeel

    Syed Adeel Hussain

    Banking, Islamic Finance and Risk Management Trainer and Consultant (Also Open to Offshore Consulting Roles)

    @Edward Thanks

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Very thankful to Stjepan Anic & Syed Adeel Hussain, this issue is concerning about my research in risk managements, therefore, I pay more attention on this issue. 

    In addition, I'm very appreciated with James Andrae, who is a risk management specialist. His comments provide me more strategic implications and thinking methodology. I fully agree that James' comments which said that "the best risk you have is the one you don't have and there are numerous examples from physical power plants to the financial markets." In addition, the global financial system is based on the blind hope that the other guy will “play by the rules” and be there to make you whole regardless of whether it is an insurance contract or swap. 

    Hoping you all can provide your comments and viewpoints into popular issues concerning about risk managements in risk managements online. 

    Thank you all. 

    Sincerely, 
    Edward

     James Andrae likes this
  • Arslan Usmani MEngPrac MIEAust MAIPM, MRMIA

    Arslan

    Arslan Usmani MEngPrac MIEAust MAIPM, MRMIA

    Planning & Risk Assessment Specialist at Petronas Upstream

    Ed, risk sharing and transfer both are sometimes misleading. If a pipeline contractor misses the delivery on time and you lost your 1 day production, what you do, do we tranfer the risk to him (liquidated damage only) but is this enough to cover your production loss but what about your commitment and good will. If you share risk what percentage of time, resouce and cost you sharev in order to bring things to the agreed deadline.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Arslan, 
    Thanks for your comments and joining this discussion. 

    Edward.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    In fact, some ways of managing risk fall into multiple categories. 
    Risk retention pools are technically retaining the risk for the group, but spreading it over the whole group involves transfer among individual members of the group. 

    In addition, I would like to site from James' comments which said "the best risk you have is the one you don't have and there are numerous examples from physical power plants to the financial markets."

  • Amirul Nazri PMI-RMP®

    Amirul Nazri

    Amirul Nazri PMI-RMP®

    Project Services | Risk Manager at Cameron

    Good financial standing of insurance companies is essential when addressing the risk transferring process. It can be a secondary risk when insurers are reported having difficulties in processing and settling claim. Some Banks are very particular on this when they assessed proposed project financing and had incorporated this in condition precedents (CP).

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Amirul Nazri, 
    Very thankful for your comments on this issue. 

    Kind regards. 

    Edward

  • Jeff Elias, Ph.D.

    Jeff

    Jeff Elias, Ph.D.

    President, Elias Consulting Group (www.drjeffhr.com)

    I'd like to add that risk sharing can be very profitable for the group or association who are involved. 1st you need a good assessment audit as to the types of risks, organizations,the and firms' liquidity to qualify them to join the "association" risk pool. Using appropriate tools for assessment of the "potential" risks, can generate a cost savings, and structured properly as an "off-shore captive insurance association" (taking advantage of money hurdle rates) with streamlined, accurate and timely reporting, with effective claims management, training, and safety programs) could repatriate income back to the association in the form of reduced future premiums. As a note, off-shore domiciles have different "banking, LOC, liquidity, etc. requirements. These types of arrangements can also work for effective costefficient re-insurance markets, as well. Dr. Jeff Elias, Ph.D. HR & RM Consultant.

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Jeff Elias,Ph.D. 

    I fully agree with your viewpoints that you have mentioned 'Using appropriate tools for assessment of the "potential" risks, can generate a cost savings, and structured properly as an "off-shore captive insurance association" (taking advantage of money hurdle rates) with streamlined, accurate and timely reporting, with effective claims management, training, and safety programs) could repatriate income back to the association in the form of reduced future premiums.' 

    Thanks for providing your comments. 

    Kind regards. 

    Edward

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    According to my past studies,insurance is a both well-known and popular form of risk transfer to take into consideration, where coverage of a risk is obtained from an insurer in exchange for ongoing premiums paid to the insurer. Risk transfer can occur informally within family and community networks where there are reciprocal expectations of mutual aid by means of gifts or credit, as well as formally where governments, insurers, multi-lateral banks and other large risk-bearing entities establish mechanisms to help cope with losses in major events. Such mechanisms include insurance and re-insurance contracts, catastrophe bonds, contingent credit facilities and reserve funds, where the costs are covered by premiums, investor contributions, interest rates and past savings, respectively. 

    Edward

  • Marcelo Severino Oliveira

    Marcelo Severino

    Marcelo Severino Oliveira

    Manufacturing, Supply Chain and Logistics.... "" Looking for a new job. ""

    In short, we need to beware, always an eye on possible risks before it happened. 
    Because if all the losses are passed to insurers, there would be many insurers.

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Marcelo Severino Oliveira, 
    Thanks for your comments. 

    Edward

  • David Wilson

    David

    David Wilson

    Ready to lead or facilitate change, apply 'old' skills and learn new ones

    We cannot be 'blind' to the need for our decision-making (and resultant actions) to be based upon information that is NOW accessible to us. 'Ignorance', due to a lack of the correct tools or techniques is understandable but, to ignore tools and techniques that enable informed decision-making, is beyond 'ineptitude'...an emerging GRC issue! 

    'Causal Relationships': operational interdependencies and interactions within and among organisations are the sources of emerging risk and opportunity but, if unidentified, can be amplified, cascade and spread far beyond the points of origin...and 'feedback' as threats: unrealised - as increased uncertainty or volatility; realised - as correlations in data (reflexive - after the event). 

    Unidentified and unmanaged risk does not dissipate, nor does the probability of occurrence, scale, duration or cost reduce...

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    David, your viewpoints are acceptable in understanding 'Causal Relationships', whereas, if unidentified could be amplified, cascade and spread far beyond the points of origin. perhaps, if providing some examples you have ever met will be better to understand. 

    Thanks for your comments. 

    Kind regards. 

    Edward.

自我突破並邁向成功的激勵影片
by 趙永祥 2015-03-24 22:18:54, 回應(1), 人氣(1906)


Dear all

​
每一個人都希望能達成自己的目標，沒有目標者應趕緊尋找自己的熱忱及目標，持續推動自­己勇往直前突破萬難。不要再給自己更多的接口，開始改變吧！


自我突破並邁向成功的激勵影片(Part 1)



​
請仔細觀賞，該影片是很有啟發性與震撼性的一則影片。

https://www.youtube.com/watch?v=H5cWt_pJ3Hc&spfreload=10​



2015最強激勵影片（Part 2）
https://www.youtube.com/watch?v=vx8khSfsfZk

​
該影片是很有啟發性與震撼性的一則影片。


趙夫子

Maslow's hierarchy of needs
by 趙永祥 2015-03-24 21:34:56, 回應(0), 人氣(1366)



 
Term of the Day

Monday, March 16, 2015

Maslow's hierarchy of needs

Motivation Theory which suggests five interdependent levels of basic human needs (motivators) that must be satisfied in a strict sequence starting with the lowest level. physiological needs for survival (to stay alive and reproduce) and security (to feel safe) are the most fundamental and most pressing needs. They are followed by social needs (for love and belonging) and self-esteem needs (to ...







