SR 11-7 SUPERVISORY GUIDANCE ON MODEL RISK MANAGEMENT

SR Letter 11-7 Attachment Board of Governors of the Federal Reserve System Office of the Comptroller of the Currency April 4, 2011 SUPERVISORY GUIDANCE ON MODEL RISK MANAGEMENT CONTENTS I. Introduction, page II. Purpose and Scope, page III. Overview of Model Risk Management, page IV. Model Development, Implementation, and Use, page V. Model Validation, page VI. Governance, Policies, and Controls, page VII. Conclusion, page 1 2 3 5 9 16 21 I. INTRODUCTION Banks rely heavily on quantitative analysis and models in most aspects of financial decision making.[Fo tn1oe They routinely use models for a broad range of activities, including underwriting credits; valuing exposures, instruments, and positions; measuring risk; managing and†¦show more content†¦For example, steps taken to apply this guidance at a community bank using relatively few models of only moderate complexity might be significantly less involved than those at a larger bank where use of models is more extensive or complex.[PageBreak] - For instance, the OCC provided guidance on model risk, focusing on model validation, in OCC 2000-16 (May 30, 2000), other bulletins, and certain subject matter booklets of the Comptrollers Handbook. The Federal Reserve issued SR Letter 09-01, Application of the Market Risk Rule in Bank Holding Companies and State Member Banks, which highlights various concepts pertinent to model risk management, including standards for validation and review, model validation documentation, and back-testing. The Federal Reserves Trading and Capital-Markets Activities Manual also discusses validation and model risk management. In addition, the advanced-approaches risk-based capital rules (12 CFR 3, Appendix C; 12 CFR 208, Appendix F; and 12 CFR 225, Appendix G) contain explicit validation requirements for subject banking organizations.EndofFootnote2.] Page 2 III. OVERVIEW OF MODEL RISK MANAGEMENT For the purposes of this document, the term model refers to a quantitative method, system, or approach that applies statistical, economic, financial, or mathematical theories, techniques, and assumptions to process input data into quantitative

The Body Shop Study Case - 2587 Words

Executive Summary The Body Shop International PLC has been facing a myriad of issues in the late 1990s. At its creation, the body shop has seen tremendous growth and success. The company thrived to bring a new revolutionary business model and was extremely successful. But after those successful years in the early 1990s, the competition became fierce as new entrants came and absorbed parts of the market. This led to declining sales and profits for the company as they were not able to differentiate themselves from the new competition. The founder of The Body Shop PLC, Anita Roddick, who was the previous Chief Executive Officer, decided to step down and handed over the position to Patrick Gournay. The new CEO implemented a new strategy and†¦show more content†¦As a result, the company failed to maintain their niche brand image and the quality of products was perceived as mediocre. Anita Roddick, founder of The Body Shop International PLC, believes in social change and action, and skin care. Financial results were of the least concern to her. After persistent failures of trying to revitalize the company, she stepped down as Chief Executive Officer in 1998 and Patrick Gournay came on board instead. Even as management changed, problems continued in fiscal year 2001 because the revenue increased by 13% but pretax profit declined by 21%. Yet, Gournay was confident that a newly implemented strategy would produce improved results. The new strategy consisted of three principal objectives: â€Å"To enhance The Body Shop brand through focused product strategy and increased investment in stores; to achieve operational efficiencies in our supply chain by reducing product and inventory costs; and to reinforce stakeholder culture.† According to the newly implemented strategy, we will estimate The Body Shop’s future earnings and financial needs to come up with short term and long term plans for The Body Shop. Since Anita is a strong-willed decision-maker without patience for finance, we will make both technically and practically correct projections by doing sensitivity analysis. 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Background and Rationale for the Research Free Essays

Violence is an intrinsic phenomenon in human society and its occurrence or recurrence indicates the ever dynamic character of society. Violence ensues because man ‘s interests and inclinations are varied and often antagonistic. The propensity of man to pursue his selfish interests which usually give room for the outbreaks of violence necessitated the evolution of the state as an impartial referee to check human excesses. We will write a custom essay sample on Background and Rationale for the Research or any similar topic only for you Order Now In Africa, conflicts leading to violence have become a major source of concern due to their recurrent nature and consequence on the continent ‘s development efforts The problem of insurgency in Africa dates back to 1904 when Moroccan insurgents kidnapped American nationals at Tangier, Morocco (Nwolise, 2005). The Nigerian experience of insurgency started pre-independence and increased significantly after independence (Olaniyan and Asuelime, 2014). However, in recent years, the insurgency in Northern Nigeria by Boko Haram continues to attract worldwide attention and it is impacting on the corporate existence of the country, especially on agricultural, which is the main economic activity in Northern Nigeria (Osumah, 