Momentum trading and Business Cycle Risk Evidence from BRIC Countries Free Essays

string(249) " investors who have quick access to information are capable of making superior abnormal returns while those who do not have quick access to information tend not to make superior risk-adjusted returns by using such information as a basis of trading\." 1. Introduction. BRIC (Brazil, Russia, India and China) countries are growing at an alarming rate. We will write a custom essay sample on Momentum trading and Business Cycle Risk: Evidence from BRIC Countries or any similar topic only for you Order Now This growth can be attributed to a number of factors including globalisation, financial liberalisation which has led to an increase in cross-border capital flows, technological developments and the internet. These countries are forecast to witness tremendous growth in the years ahead. The alarming growth of BRIC countries has attracted investors in search of suitable environments for portfolio diversification to consider BRIC countries as potential destinations for diversifying their portfolios. This paper presents a proposal to study the link between business cycles and momentum trading in the BRIC stock markets. The paper aims at understanding how business cycle risk affects momentum profits in BRIC countries. The study also seeks to provide an understanding of how momentum profits are affected by firm specific characteristics such as firm size and book-to-market ratios in BRIC countries. 2. Objectives of the study The objective of the study is to determine the impact of business cycle risk on momentum profits and thus momentum trading in BRIC countries. Research Questions The study aims at answering the following questions: Are there momentum profits in the stock markets of BRIC countries If so, what is the impact of Business Cycle risk on these profits What are the regulatory implications of momentum profits in BRIC countries Significance of the Study The study is significant to market regulators in that it will enable them design regulatory requirements aimed at reducing inefficiencies in BRIC stock markets thereby increasing their ability to attract capital. The study will also help foreign investors to gain more confidence in BRIC countries. Finally, the study will serve as a reference point for future researchers interested in conducting research on momentum profits. Limitations of the Study The study is limited only to BRIC countries. This limitation means that generalising results to other countries may not be possible. It is also limited only to a number of firms in these countries which suggests that results obtained may not be generalised to all firms. Finally, the variables employed in the study may not adequately measure momentum profits or adequately conceptualise how momentum profits are affected by business cycle variables. 5. Literature Review. A momentum trading strategy is a trading strategy that is designed based on past performance. The trading strategy is based on the assumption that â€Å"history will repeat itself†. A momentum trading strategy is therefore a strategy, which assumes that the return performance will persist in the medium term (Signos and Chelley, 1994). Momentum profits were first observed by Jegadeesh and Titman (1993). Accordingly, the study observed that stocks that performed well in a previous period also performed well in the current period, while those that performed poorly in the previous period also performed poorly in the current period. This means that a trading strategy that went long on previous winners while shorting previous losers would result in positive abnormal returns. In particular Jagadeesh and Titman (1993) observed the realisation of positive abnormal returns of 1 percent with the momentum strategy. In addition, a number of other studies have observed significant positive abnormal returns with the momentum trading strategy (e.g., Moskowitz and Grinblatt, 1999; Jegadeesh and Titman, 2001; Liu et al. (1999), Hong and Tonks, 2003; Gregory et al., 2001; Griffin et al., 2003; Gregory et al. 2001; Rouwenhorst 1998). The implication of the existence of such a Band Wagon (money making strategy) is that markets were not efficient. According to the weak- and semi-strong form efficient market hypotheses, all information available to the general public is already reflected in stock prices. This means that investors cannot realise superior risk adjusted returns by adopting a particular trading strategy such as the one proposed by momentum trading (Ross et al., 1999; Bodie et al., 2007). Attempts to attribute this finding to inefficient markets have been opposed by Fama and French (1993, 1995, 1996) who argued that observing momentum profits cannot be attributed to inefficient capital markets. Rather the single factor capital asset pricing model (CAPM) has been criticised for not being able to properly explain the variability of the cross-section of stock returns. This model suggests that stock market returns depend on a single factor (i.e., the return on the market portfolio). However, Fama and French (1993, 1995, 1996) contest this view and argue instead that stock returns could be explained by additional factors such as the book-to-market ratio and firm size. A three factor model is therefore proposed which takes into account the impact of size and book-to-market ratio and is found to perform better than the single factor CAPM (Fama and French, 1993, 1995, 1996). In addition, the three factor model was extended to a four-factor model to include a momentum factor w hich measures the difference between the return on portfolios of stocks that performed well in the previous period and the return on portfolios of stocks that performed poorly. Including a momentum factor in the three-factor model thus making it a four-factor model enabled the model to be able to explain the momentum