Maslow's 



Hierarchy of needs



Motivation theory which suggests five interdependent levels of basic human needs (motivators) that must be satisfied in a strict sequence starting with the lowest level. Physiological needs for survival (to stay alive and reproduce) and security (to feel safe) are the most fundamental and most pressing needs. 


They are followed by social needs (for love and belonging) and self-esteem needs (to feel worthy, respected, and have status). The final and highest level needs are self-actualization needs (self-fulfillment and achievement). 

Its underlying theme is that human beings are 'wanting' beings: as they satisfy one need the next emerges on its own and demands satisfaction ... and so on until the need for self-actualization that, by its very nature, cannot be fully satisfied and thus does not generate more needs.


This theory states that once a need is satisfied, it stops being a motivator of human beings. In personnel management, it is used in design ofincentive schemes. In marketing, it is used in design of promotional campaigns based on the perceived needs of a market segment a product satisfies. 


Named after its originator, the US psychologist Abraham Harold Maslow (1908-70) who proposed it in 1954.


Read more: 
  
What's preventable risks and how to effectively manage?(19-March-2015)
by 趙永祥 2015-03-19 12:04:39, 回應(0), 人氣(2003)


What's preventable risks and how to effectively manage?

Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.Top Contributor

What's preventable risks and how to effectively manage?

According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Our field research shows that risks fall into one of three categories. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Type I: Preventable risks.

These are what I call "internal risks" which is arising from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. 

To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. But in general, companies should seek to eliminate these risks since they get no strategic benefits from taking them on. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.
This risk type is best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. Since considerable literature already exists on the rules-based compliance approach, we refer interested readers to the sidebar “Identifying and Managing Preventable Risks” had been popular discussed and apparently best practiced in most industry.


Dr. Chao
5-Feb.-2015

Comments

  • John

    John Grubbs

    Student at Bowling Green State University

    It's interesting to think that there is this "preventable risk". In my experience, I've found risk to be only manageable as there is risk in everything we do, especially when it come to human nature

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John Grubbs, 
    This risk type is what I call "internal risks" which is arising from within the organization, that are controllable and ought to be eliminated or avoided. In addition, best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. 

    Thanks for your comments. 

    Dr. Chao

     John G. likes this
  • Mark Powell

    Mark

    Mark Powell

    Consultant - Rescuer of Doomed Projects; Solver of Impossible Problems; Inspired by Sharing How to Do It All

    Edward, 

    I think the terminology you have chosen for native English speakers is a bit unfortunate. 

    I understand what you are saying, but the term "preventable" does not connote to native English speakers the definition you have assigned to it. 

    Mark Powell

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Mark Powell, 
    Thanks for your response. 
    This terminology perhaps not suitable to native English speakers, it's another definition concerning about the "internal risks" which is arised from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. 
    Perhaps, you can give me better suggestions concerning about this terminology. 

    Best regards. 

    Dr. Chao

  • Mark Powell

    Mark

    Mark Powell

    Consultant - Rescuer of Doomed Projects; Solver of Impossible Problems; Inspired by Sharing How to Do It All

    Edward, 

    To me, your term "internal risks" seems to capture what you have described so far quite well. 

    All of your examples are what I would naturally think of as a company's internal risks. 

    Mark Powell

     Edward Chao likes this
  • Sherif Dawood , MBCI, MBA, ITILv3, M.Sc.

    Sherif Dawood

    Sherif Dawood , MBCI, MBA, ITILv3, M.Sc.

    Manager - Enterprise Risk Management, Strategy Management and Planning Department, VIVA Bahrain, STC Group

    Second Mark's opinion 
    We can have preventive controls as part of the control structure for managing certain risk, but we can never guarantee the prevention of the risk. If there is a risk, there will be always a residual risk till the risk becomes irrelevant

     Edward Chao likes this
  • William Thorlay

    William

    William Thorlay

    Senior Consultant for Engineering and Reliability

    Dr. Chao, 
    I think your definition on "internal risks" is well understood. On the other hand, I have to agree with Mr. Grubbs when he says that risk is something inherent to everything we do. As far as human behaviour is concern, human reliability is becoming more and more applied within the organizations worldwide.

     Edward Chao likes this
  • Tracy Dcruz

    Tracy

    Tracy Dcruz

    Business Executive at VS PAY

    We could provide payment gateway for many high risk industries like Gaming, Casino, Forex Pharmacy, Nutra, Binary, Replica, Pet shops, Tour and travel operators, Gaming, Gambling, Lotto and lottery, Headshops, Medical marijuana and many more. 
    We hope to be able to get you an account, with surety and this will be much more reliable which will have you being paid within shorter period for your transactions on credit card. 
    Tracy Dcruz Skype id: connect2vspay email id: sales@vspayglobal.com

     Edward Chao likes this
  • Stephen McManus

    Stephen

    Stephen McManus

    Owner, i Lead Projects, L.L.C.

    When discussing risks, whether internal or external, the use of "preventable" would equate to avoid the risk....this means the risk probability and/or the impact must go to zero. 

    In practice, it is often almost impossible to prevent risks from occurring or having an impact if they do occur without having a significant trade-off on one of the other constraints or objectives a project is trying to meet. So in practice there should be two questions regarding a significant risk and the desire to "prevent" the risk. 

    1st - Is it more important to do the project or not experience the risk? 
    2nd -If a prevent or avoid response is put in place, is the cost or benefit worth the trade-off of project objectives not being fully met. 

    Finally, in practice we most often have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk....what is the risk appetite of the key stakeholders.

     David D., Edward Chao like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Stephen McManus, 

    What you have indicated that "in practice we most often have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk", I agree with your viewpoints. 
    The decision-makers has the responsibility to analyze the keypoints whether the cost or benefit is worth the trade-off of project objectives not being fully met. 

    According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. 

    Finally, you have to determine how much is the project willing to invest in reducing a risk or increasing an opportunity and still leave on the table residual risk. 

    Thanks for your comments. 

    Dr. Chao 
    10-Feb.-2015

     David D. likes this
  • Michael Allocco, PE, CSP

    Michael

    Michael Allocco, PE, CSP

    System Safety SME

    MOST RISKS ARE PREVENTABLE GIVEN…. 
    The understanding of a (system) accident life cycle: 
    • Implement safety axioms to assure that risks are identified, eliminated or controlled to acceptable levels; 
    • Apply proactive, predictive, and reactive methods to understand hazards and associated risks; 
    • Consider how an adverse propagation can start? A poor decision associated with the system (integrated human, machine and environment); 
    • The decision results in a latent, dormant, hidden (hazards) situation; 
    • The hidden situation is triggered by a condition or situation (other hazards); 
    • Adverse sequences can be complex to simple; 
    • The elements of the system support the adverse progression(s): conditions and/or actions; 
    • The adverse process may progress unless detected, or progression continues and harm may result; 
    • If causality or contingency action is unsuccessful additional harm can result; 
    • Eventually the system needs to be brought back to a stable state.