2013) The insurgency has created the big humanitarian crisis, with the recorded number of internally displaced persons totalling 2.3 million people in 2017 (United Nations Refugee Agency, 2017). The literature on counter-insurgency propose diverse frameworks for understanding as well as tackling the issue, e.g. defeat through the enemy, population-centric methods- with the focused programme of support for the state. (Williams et al, 2016) An examination of literature in counter-insurgency in Nigeria shows that the response of the state has been multi-dimensional and multi-agency approach (through active colouration with both statutory, non-statutory and not for profit organisations) (Onapajo, 2017) Whilst, this is the case, the counter-insurgency approach and intervention have weighed more heavily on the military as opposed to non-military measures. Evidence shows that this approach has been counterproductive as violent activities and various crimes against humanity are still being committed by Boko Haram (Amnesty International, 2015). The author is of the opinion that the state approach requires more thorough examination, â€Å"even when there are multidimensional differences between Nigerian state and states likes India where military approach solely worked in defeating the insurgents and for this † This research has as its focus – a critical assessment of counterinsurgency measures and strategies in Nigeria, which have been two-fold: First, militarist methods like deployment of soldiers and creation of new military base in the northeast (Akinbi, 2015), and second, the political methods such as the establishment of Internally Displace Centres (IDC) across the country and active collaboration with international organisations and security agencies (Onuoha, 2012). It aims to explore why in spite of the interventions, insurgency activities are still going on in Nigeria. The research will scrutinize existing research on counterinsurgency in Nigeria and Africa, especially published works by policymakers and academics as well as security agencies. Statement of the Problem and Justification for the Research Evidence revealed that insurgency in the country is a reflection of weakness and lack of institutional frameworks and capacity. Also, it reflects a myriad of the economic, social, cultural and political quagmire the country is experiencing currently by Naeke (2016) cited in the African-Centred Solutions Building Peace and Security in Africa. As mentioned above, this research aims to examine the counterinsurgency approaches in Nigeria, with the principal purpose of developing or identifying a workable framework of analysis. It is hoped that this research will contribute to future research on counter-terrorism measures in Nigeria. The British counterinsurgency strategies applied in Malaya (1948-1960) that successfully transplanted in Kenya (1952-1960) will also be explored, as they appear to have worked in a multi-ethnic setting. This approach has been far-fetched in the Nigerian state counter-insurgency measures. The above points are also mentioned by Weitz (2006) who noted that use of military approach can only record a success in the counterinsurgency campaign if it utilizes best practices to look into the factors that led to the crisis, and provide needed facilities to discourage both citizens and followers of the insurgent group through providing educational awareness. Therefore, this work will explore counterinsurgency that will incorporate population-centric factors and interventions, in opposition to enemy-centric styles (see, e.g. Sitaraman, 2009). The work of Sitaraman will be used as a theoretical and policy framework because it is relevant to this research due to its focus on population-centric interventions. To date, there is the paucity of policy and scholarly research work on the effectiveness of the Nigerian counterinsurgency strategies. This claim gives credence and justification for doing this research, in view of two decades of failed policy interventions and the seriousness of the insurgency. It is hoped that the findings may be used by the government of Nigeria to revise its approach. This research is significant because it will scrutinize the security apparatus of government and their short-comings so far in handling the activities of the insurgents in the country. This current research is timely intervention because it will assist the policy-makers in the areas of formulation and implementation of public policy, especially counterinsurgency strategies. This current research will contribute more knowledge to the subject matter –counterinsurgency strategy, not only in Nigeria but other Sub- Saharan African States who are under the threats of insurgent groups. This research, therefore, becomes significant as it is geared towards identifying the best practice counterinsurgency strategy with a view to establish that the country adopted style is inappropriate and ineffective therefore necessitating the adaptation and adoption of best practices that are valuable to the fighting of modern insurgency like the Nigerian experience. The Aim of the Research The research aim is to explore the counterinsurgency interventions by the Nigerian government to address the Boko Haram Insurgency in the Northern Part of the Country Objectives of The Research The objectives of the research are: To understand the nature and extent of insurgency in Northern Part of Nigeria To explore whether social cultural and economic settings are imperative to the analysis of insurgency To scrutinise literature on counter-insurgency in order to identify the different theoretical perspectives and philosophical positions as well as unpack the