profits observed in Jagadeesh and Titman (1993) and the other studies identified in the Literature. In summary, Fama and French argue that anomalies such as those observed in momentum trading cannot be attributed to inefficiencies in capital markets. Rather they should be attributed to inadequacies in the models that are used in explaining the cross-section of stock returns. Other explanations have been offered for the observation of momentum profits. According to behavioural finance theorist, momentum profits are a result of slow movement of information. Behavioural finance theorists are against market efficiency theorists who argue that information is rapidly reflected in stock prices. Among behavioural theorists, Hong and Stein (1999) argue that momentum profits can be attributed to slow diffusion of information across interested investors. This means that some investors receive information about stock prices earlier than others and as such appropriate action faster than others. By so doing, investors who have quick access to information are capable of making superior abnormal returns while those who do not have quick access to information tend not to make superior risk-adjusted returns by using such information as a basis of trading. You read "Momentum trading and Business Cycle Risk: Evidence from BRIC Countries" in category "Essay examples" Barberi s et al. (1998) argues that momentum profits can be attributed to overreaction or underreaction of stock prices to news. The explanation from behavioural theorists conflict with those of Fama and French because behavioural theorists also suggest that there is nothing like an efficient market. Given the conflict between behavioural theorists and proponents of market efficiency, alternative explanations have been provided by recent studies. These studies argue that momentum profits are influenced by business cycle variables (e.g., Antoniou et al., 2007; Liew and Vassalou, 1999). Contrary to this view Griffen et al. (2002) in a study examining the link between business cycle variables and momentum profits across many countries argue that momentum profits are not a function of business cycle variables. While many studies have investigated the relationship between business cycle variables, most of these studies focus on developed markets with very little attention paid to emerging markets such as those of BRIC countries. Given the increasing role that BRIC countries play in the global economy, it is important to understand whether there are momentum profits in these countries as well as the role that business cycle risk has on momentum profits. This study is therefore a positive step toward contributing to the literature on momentum profits and business cycle risk by extending previous studies to stock markets in BRIC countries. 6. Research Methods This study will employ an econometric model to study the relationship between momentum profits and three sets of variables: (i) business cycle variables; (ii) firm specific variables (iii); and behavioural finance variables. The relationship between momentum profits and these variables can be represented using the following econometric model: (1) Where is a measure of the momentum profit of country i at in year t; is a vector of firm specific variables; is a vector of the past cumulative raw returns; and are the sensitivities of the momentum profits to changes in firm-specific variables and past cumulative returns respectively. The magnitude of the effect of these variables will be determined by testing the significance of the parameters at the 5% level of significance. In order to study business cycle variables, a model was developed by Chordia and Shivakumar (2002) and later extended by Antoniou et al. (2007). The model is an econometric model which establishes the relationship between momentum profits and business cycle variables. The model can be stated as follows: (2) Where is the return (inclusive of dividends) of firm i in month t, BC is a vector of j (j=1-6) macroeconomic variables representing business cycle variables (DY, Rf, TERM, DEF, FX, and GDP), and is the error term of stock i in month t. DY is the dividend yield; Rf is the risk-free interest rate; DEF is the premium for default risk premium which is estimated as the difference between the yield on long-term corporate bonds and the yield on long-term government bonds; The term spread (TERM) is the difference between the yield on long-term government securities minus the yield on short-term government securities; FX is the foreign exchange rate; and GDP is the change in GDP (Antoniou et al., 2007). As earlier mentioned, stock returns depend on two factors: market factors and firm-specific factors. There is a trade-off relationship between the manner in which each group of factors affect stock returns. That is the higher the impact of firm-specific factors, the lower will be the impact of market factors and vice versa (Antoniou et al., 2007). To estimate equation (1) equations 3 has to be estimated and its parameters used as inputs to equation (2). After estimating equation (2) its parameters can then be used as inputs to equation (1). In this study, both time-series and cross-sectional regressions are used. Cross-sectional regressions are preferred over time series regressions because they help to avoid data-snooping biases which tend to occur in time-series regressions. In the time-series regressions, individual stocks are used which help to reduce the degree of loss of information that tends to occur when portfolios are used. Using first-pass time series regression, which allows the parameters to also fluctuate with firm-specific variables. The firm-specific factors include firm size and book-to-market ratio. The first-pass time-series regression can be stated as follows: (3) is the return on firm i at time t, BC is a the vector of business cycle risk variables identified earlier, FF (Fama and French factors) are the firm-specific variables. Once equation (3) has been estimated, the parameters will be used as inputs to the second pass regression equation (4) below: (4) Where is the output of equation (3). It is the unexplained variation from equation (3). These include the intercept coefficient and the residual term (+) of the regression equation (3); is a vector of firm characteristics, which include firm size and book-to-market ratio for security i at time t. represent the three sets of past cumulative raw returns (for m=1-3) over the second through third (RET 2-3), fourth through sixth (RET 4-6) and seventh through twelfth (RET 7-12) months prior to the current month t. (Antoniou et al. 2007). 