Risk‐Based Capital Allocation Using a Coherent Measure of Risk
This article outlines a procedure for quantifying risk‐adjusted capital reserves that may be used for both performance evaluation and capital allocation. The author identifies and quantifies the sources of risk capital that must be addressed, to cover current investment and withstand market shocks, for any business line that exhibits earnings volatility. The author classifies risk capital into two types: market‐risk capital and earnings volatility‐related capital. Market risk capital may be divided into two categories; risks due to “normal” or “diffusion” type price movements and catastrophic moves or “stress” events. In contrast, earnings volatility‐related capital is directly related to the firm's equity‐at‐risk, in the event that market shocks lead to sustained earnings volatility. The author suggests that these risk‐adjusted capital measures may be used as a benchmark, in conjunction with net earnings, to evaluate performance, or to allocate equity capital across different operations within a firm.
Building a Coherent Risk Measurement and Capital Optimisation Model for Financial Firms
In this paper, the authors consider how risk measures, based on internal models of this type, might be integrated into a firm's own methodology for allocating risk capital to its individual business units and for determining its optimal capital structure. They also consider the implications of these developments for the future approach to determining regulatory capital requirements.
Tourism in the Amazon: identifying challenges and finding solutions
Purpose – The purpose of this paper is to provide an overview of the tourism sector in the Amazon regions of Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname and then discuss the manner in which tourism activity assists the protection of the Amazon rainforests. The paper also describes the manner in which the first World Hospitality and Tourism Themes Roundtable on Tourism in the Amazon is organized in 2009.Design/methodology/approach – Teams of researchers from the Ministries of Tourism, the private sector and academia in the Member Countries of Treaty for Amazon Cooperation collaborated to address, in ten‐page papers, the question “Does sustainable tourism offer solutions for the protection of the Amazon rainforest?”Findings – The paper provides valuable information on the current state of tourism policy and practice in the Amazon Member Countries. It also articulates the challenges that attend the development of sustainable tourism as a mechanism for the protection of the Amazon.Practical...