     Edward Chao, David D. like this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Michael Allocco, 
    The statements you have pointed out makes sense, and thanks for your reply with sincerity. 

    Dr. Chao

  • Pierre Lommerse

    Pierre

    Pierre Lommerse

    High-level business analytics professional with a focus on risk management, compliance and governance

    Dear Edward, 

    I tend to say risk is the only certainty in your life the difference is how you cope with it, other thought is doing business is consciously taking risk. 
    When we discuss the risk factor we have to keep in mind it is not risk management but overall management, think of the loop identify, assess, accept/not accept, control. So when we discuss the “internal risks” we have to be aware of them. My experience is that one of the biggest risks is, motivation, being proud to be part of the organization etc.

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear Pierre Lommerse, 
    I'm very appreciated with your reply. According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. Thanks for your comments again. 

    Dr. Chao

  • John Mallino

    John

    John Mallino

    Sr. System Safety Engineer at BAE Systems

    Preventable risks are risks that can be engineered out of the design. With that said, if asked which specific risks are preventable. I would say OSHA top ten most cited violations. No excuse for these risks to be active at your job site. 
    http://www.safetyandhealthmagazine.com/articles/11136-osha-announces-top-10-most-cited-violations-for-2014

     Edward Chao likes this
  • David Brady

    David

    David Brady

    President, DBrady Risk Associates

    John M got it right. The only way to make a risk preventable is to eliminate it altogether, either removing it by re-engineering or or changing the process if possible, e.g. if the risk is flying then drive or take the train. Although remember that eliminating a risk may introduce a secondary risk.

     Edward Chao likes this

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Edward, 
    Glad to see your comments have brought up numerous valid replies. In my experience these 'internal risks', while being largely preventable or able to be mitigated (or at least should be so) can also be very insidious because many of them can arise from the company 'culture'. But when a company's 'culture' is flawed identifying and mitigating those risks can be a daunting task because people may not even realise the risk exists, let alone where it stems from - 'it's how we do business'. In these companies (read 'large organisations') those people in positions of authority have generally reached those positions because they understand how to 'work the system' and that knowledge and understanding becomes their power base. When you start to identify and address those internal risks be prepared for some potentially serious pushbacks because someone's power base is suddenly being threatened. 
    Interested to see if anyone else shares these views. 
    John

     Edward Chao likes this
  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John O'Sullivan, 
    First, I'm very appreciated with your reply. 

    Secondly, according to your past experiences which said in your comments,'internal risks', while being largely preventable or able to be mitigated (or at least should be so) can also be very insidious because many of them can arise from the company 'culture'. But when a company's 'culture' is flawed identifying and mitigating those risks can be a daunting task because people may not even realise the risk exists. 
    In fact, the culture seems to play an important factor in 'internal risks', which can also be very insidious because many of them can arise from the company 'culture'. 

    Thirdly, when we discuss the risk factor we have to keep in mind it is not risk management but overall management, think of the loop identify, assess, accept/not accept, control. So when we discuss the “internal risks” we have to be aware of them.Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. 

    Finally, I'm very appreciated with your professional comments. 

    Sincerely, 
    Edward

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Thanks Edward, 

    From a Quality point of view the causes of these types of risks (ie variations in output) would usually be termed 'common causes'. Any unexpected, uncontrolled or unauthorised variation in output results in risk. The only way to fix them is by fundamentally changing the 'system' or, in some situations, the system's implementation. Common causes arise when 'everyone is doing it'.

    John

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John O'Sullivan, 
    I'm very appreciated with your comments. 
    I agree with your viewpoints, the better way to fix 'internal risks' is by fundamentally changing the 'system' or, in some situations, the system's implementation. 
    You provide another solution to fix the 'internal risks'. 

    Sincerely, 
    Edward

  • James Andrae

    James

    James Andrae

    Risk Management Specialist

    Top Contributor

    Edward 
    I agree with your comments in general, and yes the examples you identified are internal and "preventable" through a variety of actions. (there is no sure fire mitigation for rogue trading). 
    In Australia we have taken the risk management of physical injury to a new level. I worked for a company that went into the Guinness book of records when it achieved a million hours without any injuries. Preventable risks that have direct impact on the bottom line and lives. 
    While nothing is perfect and some solutions do open the door to other risks, it is none the less the most important exercise and question for a risk manager to undertake. This is the heart of the process to determine Board risk appetite declarations, Risk Policies, Corporate structures etc, etc... 
    I prefer to approach an organisation as a blank sheet, identify risks and put them in 3 columns and then spend some time analysing what is the understanding of each risk by the relevant staff. I'm sure you are doing this process since you started at the same point I did . 
    The bottom line is the identification of the universe of risks I have to have, I want to have, and I don't want to have. Then devise a strategy to address these. 
    Of course it is a very involved processes and you need to move at least 3 to 6 iterations to ensure no new risks are accidentally introduced and what residual risks remain and so on. 
    If done right, the rewards are astronomical, and most importantly it sets the culture. Everyone has to get on board and risk management is embedded in the hearts and minds just through the exercise. 
    Qualitative benefits are numerous, least of all, the insights gained. 
    I once worked for a company that wanted to address 1 preventable risk. 
    The cash flow risk. They wanted greater certainty of revenue. In attempting to mitigate this risk, it created new risks, some of which were an even higher order of risk. But once we went through the process and mapped it out down to the most minute issues stressed in 6 different ways, the CEO was so impressed this strategic thinking became the norm for every action undertaken You cannot ask for a better culture. 
    Happy to provide further details in private if you want to contact me.

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear James Andrae, 

    I'm very appreciated with your professional comments about the topic:"What's preventable risks and how to effectively manage?". According to your viewpoints, the bottom line is the identification of the universe of risks I have to have, I want to have, and I don't want to have. Then devise a strategy to address these. I agree with your viewpoints stated. Your past experiences in two companies which gave me some hints in solving preventable risk. You are an expertise in facing risks, therefore you know how to solve in better way. According to my past experiences,the first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. 

    To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. In addition, companies should seek to eliminate these risks since they get no strategic benefits from taking them on in general. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.Finally, you have to determine how much is the project willing to invest in reducing a risk, how to avoid and manage is an important issue to take into consideration. 

    Happy to receive your comments and if possible, we can discuss more details on risk managements in private if you don't mind. 

    Best regards. 

    Edward

  • John

    John O'Sullivan

    Director, Strategic Asset Engineering Pty Ltd. Available from 2Feb15.