6. Data Stock price data for stocks in the BRIC countries will be retrieved from the Thomson Financial Datastream Database. Data on dividend yields will also be retrieved from this database. The database also reports data on exchange rates. GDP, interest rate and exchange rate data will be retrieved from the IMF International Financial Statistics (IFS) database. Stock price data will be used to calculate the monthly return for each stock over the 60 monthly holding periods from January 2007 to December 2011. The returns will be used as inputs to the first-pass regression. Given that this study is based on quantitative models that have been applied in other studies, there would be no need for pilot testing. Conclusion This paper was aimed at providing a research proposal to study how momentum trading is affected by business cycle variables. The proposal began by providing a general background on the topic. It later focused on the literature review, methodology and data description. The study will apply quantitative analysis to quantitative data from BRIC countries. The findings will provide a better understanding of momentum trading in BRIC countries and help policy formulation on how markets can become more efficient in these markets so as to enable investors make invest with greater confidence. References Antoniou A., Lam H. Y.T., Paudyal K. (2007). Profitability of momentum strategies in international markets: The role of business cycle variables and behavioural biases. Journal of Banking Finance volume 31, issue 3, pp. 955-972. Barberis N., Shleifer A., Vishny R.W.(1998). A model of investor sentiment, Journal of Financial Economics 49, pp. 307–343. Chelley-Steeley, Patricia and Siganos, Antonios, (2004). â€Å"Momentum Profits in Alternative Stock Market Structures†. Available at SSRN: http://ssrn.com/abstract=624583 Fama E.F., French K.R. (1996). Multifactor explanations of asset pricing anomalies, Journal of Finance 51 (1996), pp. 55–84. Griffin, John M., Martin, J. Spencer and Ji, Susan, â€Å"Momentum Investing and Business Cycle Risk: Evidence from Pole to Pole† (March 18, 2002). AFA 2003 Washington, DC Meetings; EFA 2002 Berlin Meetings Presented Paper. Available at SSRN: http://ssrn.com/abstract=291225 or DOI: 10.2139/ssrn.291225 Hong H., Stein J.C. (1999). A Unified Theory of Undereaction, Momentum Trading, and Overreaction in Asset Markets. Journal of Finance. Vol. 6, pp 2143-2184 Jegadeesh N., Titman S. (1998). Returns to buying winners and selling losers: Implications for market efficiency, Journal of Finance 48, pp. 65–91. Liew, Jimmy K.yung Soo and Vassalou, Maria, (1999). â€Å"Can Book-to-Market, Size, and Momentum Be Risk Factors That Predict Economic Growth?† Available at SSRN: http://ssrn.com/abstract=159293 or DOI: 10.2139/ssrn.159293 Rouwenhorst, K.G. (1998). International momentum strategies, Journal of Finance 53, pp. 267–284. Wu, X. (2002). A conditional multifactor analysis of return momentum, Journal of Banking and Finance 26 (2002), pp. 1675–1696 How to cite Momentum trading and Business Cycle Risk: Evidence from BRIC Countries, Essay examples Momentum trading and Business Cycle Risk Evidence from BRIC Countries Free Essays string(57) " suggest that there is nothing like an efficient market\." 1. Introduction. BRIC (Brazil, Russia, India and China) countries are growing at an alarming rate. We will write a custom essay sample on Momentum trading and Business Cycle Risk: Evidence from BRIC Countries or any similar topic only for you Order Now This growth can be attributed to a number of factors including globalisation, financial liberalisation which has led to an increase in cross-border capital flows, technological developments and the internet. These countries are forecast to witness tremendous growth in the years ahead. The alarming growth of BRIC countries has attracted investors in search of suitable environments for portfolio diversification to consider BRIC countries as potential destinations for diversifying their portfolios. This paper presents a proposal to study the link between business cycles and momentum trading in the BRIC stock markets. The paper aims at understanding how business cycle risk affects momentum profits in BRIC countries. The study also seeks to provide an understanding of how momentum profits are affected by firm specific characteristics such as firm size and book-to-market ratios in BRIC countries. 2. Objectives of the study The objective of the study is to determine the impact of business cycle risk on momentum profits and thus momentum trading in BRIC countries. Research Questions The study aims at answering the following questions: Are there momentum profits in the stock markets of BRIC countries If so, what is the impact of Business Cycle risk on these profits What are the regulatory implications of momentum profits in BRIC countries Significance of the Study The study is significant to market regulators in that it will enable them design regulatory requirements aimed at reducing inefficiencies in BRIC stock markets thereby increasing their ability to attract capital. The study will also help foreign investors to gain more confidence in BRIC countries. Finally, the study will serve as a reference point for future researchers interested in conducting research on momentum profits. 