different concepts that are relevant, e.g. identity, religious, ethnic affiliations. To explore the level of international co-operation and multi and bilateral agreements on counter-insurgency in Nigeria. Research Question The following research question has been identified: Are the counterinsurgency intervention measures and strategies introduced by the Nigerian government fit for purpose? The Scope and Limitations of the Research The research delimits the scope to cover Nigeria’s State Policies and Strategies on counterinsurgency operations from 2009 to 2017. This research scope covers the government interventions to the Boko Haram insurgency in particular from 2009 when the insurgent group commence violent attacks in the North-East before its activities came to capture global and national attention, to 2017. Emphasis will be placed on the response of the Nigerian state within this period. The major limitation of this research is the inability of the researcher to gain access to members of the Boko Haram sect for interviews. Some victims of the sect ‘s activities which were reached in Jos, Lagos, Kaduna and Abuja were not willing to talk, and this forms another setback to this research. Furthermore, members of the public particularly the target population for this research especially security agencies like the Department of State Security (SSS), the Police Force, Defence Headquarters etc. we’re not willing to divulge necessary information on grounds that the required information is classified and the Theater Commander of the Operation Lafiya Dole is far from the targeted population, the headquarters of the Operation Lafiya Dole is at Maiduguri, Borno State and is not part of the fieldwork area. The significance of the research This research shall be of significance to knowledge as it will enable the Nigerian authorities and members of the public to appreciate what really need to put in place for winning hearts and minds of the populations, rather than sincerely and consciously getting to the immediate root causes of Boko Haram Insurgency and addressing them there from proactively, the Nigerian state rather adopts a violent or reactive approach which has so far not been successful but has only worsened the situation and to avoid the causes of another Boko Haram Insurgency in Nigeria. It will also enhance an understanding of the stages of the crisis in order to build up counterinsurgency interventions to effectively arrest insurgent violence when they erupt if there is the failure in the application of early warning. Finally, it will serve as a contribution to existing literature on the counterinsurgency interventions which can assist other researchers in future studies. This research therefore becomes significant as it is geared towards identifying the best practice of counterinsurgency interventions to win the hearts and minds of the population and to curb the activities of the insurgents and the remote and immediate causes of the Boko Haram insurgency with a view to establishing the policy framework that the country intervention measures to managing the Boko Haram. Violence is inappropriate and ineffective therefore necessitating the adoption of more effective and amicable counterinsurgency interventions. Organization of Chapters This research is structured into a seven-chapter framework. Chapter one introduces the research and comprises of the statement of the problem, objectives, significance, and scope and limitations. Chapter two comprises of literature review and theoretical framework of the research. Chapter three presents a general overview of the Boko Haram Insurgency in Nigeria. Chapter four presents the various steps taken to conduct the data collection and design. Chapter five explores the counterinsurgency interventions to counter Boko Haram Insurgency in Nigeria and asses the counterinsurgency interventions to counter insurgents in the developed and developing countries. Chapter six discuss the research findings and analysis of data obtained from the potential participants through semi-structured. Chapter seven discuss the summary, conclusion and recommendations of the research. The operational definition of terms Insurgency The research will adopt the definition of the United States Department of Defence to describe insurgency as a group that aimed at the overthrow of a legitimate and constituted authority of a state through the use of subversion and armed conflict (Sources) It can also be classified as a rebellion against a legitimate government when those taking part in the rebellion are not recognized as belligerents and utilisation of subversion and violence to seize, nullify or challenge the political system. Terrorism Terrorism will be perceived as an attack against the state through an avenue to create violence among the majority non-combatants masses and utilisation of fear to achieve political or ideological goals of the group or movement they represent. (Source) Counterinsurgency Counterinsurgency can be perceived as counterinsurgency campaigns integrate political, security, economic, and informational components that reinforce governmental legitimacy and effectiveness while reducing insurgent influence over the population. COIN strategies should be a comprehensive civilian, military efforts and civic actions taken to simultaneously defeat and contain insurgency and address its root causes and winning hearts and minds of the local populace from insurgent violence; strengthen the legitimacy and capacity of government institutions to govern responsibly and marginalize insurgents politically, socially, and economically. (Source) How to cite Background and Rationale for the Research, Papers