    Edward, 
    I believe one principle is worth always remembering when dealing with risk, regardless of the type, source or severity of that risk. and that is: 
    Regardless of what business you THINK you are in, you are in the PEOPLE business. 
    Cheers, 
    John

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    Dear John, 
    Thanks for your reply. 
    You have mentioned that when dealing with risk, "Regardless of what business you THINK you are in, you are in the PEOPLE business." It is useful for me how to treat the risk happened in the coming future. 

    In my experiences running on project managements, I usually think that risk management can include the following activities 
    1.Planning how risk will be managed in the particular project. Plans should include risk management tasks, responsibilities, activities and budget. 
    2.Assigning a risk officer – a team member other than a project manager who is responsible for foreseeing potential project problems. Typical characteristic of risk officer is a healthy skepticism. 
    3.Maintaining live project risk database. Each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. 
    4.Creating anonymous risk reporting channel. Each team member should have the possibility to report risks that he/she foresees in the project. 

    Very thankful for your comments again. 

    Best regards. 

    Edward

  • Edward Chao

    Edward Chao

    Governmental Counseling consultant, Small and Medium Enterprise Administration,Ministry of Economic Affairs,Taiwan.

    Top Contributor

    There are two questions regarding a significant risk and the desire to "prevent" the risk. 
    The first question has to be considered is "Is it more important to do the project or not experience the risk?", the second is "if a prevent or avoid response is put in place, is the cost or benefit worth the trade-off of project objectives not being fully met." (Sited from Stephen McManus) I think that it's necessary for us to think about the process how to prevent the coming risk and the best solution. 

    As what I suggest in the former comments 'Maintaining live project risk database.' 
    In fact, each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. 

    Edward.





Edward Chao

大陸旅客淺談台灣，令人感觸良深
by 趙永祥 2015-03-13 17:42:58, 回應(0), 人氣(1539)


大陸旅客淺談台灣....令人感觸良深


我心戚戚， 台灣加油!


這次在台北小住半月，放棄了千篇一律的飯店，決定住在位於 南京東路尾段的一間民宿，想試試看台北人的生活。房間外可以看到河濱公園，也能看到不遠處的101大樓，樓下就有7-11、全家，和一家好吃的滷肉飯，還有四通八達的公車線路，以及就在馬路對面的饒河夜市，這大概像一個台北人的住所了吧！每天出門時我會和大樓的管理員和清潔阿姨打招呼，閒扯兩句，有時候晚上回來得晚一點，也會收到管理人員關心的問候，人跟人之間的關係貼近且平等，在這裡生活省了很多心。

不過，要說對大陸人不怎麼友好的台灣人，我也遇過，例如某間7- 11的店員可能是聽到我的大陸口音，明顯不耐煩還擺起臭臉；還有夜市裡某一攤待客不周到的店家；以及一直扯大陸沒有台灣好的計程車司機。

但他們並不會因此就令我感到「不爽」，因為我清楚他們不是台灣的大多數人。至少我走進100間7-11時會有98間的店員，微笑著為我熱心解決問題；我逛了5個夜市也只有那一攤讓我貼了冷屁股；我每天搭很多趟計程車，碰到一直硬要聊政事的司機也只有那一位而已。這是概率問題，絲毫不影響我對台灣的認同。

真正對台灣這個社會產生認同，是一日傍晚在一條擁擠路段的公車上。那天公車上的擁擠程度不輸給大陸城市的公交。但車子行至下一站，上來了一位拄著枴杖的老大爺，老大爺走路晃晃悠悠教人想上去扶一把，我剛這麼想，前面的一位大叔就扶了上去，攙著他慢慢走，一旁坐在博愛座上的老太太也站了起來，讓這位老大爺能坐在離門口最近的地方，而她自己則挪到旁邊去坐。

這3、5步就可跨過的距離，老大爺走了3、5分鐘，司機就這樣靜靜地等著，整車人都沒有任何怨言，待老大爺坐穩之後，司機才緩緩地發動汽車。老大爺坐下後，又向那些剛才幫助過他的人一一道謝，看到這一幕，我差點兒哭了出來。

那場景太難忘，不論是公車司機的靜靜等候，還是全車人的沒有怨言，或是讓出自己座位的老太太，這些，都是我所沒有見到過的美好，而這樣的美好，卻是台灣人生活當中最正常不過的一部分。

不過令我最奇怪的一點，是他們的新聞節目。分明在我看來，台灣這個社會已經是非常平和的了，人與人之間也都很好相處，食品安全也沒有嚴重到天天在吞化學周期表，一切看上去都很不錯。但只要一打開電視，就會瞬間錯亂，這是我這些日子生活的台灣嗎？新聞裡幾乎沒有美好的東西，都是聲嘶力竭的議員代表，或是潑糞、耍奸的無知青年，電視裡的人都在吵架，新聞裡的事都很醜陋，可我在看的時候總是懷笑的，因為我知道台灣社會比新聞裡說的美得多。

他們的媒體以披露真相為己任，台灣的媒體是十分有力的，他們可以讓民眾認知到這個社會的不完美，而他們敢於這樣做，是因為心中無鬼。

樂不思蜀也是因為如此。這一次離開台灣，有著前所未有的不捨，這個生活機能萬分豐富的小島，不僅給予所有居民便利，還保留了他們最難得的愛。

我只是一個平凡的人，不用跟我講城市建設或是多少個理論代表，我需要的，只是觸手可及的安逸感──坐在誠品看書的夜晚、花很少的錢就能看到很棒的舞台劇演出、很便宜但很用心的一碗豬腳飯。──除了我出生的家鄉，也只有台北能給我了。在異鄉，若還是可以帶給你這樣的感覺，那麼這個地方，是說什麼也不可以錯過的了。

***適度「放空」的重要性： 什麼事都不做，創造力更豐富
by 趙永祥 2015-03-13 17:31:13, 回應(7), 人氣(2557)

適度「放空」的重要性：什麼事都不做，創造力更豐富


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身處在當今網絡化的社會裡，我們隨時都有可能淪為資訊超載的受害者。內省（introspection）和反思（reflection）已經變成了失傳的藝術，因為「只要完成這個」「把那個找出來」的誘惑實在是強大到難以抵抗。

然而，更認真工作不必然是更聰明地工作。事實上，放慢步調，並且定期地排出「什麼事都不做」（doing nothing）的時段，或許才是我們能夠做的最好的事情，藉以引導出有助於激發想像力、改善心理健康的精神狀態。