5. Literature Review. A momentum trading strategy is a trading strategy that is designed based on past performance. The trading strategy is based on the assumption that â€Å"history will repeat itself†. A momentum trading strategy is therefore a strategy, which assumes that the return performance will persist in the medium term (Signos and Chelley, 1994). Momentum profits were first observed by Jegadeesh and Titman (1993). Accordingly, the study observed that stocks that performed well in a previous period also performed well in the current period, while those that performed poorly in the previous period also performed poorly in the current period. This means that a trading strategy that went long on previous winners while shorting previous losers would result in positive abnormal returns. In particular Jagadeesh and Titman (1993) observed the realisation of positive abnormal returns of 1 percent with the momentum strategy. In addition, a number of other studies have observed significant positive abnormal returns with the momentum trading strategy (e.g., Moskowitz and Grinblatt, 1999; Jegadeesh and Titman, 2001; Liu et al. (1999), Hong and Tonks, 2003; Gregory et al., 2001; Griffin et al., 2003; Gregory et al. 2001; Rouwenhorst 1998). The implication of the existence of such a Band Wagon (money making strategy) is that markets were not efficient. According to the weak- and semi-strong form efficient market hypotheses, all information available to the general public is already reflected in stock prices. This means that investors cannot realise superior risk adjusted returns by adopting a particular trading strategy such as the one proposed by momentum trading (Ross et al., 1999; Bodie et al., 2007). Attempts to attribute this finding to inefficient markets have been opposed by Fama and French (1993, 1995, 1996) who argued that observing momentum profits cannot be attributed to inefficient capital markets. Rather the single factor capital asset pricing model (CAPM) has been criticised for not being able to properly explain the variability of the cross-section of stock returns. This model suggests that stock market returns depend on a single factor (i.e., the return on the market portfolio). However, Fama and French (1993, 1995, 1996) contest this view and argue instead that stock returns could be explained by additional factors such as the book-to-market ratio and firm size. A three factor model is therefore proposed which takes into account the impact of size and book-to-market ratio and is found to perform better than the single factor CAPM (Fama and French, 1993, 1995, 1996). In addition, the three factor model was extended to a four-factor model to include a momentum factor w hich measures the difference between the return on portfolios of stocks that performed well in the previous period and the return on portfolios of stocks that performed poorly. Including a momentum factor in the three-factor model thus making it a four-factor model enabled the model to be able to explain the momentum profits observed in Jagadeesh and Titman (1993) and the other studies identified in the Literature. In summary, Fama and French argue that anomalies such as those observed in momentum trading cannot be attributed to inefficiencies in capital markets. Rather they should be attributed to inadequacies in the models that are used in explaining the cross-section of stock returns. Other explanations have been offered for the observation of momentum profits. According to behavioural finance theorist, momentum profits are a result of slow movement of information. Behavioural finance theorists are against market efficiency theorists who argue that information is rapidly reflected in stock prices. Among behavioural theorists, Hong and Stein (1999) argue that momentum profits can be attributed to slow diffusion of information across interested investors. This means that some investors receive information about stock prices earlier than others and as such appropriate action faster than others. By so doing, investors who have quick access to information are capable of making superior abnormal returns while those who do not have quick access to information tend not to make superior risk-adjusted returns by using such information as a basis of trading. Barberis et al. (1998) argues that momentum profits can be attributed to overreaction or underreaction of stock prices to news. The explanation from behavioural theorists conflict with those of Fama and French because behavioural theorists also suggest that there is nothing like an efficient market. You read "Momentum trading and Business Cycle Risk: Evidence from BRIC Countries" in category "Essay examples" Given the conflict between behavioural theorists and proponents of market efficiency, alternative explanations have been provided by recent studies. These studies argue that momentum profits are influenced by business cycle variables (e.g., Antoniou et al., 2007; Liew and Vassalou, 1999). Contrary to this view Griffen et al. (2002) in a study examining the link between business cycle variables and momentum profits across many countries argue that momentum profits are not a function of business cycle variables. While many studies have investigated the relationship between business cycle variables, most of these studies focus on developed markets with very little attention paid to emerging markets such as those of BRIC countries. Given the increasing role that BRIC countries play in the global economy, it is important to understand whether there are momentum profits in these countries as well as the role that business cycle risk has on momentum profits. This study is therefore a positive step toward contributing to the literature on momentum profits and business cycle risk by extending previous studies to stock markets in BRIC countries. 5. Research Methods This study will employ an econometric model to study the relationship between momentum profits and three sets of variables: (i) business cycle variables; (ii) firm specific variables (iii); and behavioural finance variables. The relationship between momentum profits and these variables can be represented using the following econometric model: (1) Where is a measure of the momentum profit of country i at in year t; is a vector of firm specific variables; is a vector of the past cumulative raw returns; and are the sensitivities of the momentum profits to changes in firm-specific variables and past cumulative returns respectively. The magnitude of the effect of these variables will be determined by testing the significance of the parameters at the 5% level of significance. In order to study business cycle variables, a model was developed by Chordia and Shivakumar (2002) and later extended by Antoniou et al. (2007). The model is an econometric model which establishes the relationship between momentum profits and business cycle variables. The model can be stated as follows: Where is the return (inclusive of dividends) of firm i in month t, BC is a vector of j (j=1-6) macroeconomic variables representing business cycle variables (DY, Rf, TERM, DEF, FX, and GDP), and is the error term of stock i in month t. DY is the dividend yield; Rf is the risk-free interest rate; DEF is the premium for default risk premium which is estimated as the difference between the yield on long-term corporate bonds and the yield on long-term government bonds; The term spread (TERM) is the difference between the yield on long-term government securities minus the yield on short-term government securities; FX is the foreign exchange rate; and GDP is the change in GDP (Antoniou et al., 2007). As earlier mentioned, stock returns depend on two factors: market factors and firm-specific factors. There is a trade-off relationship between the manner in which each group of factors affect stock returns. That is the higher the impact of firm-specific factors, the lower will be the impact of market factors and vice versa (Antoniou et al., 2007). To estimate equation (1) equations 3 has to be estimated and its parameters used as inputs to equation (2). After estimating equation (2) its parameters can then be used as inputs to equation (1). In this study, both time-series and cross-sectional regressions are used. Cross-sectional regressions are preferred over time series regressions because they help to avoid data-snooping biases which tend to occur in time-series regressions. In the time-series regressions, individual stocks are used which help to reduce the degree of loss of information that tends to occur when portfolios are used. Using first-pass time series regression, which allows the parameters to also fluctuate with firm-specific variables. The firm-specific factors include firm size and book-to-market ratio. The first-pass time-series regression can be stated as follows; is the return on firm i at time t, BC is a the vector of business cycle risk variables identified earlier, FF (Fama and French factors) are the firm-specific variables. Once equation (3) has been estimated, the parameters will be used as inputs to the second pass regression equation (4) below: Where is the output of equation (3). It is the unexplained variation from equation (3). These include the intercept coefficient and the residual term (+) of the regression equation (3); is a vector of firm characteristics, which include firm size and book-to-market ratio for security i at time t. represent the three sets of past cumulative raw returns (for m=1-3) over the second through third (RET 2-3), fourth through sixth (RET 4-6) and seventh through twelfth (RET 7-12) months prior to the current month t. (Antoniou et al. 2007). 6. Data Stock price data for stocks in the BRIC countries will be retrieved from the Thomson Financial Datastream Database. Data on dividend yields will also be retrieved from this database. The database also reports data on exchange rates. GDP, interest rate and exchange rate data will be retrieved from the IMF International Financial Statistics (IFS) database. Stock price data will be used to calculate the monthly return for each stock over the 60 monthly holding periods from January 2007 to December 2011. The returns will be used as inputs to the first-pass regression. References Griffin, John M., Martin, J. Spencer and Ji, Susan, â€Å"Momentum Investing and Business Cycle Risk: Evidence from Pole to Pole† (March 18, 2002). AFA 2003 Washington, DC Meetings; EFA 2002 Berlin Meetings Presented Paper. Available at SSRN: http://ssrn.com/abstract=291225 or DOI: 10.2139/ssrn.291225 Antoniou A., Lam H. Y.T., Paudyal K. (2007). Profitability of momentum strategies in international markets: The role of business cycle variables and behavioural biases. Journal of Banking Finance volume 31, issue 3, pp. 955-972. Liew, Jimmy K.yung Soo and Vassalou, Maria, (1999). â€Å"Can Book-to-Market, Size, and Momentum Be Risk Factors That Predict Economic Growth?† Available at SSRN: http://ssrn.com/abstract=159293 or DOI: 10.2139/ssrn.159293 Rouwenhorst, K.G. (1998). International momentum strategies, Journal of Finance 53, pp. 267–284. Wu, X. (2002). A conditional multifactor analysis of return momentum, Journal of Banking and Finance 26 (2002), pp. 1675–1696 Jegadeesh N., Titman S. (1998). Returns to buying winners and selling losers: Implications for market efficiency, Journal of Finance 48, pp. 65–91. Barberis N., Shleifer A., Vishny R.W.(1998). A model of investor sentiment, Journal of Financial Economics 49, pp. 307–343. Fama E.F., French K.R. (1996). Multifactor explanations of asset pricing anomalies, Journal of Finance 51 (1996), pp. 55–84. Hong H., Stein J.C. (1999). A Unified Theory of Undereaction, Momentum Trading, and Overreaction in Asset Markets. Journal of Finance. Vol. 6, pp 2143-2184 Chelley-Steeley, Patricia and Siganos, Antonios, (2004). â€Å"Momentum Profits in Alternative Stock Market Structures†. Available at SSRN: http://ssrn.com/abstract=624583 How to cite Momentum trading and Business Cycle Risk: Evidence from BRIC Countries, Essay examples