推開資訊，才有時間做更重要的事

我們的生活已經變得是透過忙碌的程度（busyness）來界定的。環顧你的四周，在車站、咖啡店、街道上，人們都黏在他們的手機或平板上。

我最近詢問了一個我輔導過的高階主管（我姑且稱呼她為海倫），她一天收到多少e-mail。「500封！不過我一封都沒看。如果我看了，我就沒辦法工作了。」

取得資訊一點都不難，真正的挑戰在於「把資訊推開，這樣我才不會苦於資訊超載。我需要時間去思考。」

海倫有一個助理，會幫她過濾所有的e-mail，所以海倫每個星期都會花上幾個小時，跟助理一起討論有問題的郵件。「我不是領薪水來做這種工作的。」她解釋，「如果我一直都忙著做別人期望我做的事情，我就沒有時間留給我應該做的事情了。在網路空間裡，你是沒辦法從事有創造性的工作的。」

海倫說的確實很有道理，我也從經驗中發現，很多人如果能夠做得少一點，深思多一點，情況都會更好。

只是，人們向來很難真正接受「什麼都不做」這件事。我們會把它跟不負責任、浪費生命聯想在一起。大多數人如果不做點什麼的話，都會產生罪惡感。從另一個角度來看，每當我們覺得真的很忙碌的時候，往往會感到亢奮。而分心所引起的行為，像是不斷地查看e-mail，會刺激腦部大腦分泌多巴胺（dopamine）到血液裡，讓我們感到一陣興奮，導致手邊的動作更難停下來了。

這種情形的危險在於，我們可能會失去我們的連結（connections），不只是人際之間，而是我們跟自己的連結。如果我們不給自己一些不受打擾、可以自由聯想的時間，就比較不可能產生個人的成長、洞見和創造力。

無聊的好處：激發想像力和創造力

「什麼都不做」和「無聊」是緊密交織在一起的，如同我在〈什麼都不做和無事可做：空閒時間和無聊的潛藏價值〉（Doing Nothing and Nothing To Do: The Hidden Value of Empty Time and Boredom）這份報告中所說的，儘管我們多半都覺得「無聊」很難忍受，但是在很多情況下，無聊卻可以成為某件事的序曲、開端。它可以激發我們的想像力和創造力。某種意義上來說，無聊甚至可以被視為一個臨界、初始的空間（liminal space），一項關鍵的資源，促使我們去尋求不熟悉的事物。

然而，在網路時代，娛樂和讓人分心的事物幾乎是無窮無盡，我們很容易就會發現自己處在一個持續忙碌的狀態裡，而非什麼都不做。而我們在網路空間（一個多工和極度活躍的世界）裡的狂熱行徑，也讓我們得以自欺欺人，誤以為自己是很有生產力的。

真相是什麼呢？社群媒體其實是非常被動回應的（reactive），並不是非常有原創性的（original）。它不但局限了創造力，而且可能有害心理健康。如果我們不知道如何在行動與反思之間取得平衡，我們可能會面臨心理崩潰（psychological burnout）。

高效主管的祕密：從忙碌中抽身，才能思考和行動

不幸的是，在當代組織裡，工作成癮者不但備受鼓勵、支持，甚至還會得到獎勵。而且這個瘋狂行徑的發展愈演愈烈，很難對抗，因為這樣的行為對組織是很有用的。

這跟「控制」有關，背後的心態是：「我付給那個人高薪，為什麼他們不在辦公桌前工作？」

然而，拚命工作和聰明工作未必有關。事實上，一個工作狂文化很可能會促成嚴重的個人和心理健康問題，包括士氣低落、情緒沮喪、藥物或酒精等成癮物質的濫用、職場騷擾、關係破裂、缺席率高於平均。

成效最高的主管都是可以行動和思考的人，這意味著他們隨時都可以從不得不忙碌的狀態中抽身。

什麼事都不做：激發無意識思考，孵育創意

什麼都不做或無事可做，都是刺激「無意識的思考過程」的珍貴機會。無意識思考擅長於整合和連結資訊，其運作方式就是在我們廣大的知識資料庫裡，潛意識地執行聯想性的搜尋。在這個心靈區域裡，我們比較不會受到傳統聯想的限制，比起我們有意識地專注於解決問題時，更有可能產生新穎的點子。

這些思考過程的結果，可能不會立即進入我們意識層面，為我們所察覺。它們可能需要時間去孵育。在此提供的建議是，什麼事都不做（或是少做點事）不但是增進心理健康的最佳良方，也可能是解決複雜問題的最好方式。

一個好的問題解決者會在停止了意識的工作之後，還會繼續無意識地工作著。人們可以藉由斷斷續續地專注在問題上，同時又關注一些世俗的活動（像是散步、開車、閱讀、跟小孩玩），而找到有創造力的解決方案。

切斷與周遭事物的連結和專注在當下的好處，在企業界日益受歡迎，許多高階主管開始從事正念冥想（mindfulness meditation），以協助他們制定決策和解決問題。不過，如果一個主管持續瘋狂地工作9個小時之後，再去參加正念課程，可能也只能發揮暫時的效果。

理想狀況下，這種中斷、放空的時間應該是放在一天當中。到外面走走、把腳翹在桌上一段時間，說不定都會比午餐都不吃、一直在工作來得更有生產力。

義大利畫家瓦薩里（Giorgio Vasari）說得很好，「天才有時候是在工作最少的時候，完成最多事。」

有許多著名的例子，都是人們「憑空」（out of nowhere）想出絕佳點子，從阿基米德（Archimedes）在浴缸裡發現了浮力的原理，到牛頓在林肯郡公園（Lincolnshire garden）散步時發現了地心引力，和英國樂壇披頭四（Beatles）成員之一保羅．麥卡尼（Paul McCartney）有天早上醒來，發現自己在睡夢中完成了《昨日》（Yesterday）這首歌的旋律，都是如此。

創意的孕育期也可以透過許多方式引介、推行。像是3M、皮克斯（Pixar）、Google、Twitter和Facebook等公司都已經讓「不連續、斷裂的時間」（disconnected time）變成他們工作場合裡很重要的面向。

工作太拚命了嗎？事情愈做愈多，就是該放空的時候

要察覺出我們已經工作得太拚命，而且不是太聰明，通常可以從以下跡象看出來：發現自己處在一個永遠都還有更多事要做的狀態裡。我們欺瞞自己，以為只要再多做一件事，就可以放鬆。這樣的念頭其實是一種妄想和錯覺，結果不是我們的待辦清單（to-do list）繼續拉長，就是我們覺得自己可以再把事情做得更好一點。

如果我們持續陷在這樣的心態裡，就是時候該擺脫單調的工作，稍事休息一番。出人意表的是，通常只要斷線一段時間之後，問題看起來就會大不相同。我們可能會發現，答案其實一直就在那裡，正面直視著我們。

（本文英文標題為〈The Importance of Doing Nothing〉，作者Manfred Kets De Vries是INSEAD領導力發展和組織變革傑出教授。）

創造「放空時間」的3種方式

  1. 維繫關係：我們需要與人群進行有意義的接觸，讓我們覺得自己真正活著。維繫人際關係需要互動、投入和休息。

  2. 說不：懂得說不，是我們能夠培養的最實用的技能之一。說不，不必然會跟自私劃上等號；而對每一項請求都說好，也是不健康的。向不重要的請求說不，可以釋放出時間，從事更重要的事。