Emergency Management And Homeland Security â€Myassignmenthelp.Com

Question: Discuss About The Emergency Management And Homeland Security? Answer: Introduction The aim of this report is to provide guidance to the A4A organization considering the processing and storage of data that is about to store in the information systems. The scope of this report is to provide a security risk management approach for the organization to the integrity, confidentiality, and availability of information that are being stored in the information systems of the organization. A4A is Non-Governmental Organization that is about to transform its existing system into the information system that means various data and information are about to be uploaded into the database. This will be vast transformation that will include outsourcing of the systems for other organizations and for larger space, they will need cloud storage that could result in various security issues related to the organizational operational activities and all the data related to the employees that are looking forward to join the organization. This report focuses on the guidelines that could help in achieving information security in better and efficient way for the data and information related to the organization. Risk assessment process have several step and these steps have been explained in the below report. Applicable Policy The policy for security of information by the Australian Government policy has been promulgated through the ISM and the PSPF. Several requirements those are mandatory within the PSPF that can be helpful to relate the handling of A4A information (Sylves 2014). A4A can only be able to achieve effective information security for the information that is about to save in the system regarding its members and operational activities. This can only be achieved if it becomes the part of the culture, operation and practices plans of the A4A. This implies that the A4A should not build protective security as an afterthought rather it should build it into the governance processes. The organization should proactively mitigate and manage the identified security risks at its early stages that are associated with the information storage system. Australian Privacy Law Set of thirteen APPs (Australian Privacy Principles) has been included within the Privacy Act 1988 (Cth) that can be helpful in regulating the handling of personal information by the A4A (Arregui, Maynard and Ahmad 2016). The information those have been remarked as personal should be determined by the A4A and handling of these information should be done according to the principles of the APPs. Privacy Legislation The pieces of legislations that are applicable to this policy can be listed as: Firstly, Freedom of Information Act 1982, secondly, Privacy Act 1988 and Archives Act 1983 (Zetler 2015). Risk Assessment Framework This can be stated as the set of guidelines for the risk assessment process on the basis of existing frameworks that is being defined in the Australian Standards AS/NZS ISO 31000:2009 Risk management that includes HB 167:2006 Security Risk Management, and guidelines and principles. Risk assessment can be referred as the subjective process and A4A should ensure that the defined process is justifiable, documented, and transparent (Saint-Germain 2015). It is the best option for many objectives like firstly, identifying the level of risk tolerance, secondly, identifying the specific risks to the employees, assets, and information that are being stored in the system. Third benefit is that identifying the appropriate protection in order to mitigate the risks that have been identified previously. Applying ISO 31000 The process of risk assessment process should be consistent within the existing standards. In order to successfully manage the risk assessment, the whole process can be sub-divided into five key points that can be stated as (Draper and Ritchie 2014): Establishment of the Context: This step states to define the external and internal influences that can have impact on the implementation of the arrangement directly or indirectly. Identification of the Risks: Developing a robust list of the identified risks, this might have the capability to affect the success in implementing this arrangement. Assessment of the identified Risks: After the first two steps it states to analysing the list of identified risks in contrast with the organisations likelihood, impact, and the tolerances. Selection of Proper Treatments: This step includes choosing risk assessing strategies that are appropriate for A4A including the controls for those identified risks. Development of overall Risk Assessment: This is the last and final step that includes summarization of the output of identified risks in accordance with the mitigating measures or control into all the categorized risks. Control risks Evaluate Risks Analyze risk Identify risk Established Context Consultation and communication Monitor and Review Figure 1: Risk Assessment Process (Source: Created by Author) Establish the Context The assessment process that is going to be implemented with the system of A4A must address the security, organizational and strategic risk management contexts in order to eliminate all the existing risks. All facets of the functions or activities of the organization will be covered by the security risk assessment (Whittman and Mattord 2013). For a successful risk management system it is necessary that the risk management is appropriate