  3. 管理睡眠習慣：在一個完美的世界裡，我們都應該一個晚上睡足8小時。睡眠是個人成長和創造力的關鍵。睡眠習慣不好，是我們尚未擺脫忙碌狀態的明證。

  4. http://www.managertoday.com.tw/articles/view/45569

在得意與失意之際皆能以平常心觀之，則人生無礙
by 趙永祥 2015-03-10 15:27:18, 回應(1), 人氣(2101)

人生體悟：

在得意與失意之際，皆能以平常心觀之，則人生無礙！




趙夫子


Ryan Tan 的相片。

【控制與佔有】
by 趙永祥 2015-03-08 14:25:06, 回應(3), 人氣(1871)


                      【控制與佔有】

華藏衛視

主講: 淨空法師

【控制與佔有】講經內文

可是愛心是義務的付出，決定不能佔有。凡夫的愛心，縱然是對自己的兒女、親人很愛護，也不算是慈悲。因為他有控制、佔有的念頭，念念想控制、佔有一切人事物，這是錯誤。錯在哪裡？佛告訴我們「能所皆空，了不可得」。六百卷《般若經》裡，「不可得」這三個字重複千遍以上，就是要我們牢牢記住，「不可得」是事實真相。以為一切有能得、有所得，那是愚痴、無明。

若了解一切法不可得，能所俱不可得，你就解脫了。「解脫」，用現代話說，就是心裡沒有負擔，你的心就得自在，妄想、分別、執著就會全部放下。我們處處放不下，主要是愚痴沒有破，還以為有能得、有所得，心裡還有負擔，所以生活很痛苦，修學功夫也不得力。

諸佛如來應化在世間，所作所為全是「夢中佛事，水月道場」。道場建立得再大、再輝煌，覺悟的人視為鏡花水月，沒有絲毫執著、慳貪，這才顯示出大自在，這才是高度的享受。生活中對一切人事物有受用，絕對沒有控制、佔有的念頭，這才是過佛菩薩的生活，凡夫與佛菩薩不相同之處就在此地。凡夫是念念當中要控制別人，念念當中要佔有一切，所以心裡患得患失，憂慮煩惱永遠不斷，這種日子過得好苦。

而佛菩薩的大慈大悲，一定圓滿含攝「真誠、清淨、平等、正覺」。這五句中的任何一句，都含攝其他四句，「一即一切，一切即一」。若慈悲心不清淨、不平等，就是佛法講的四種慈悲的「愛緣慈悲」。這是凡夫的慈悲，沒有捨棄控制、佔有，沒有捨棄種種要求，這不是大慈大悲。愛緣慈悲往上提升，是「眾生緣慈悲」、「法緣慈悲」，再向上是「無緣慈悲」，大慈大悲就是無緣慈悲。無緣就是無條件，無有要求、無有佔有、無有控制，這是諸佛與法身大士的大慈大悲，也是具足真誠、清淨、平等、正覺的慈悲心。我們要是用這種心來處事待人接物，在處事待人接物裡就證果了；像《華嚴經》說的「入大解脫門」，就成佛了。這個大也是大乘的意思；小的解脫門是阿羅漢，小乘聖者。

【讀經聞法重要】

我們是凡夫，業障、習氣、煩惱非常深重，很不容易斷除，唯有用覺悟的方法才能斷除。所以讀經聞法非常重要，一天都不能間斷。我們不是上根利智的人，不可能短時間的聽聞、學習就能開悟。中下根性的人，想在一生中得利益，唯一的方法就是讀經聞法，長時間的薰修，才能契入《華嚴經》所講「入佛法」的境界。入佛法就是覺悟，這是真正得大利益。

【管事操心】

我是個凡夫，是個中下根性的人，今天能有這點成就，能有這點小智慧，是四十多年天天讀經、天天講經得來的。也有一些大德們也是講經，但他們除了講經外，還要管事；管事要操心，對自己多少有妨礙。我這一生的緣分殊勝，一生中「不管人、不管事、不管錢」，所以世俗間的事務，對我沒有障礙，才能有這點成就，這也是我現身說法為大家做個榜樣。

什麼人能管事？真正得清淨心的人。所以古代寺院叢林裡的管事，都是諸佛菩薩應化再來的。我們不是聖人應化，我們是道道地地的凡夫。道道地地的凡夫若也辦事，就是捨己為人，也值得敬仰。雖犧牲自己的定慧來服務大眾，但是戒一定要清淨，這才是修真正的福報。戒清淨是如理如法的照顧大眾，沒有私心，以真誠、愛護、關懷，幫助一切大眾好好修學。

韓館長就是這種人，她不是佛菩薩化身來的，她創建道場，成就大家，對我們的恩德很大。我們對她的報答，是表現在臨終那一刻，我們送她往生，這是大報恩。可是這種緣很不容易得到，不是每個人都有這麼好的緣分，這麼好的機會。她若不能往生，來生得大福報，作國王大臣、大富長者。但世間的福報，做到大梵天王、摩醯首羅天王，還是搞六道輪迴，出不了三界，所以那個福報不是究竟圓滿的。我們現在清楚明白，唯有往生不退成佛，才是真實的。

【學過日子】

修學就是學過日子，知道如何對自己、對別人。對自己決定是清淨、慈悲，專修專弘；對別人，一定要真誠、清淨、慈悲，做到無緣，沒有條件。決定不可對一切人事物，有絲毫控制、佔有的念頭；只要有這個意念在，就是造業。所以放下一切控制、佔有，放下一切要求，這是智慧，這是功德，比福德還要殊勝。希望大家共同勉勵，依教奉行。



馬雲與台灣青年對談火花：創業不抱怨、怕迷茫
by 趙永祥 2015-03-06 18:27:22, 回應(0), 人氣(1244)


馬雲與台灣青年對談火花：創業不抱怨、怕迷茫
SmartM編輯部/陳薪智/104.03.05

馬雲來台與台灣大學、台灣師範大學及台灣科技大學學生，共同對談關於青年創業創新議題，以下為對談Q&A整理。

Ｑ：您提到失敗經驗只有那幾種，有哪些就屬於失敗經驗？

Ａ：養企業就像養小孩，小孩初期有抵抗力，但慢慢6個月後容易感冒，而企業20-40人最不容易犯錯，沒有錢就不怕出錯，錢一多後反而容易開始礙手礙腳。而企業人數也是問題，當企業200人以上可能開始忙亂，到800人又是新挑戰，再到10,000人以上更難管理。