to be prevailing and emerging risk environment. Establishment of the context is a very critical objective as it provides a platform on which all the respective activities of the risk assessment are being conducted. How to Determine A4A Context Internal environment in which the organization is willing in order to achieve its goals can be stated as the context of the A4A. Following are the objectives that can be included in this topic: A4A Organizational structure, governance, accountabilities or responsibilities, and roles. Extent and nature of the contractual relationships (Wensveen 2016). Culture of the A4A including its security culture Policies and objectives including the strategies that are being made to achieve them. Perception, values of, and relationships with the internal stakeholders Models, guidelines, and standards that are being adopted by the organisation Lastly, information flows, decision making processes, and information systems The Strategic Context of Outsourcing A4A must consider the aspects of the strategic contexts that are relevant according to the situation that will be the factors which will be implemented in the risk assessment management process. These include, firstly, relevant Australian regulation, policy, and legislation considering the facts that are responsible for safeguarding the information related to the operational activities of the A4A (Peppard and Ward 2016). Secondly, it includes potential jurisdictional and foreign laws access to information, and third objective that is being included in this is the potential benefits of off shoring or outsourcing arrangements that is being arranged to manage the systems that needs to be installed. Identifying Risk Identifying risk can be used in manner to comprehensively determine the sources of risk that are applicable and the events that have potential to impact the business of A4A organization. There should be full description on the issues that is being identified in manner to make the decision makers completely understand the facts that is all about. A4A risk management team should determine the risks that are related to the availability, integrity, and the confidentiality of the types of data that is being saved in the information system considering the personal information of the employees and the operational data or information (Webet al. 2014). As mentioned in the AS/NZS 4360:2004 risks can be defined as The chance of something happening that will have an impact on the objectives. How to Determine Agency Risk Tolerance Intolerable risk Scope for A4A Tolerable risk Increasing risk Figure 2: Risk Tolerance (Source: Created by author) This determination can be made during the Establishing the context phase during the risk assessment processes. Risk tolerance is completely dependent on the organizational context of the A4A and Heads of the A4A. Tolerance level can be stated as the sum of risk appetite of A4A. The risk tolerance will be based on the the principle of managing risk to the reasonably practicable low level, while it still allows the scope for the innovation and flexibility in business practices. Boyens et al. (2014) stated that it can be affected or changed changing the evaluation criteria, which implies that appetite risk of the head of the A4A for the risk can be variable that can depends upon: Firstly, prevailing community and political expectations and sensitivities. Secondly, incident security nature such as hacking terrorist attack etc., thirdly, emergence or existence of security trends such as cyber-attacks, data breaches, trusted insider etc. Another factors may be business or strategic priorit ies, ability of the government, individual or the organization to compensate losses and lastly but not least availability of the resources for treatment. Questions To Consider When Determining Risks within Cloud Context In order to establishing context in a risk management it is very necessary to understand the nature of the vulnerabilities, criticality, and potential or relevant threat. The questionnaire that can be included in this section in order to facilitate it can be listed as (Rebello et al. 2015): The aggregated value of the information holdings to the A4A How the integrity, availability, and confidentiality of A4A will be affected What would be the look of an unintended disclosure? What would be the look of an event or incident How outsourcing might affect the information of the A4A including the sources of risks and related threats How much impact on losing information can affect the A4A A4A can take into account the individual security plans while searching for the information that are related to the risk identification process due to the existing presence of information on security of the information. Potential Threats When Outsourcing Information Data Loss: There may be the permanent deletion or loss of data, which could be a result of malicious activity or by any accident. Data Breaches: The information those are very sensitive for the organization could be leaked or stolen or might be manipulated by an unauthorized user (Peltier 2016). Service traffic or Account Hijacking: this another potential threat that might lead the external entities eavesdropping on the operational activities such as manipulating data, transactions, through phishing, fraud, and return falsified information. DOS (Denial of service): this threat or attack can block the user from accessing their application or data that will affect the organization and its consumers too. API (Application Programming Interface) and Interfaces Insecure: In manner to circumvent the security processes, vulnerable interfaces may be exploited maliciously and accidentally both. Malicious Insider: The insider formal stakeholders like contractor, former employee, or any of the other business partners can be threat who had or has the access authority to the