所以創業初期找合夥人很重要，初期找5個都是MBA畢業的不會成功，職稱越大越難低下身去幹活，所以要找最合適的人，例如年輕人願意跟企業一起成長，這些人有共同目標。另外，阿里巴巴是在家創業，我們初期在全球招聘人才時，反而故意選在破爛辦公室招聘，所以年輕人在求職時不要只看公司硬體是否華麗，外觀不一定代表公司體質是好的。企業每一階段在用人、用設備的想法都又不斷變化，犯錯誤很正常，不承認錯誤才比較危險。

Ｑ很多青年做小型創業是迎合個人需求，但可能不符合市場，如何測試水溫？

1.不要用MBA角度去創業，而是用狼性的性格去闖行業，即使再好的產業你投入也可能失敗，所以創業要選擇自己非常非常喜歡、有興趣的內容，因為我太想做這件事情，所以就不怕挑戰。2.從最簡單、最快的事情開始著手，先生存下來再開始茁壯，即使互聯網看似有發展性產業，失敗創業者也死了一堆，所以一定要選擇自己最感興趣的項目，從最簡單一步步慢慢走。

剛開始創業遇到很多挑戰容易不開心，所以一定要找到自己最熱愛的項目，痛苦感才能相對減少。不是每個人都適合當老闆，所以不當老闆的人要會挑老闆，挑選有發展性，找到比自己厲害、有胸懷的老闆，而老闆找員工要找有才幹的人，就像我當初找到蔡崇信，他比我聰明能幹，所以創業時，好的合作夥伴比錢還重要。

Ｑ我未來想去美國發展，但家人希望自己待在台灣，創業發現理念不同該怎麼辦？

我家人從沒支持我創業，你現在大學一年級聽父母的話，投入讀書多開拓學習經驗，就像我有六年教書經驗，才有今天創業的定性。與父親多溝通交流，完全聽父親不會有出息，但完全不聽又不是好兒子，所以把握大學這幾年時間好好思考。

Ｑ我曾在阿里巴巴實習，兩岸三地人才特質有何差異？

台灣年輕人彬彬有禮、相處起來很舒服，就像客服追求體驗，感受到自己回到熟悉環境的感覺，體驗與文化有關係，台灣年輕人很理性、有修養，溝通方式很值得學習。所以這次除了100億基金，還提供每年200位台灣人到阿里巴巴實習，在這邊學習如何組織、如何創業，所以我很期待台灣大學生的發展，我是創業者對年輕人永遠感興趣，台灣青年應該扎根台灣、放眼世界。

Ｑ想到阿里巴巴工作，有哪些條件？怎麼挑選人才？

我們選才開始與傳統方式不同，1.我們現在不看履歷，而是看學習能力。在大數據時代沒有人是專家，所以年輕人有本錢就有機會，2.願意幫助別人解決問題的能力，以別人為中心的能力。另一個注重開放，3.有開放的心胸去做就非常歡迎，所以希望幫台灣企業放眼全球。

Ｑ為何會選台灣投資？台灣企業如何拿到創業基金？

這100億基金不會希望解決台灣經濟問題，而是一種心意，領頭羊概念讓更多企業願意加入這個基金，一年後再來回顧如何做的更好，每個時代地區最受期待就是年輕人。

所以我們會成立專業團隊進行評估計畫，團隊會在台灣做本地服務，第一年，主要支持台灣本地年輕人，知道如何把有創意產品通過阿里巴巴，賣到中國跟全世界，這是重要核心，這是我們能幫上忙的方法之一。未來賺錢後會再投資回來到這個基金，例如台灣年輕人願意在淘寶上販賣台灣產品，這對淘寶、台灣都是雙贏局面。


對房地合一稅之看法
by 趙永祥 2015-02-24 07:53:08, 回應(0), 人氣(1791)


對房地合一稅之看法
趙永祥博士
南華大學財金系

房地合一稅制改革是要改善目前房地分開課稅缺失，建立制度，原來喬了八個月的稅改只是把現行的房產交易利得分課土地增值稅和房屋交易所得稅，合併為「所得稅」的形式，而成為主要或唯一目標，套個「先求有，再求好」的美名，無關居住正義、社會公平，也沒有量能課稅或增加稅收，如此的「意圖不明，境界不高」，算是哪門子的的稅制改革?又如何達到行政院宣示的「經由稅制調整的稅收增加，用於照顧青年、弱勢及老人」目標?

房地合一稅制，各界原本寄予厚望，但財政部受不了壓力而不斷退縮，最後提出的版本是輕稅又不排富，甚至訂定日出條款幫炒房客劃出逃命線，於是稅制改革開始走調，學界和社會團體紛紛表示失望和憤怒。行政院表示還沒定案，仍在社會、黨內溝通階段，因此我們試著針對財政部最近的言論，站在對話的角度，一一予以釐清。財政部好像得了失憶症，竟然忘了四年前實施的奢侈稅早已是「房地合一，實價課稅」。而且即使房地合一稅制對炒房客兩年內出售房產課徵30%所得稅，但因非自用的定義寬鬆，且以扣除成本、費用和土地增值額後的所得額為稅基，抑制炒房效果顯然比奢侈稅還小，簡直是「明修稅制，暗助炒房」，就稅改而言其實就是倒退走。

因不動產交易所得都是多年累積，若在同一年度實現，會累進到最高稅率45%，不是一般人可以負擔、17%的稅率並不算低，稅負將增加三到四倍。給一戶自住房屋在4,000萬元以下免稅，還有長期最高80%的折扣，一般自住者，尤其一家數口只有一棟房屋者，根本課不到所得稅，而炒房客扣除長期折扣優惠、及成本、費用和土地增值額之後還能獲利上千萬元，這代表實際獲利為數千萬元，才課徵45%的稅率怎會負擔不起？又哪來稅負暴增的問題？財政部會幫炒房客設想，難道就不知目前綜所稅適用最高稅率45%的其實大多數是高薪資所得者，何不轉念將辛勤的薪資所得改為可有成本費用扣除並以最高稅率17%分離課稅？

採累進稅率易致投資客成立一人公司炒房，所以才採和營所稅一樣的單一稅率17%。財政部想到炒房客會避稅就手足無措，一下子就被看破手腳，豈不是未戰先輸？財政部怎能沒有對策?實質課稅原則不能用嗎？國稅局沒有查核能力嗎？營所稅就不能對炒房者也分離課徵更高的稅率嗎？此外，「訂日出條款是希望重新開始，保障廣大自住者、長期持有」的說法，更是不知所云。原版已將自住者、長期持有者排除在課稅對象之外，財政部不見房產稅制不公的漫漫長夜，卻寧可讓居住正義的房產稅制晚幾年日出，不是擺明要讓「既有的」炒房客慢慢從奢侈稅解套？

至於「房地合一課稅方案絕對不能讓房市硬著陸」的說法，更是杞人憂天。台灣空屋超過200萬棟，房價卻仍飆漲，形成深沈的民怨，財政部先是提供資金（遺贈稅大降又沒配套），慢半拍才有對策（晚了兩年多才推出奢侈稅）；反而在大眾期待房地合一實價課稅以使房價合理修正之際，財政部卻處處為投資客設想。財政部改為輕稅之後，炒房客賣房意願降至近兩年來新低，房價開始升溫，從炒房客喜形於色的反應中，財政部真不知道民怨加深的帳一定會算到自己身上？

總之，財政部的房地合一稅制已經變調走味，是「有若無，實若虛」的稅改，在落實居住正義和社會公平方面可謂「晚節不保」，便宜炒房客，更加深民怨，明年總統和立委大選，選民必然把這筆帳算在執政黨頭上。好戲在後頭，我們拭目以待。

The Benefits of Strategic Risk Management in Decision-Making: risk impacts on corporate performance and future development
by 趙永祥 2015-02-15 07:49:08, 回應(2), 人氣(2485)

The Benefits of Strategic Risk Management in Decision-Making
: Practical experiences on how to encourage decision-makers to realize risk impacts on corporate performance and future development

by Dr. Chao Yuang Shiang


While conventional enterprise risk management (ERM) techniques have done a reasonable job in identifying and mitigating financial and operational risks, research shows that it is the management of strategic risk factors that will have the greatest impact on your ability to realise your strategic objectives. 

Bringing ERM into the forefront of strategic decision making and execution could thus give your business a decisive edge.


Strategic risks
can be defined as the uncertainties and untapped opportunities embedded in your strategic intent and how well they are executed. As such, they are key matters for the board and impinge on the whole business, rather than just an isolated unit.
 
Strategic risk management approach 
can be viewed as your organisation’s response to these uncertainties and opportunities. It involves a clear understanding of corporate strategy, the risks in adopting it and the risks in executing it. These risks may be triggered from inside or outside your organisation. Once they are understood, you can develop effective, integrated, strategic risk mitigation.


The main types of risk a business is likely to face. 

Type 1. Financial risks
Financial risks are typically well controlled and are part of the routine focus of board risk discussions, with strong impetus coming from the increased regulatory, accounting and financial audit focus. As financial information is a key element of stakeholder communications, performance measurement and strategic delivery, board risk discussions will devote considerable time to these risks. The different types of risks will be discussed as follows.
 
Type 2. Operational risks
Operational risks are typically managed from within the business and often focus on health and safety issues where industry regulations and standards require. These internally driven risks may affect your organisation’s ability to deliver on its strategic objectives.
 
Type 3. Hazard risks
Hazard risks often stem from major exogenous factors, which affect the environment in which the organisation operates. A focus on the use of insurance and appropriate contingency planning will help address some of these. However, there is often a danger that as many of these risks cannot be controlled, boards and senior management will not reflect these in their strategic thinking. Confining strategic management to controllable factors will leave your business at risk of failing to address these factors.
 
Type 4. Strategic risks
Strategic risks are typically external or affect the most senior management decisions. As such, they are often missed from many risk registers. Your board has a responsibility to make sure all these types of risks are included in their key strategic discussions.

(Figure 2 sets out the main types of risk a business is likely to face)



Figure 2: Risks to business

The next discussion will be focused on how are risk management frameworks evolving in the face of these gaps in how risk is managed and the need for greater integration with strategic management? This research with board-dimension analysis is to highlight three major concerns.
First, many executives are worried that the risk frameworks and processes that are currently in place in their organisations are no longer giving them the level of protection they need.
Second, boards are seeing rapid increases both in the speed with which risk events take place and the contagion with which they spread across different categories of risk. They are especially concerned about the escalating impact of ‘catastrophic’ risks, which can threaten an organisation’s very existence and even undermine entire industries. 
Third, shift is that boards feel they are spending too much time and money on running their current risk management processes, rather than moving quickly and flexibly to identify and tackle new risks. As a result, some are not convinced that their return on spending on ERM is fully justified by the level of protection they gain from it.

 
Conclusion

These shortcomings as mentioned above reveal that current approaches to risk management are no longer fit for purpose. It is important to develop and expand existing frameworks and tools, drawing on outside experience and knowledge wherever possible. Indeed, the external viewpoint that independent directors can bring to the boardroom will play an essential part in ensuring this breadth of risk-thinking enhances the development of strategic thinking.  


Discussions

How to map the risks to key performance and value measures

Where possible, it is useful to consider risk in the context of how shareholders or stakeholders measure value in the organisation. This will help management articulate to stakeholders how the risks they are taking or the risks the business is exposed to may affect the organisation’s ability to realise its objectives. Creating common metrics for risk and performance also allows management to define the priorities of risk management activities and focus on the more relevant risks to stakeholders and the board.
 


Suggestions

Encouraging management to understand risk impacts in the context of key performance metrics can be a complex task. However, if the key value drivers of the business are well understood by management, determining the potential impact of risk events on these value drivers should be achievable and would be considered part of a good risk management system. The challenge your and many other boards face is how to make sure the processes used to review and approve strategy can be extended to include an appropriate consideration of risk. There is a range of approaches that may be taken into considerations.


Dr. Chao Yuang Shiang

(Faculty in Dep. of finance, Nan Hua university)

15-February-2015

人生四不原則
by 趙永祥 2015-02-13 11:32:12, 回應(1), 人氣(2256)


人生四不原則


不亂於心，不困於情，不畏艱難，不念過往

不亂於心，不困於情，不畏將來，不念過往。 [☀.¸¸. •歡迎轉貼、分享... 廣結善緣•.¸¸.☀.]

跪膝按摩 膝蓋復健法
by 趙永祥 2015-02-13 09:00:15, 回應(0), 人氣(2105)

跪膝按摩 膝蓋復健法
5-Minute Daily to Recover Knees



每天起床後， 用5分鐘做此運動，就可讓膝蓋逐漸恢復健康。 請參閱 "如何運動不傷膝蓋" 

也歡迎參觀我主持的Linmark聯誼會暨任江履昇女士清寒獎學金部落格: 

English Translation:
Hello, I would like to introduce you a very easy exercise to warm up and recover your knees.
榮華花間露，富貴草上霜，既生不帶來，亦死不帶去
by 趙永祥 2015-02-05 15:38:14, 回應(1), 人氣(5286)


人這一輩子無非就是個過程，

榮華花間露，富貴草上霜，既生不帶來，亦死不帶去，
得意些什麼？失意些什麼？

結論

每天所遭遇的人事物能以平常心看待，順其自然、隨遇而安，

身心如行雲般自在，像流水般灑脫才是人生應有的處世態度。












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人這一輩子，無非就是個過程， 榮華花間露，富貴草上霜，生不帶來，死不帶去， 得意些什麼？失意些什麼？ 順其自然、隨遇而安， 如行雲般自在，像流水般灑脫，才是人生應有的態度。 [☀.¸¸. •歡迎轉貼、分享... 廣結善緣•.¸¸.☀.]

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