network of the A4A organization (Dhillong, Syed and Sa-Soares 2017). This access authority can be misused for personal gain or profit by impacting negatively to the organization. Insufficient Due Diligence: Implementing cloud services into the system of the A4A without considering the scope of undertaking the vulnerabilities and weaknesses of this implementation. Shared Technology Vulnerabilities: Cloud infrastructure such as GPU, CPU caches etc. are vulnerable to scalable sharing practices if there is not any design established for the multi-tenant architecture. Mapping Risks In order to completely understand the impact of the risks that are identified, there should be proper emphasis on the vulnerabilities or causes that the identified risks possibly cause to the organization. In order to inform the risk assessment, it is essential to gauge the likelihood and the consequences of the risk events. Mapping risks will help in dividing the risks into categories according to their priority, which can be helpful in guiding the source allocation in order o mitigate the identified risks (Beckers et al. 2013). Various objectives are considerable during the mapping risks system those can be stated as: the sectors where there is the impact of the risks, the frequency of risk happen, outcome of the risk eventuating, the individuals that will be affected by the occurrence of the risk event and lastly, the stakeholders that are involved in the risk assessment including the impact of these risks on the stakeholders and many more. Assessing Risk After the relevant identification of the risks the assessment process can be used for the determination of the level of risks. There should be holistic evaluation of the likelihood of the risk that might occurred, acceptable level of the tolerances that can be presented by the graph mentioned in the figure 2, and the consequences of the identified risk events (Oppliger, Pernul and Katsikas 2017). In manner to address the consequences and likelihood levels there should be proper consideration on the effectiveness control and the sources of risk events. Risk assessment includes the level of control and oversight organizations have on the management of their information. For better explanation an example can be that the A4A confidential information related to the employee and the operational activities can be assessed in the relation to the integrity, availability, and the confidentiality including the aggregation (Soomro, Shah and Ahmed 2016). The risk assessment should be assessed on the basis of the potential impact of the risks for the A4A for the sectors mentioned above including all the stakeholders that might be affected due to these risks. Guidance on Determining Potential Consequences This step is completely dependent on the profile of the information that is about to store in the information system of the A4A. Information related to the donors, employees sensitive information such as bank account number, social security number and many more, all the transactional informational and much other information are about o store in the information system of the A4A (Albakri et al. 2014). The expose of such information could relate to the privacy and security issue of the individuals that are related to the A4A. Evaluating the Risks Evaluation of the risks related o the unintended expose of information about the operational activities and the data about the employees involves the consideration of the risks within the context of the potential treatment and A4As risk tolerance options (Yang, Shieh and Tzeng 2013). In many of the circumstances the unauthorized expose or access of the information that is being stored in the system might be quantified almost the whole in financial terms on the basis of revenue loss that results it in a matter of financial calculation. However, for these circumstances, A4A can consider a wide range of factors that includes the impact on the reputation of the organization due to the expose of this sensitive information that includes loss of data related to the employees and organizational operational activities (Feng, Weng and Li 2014). These objectives results in the complexity for calculating the risks level and the acceptance resides with the head of the organization How to Consider Potential Risk Treatment Options The risks related to the security of the organization cannot be eliminated completely but it can be minimized to an extent level as the security cannot be absolute. Thus the aim should be provided in tolerating the threats that includes firstly, for the identified risks rating level while making selections for the risk treatments for the systems that are being introduced for the storage of information should be conducted proportionally (Raghupati and Raghupati 2014). This could be divided into six step processes where A4A: firstly, prioritise the intolerable risks, secondly, establishment of the treatment options, thirdly, identification and development of treatment options, fourth, Evaluating the treatment options, fifth, detailing the review and design the selected options also considering the management of residual risks, sixth, communication and implementation. Communication and Consultation There should be a consultation and communication plan management that should be established at very early stage during the risk assessment in order to determine the processes that will be informed or communicated to the stakeholders including external and internal stakeholders (Itradat et al. 2014). Proper and effective communication and consultation during the process of the risk assessment can be helpful in ensuring the facts that are responsible or the successful implementation of the risk assessment process and that are responsible with a stake in the process through understandings that will implies that what decision is need to be made in order to successfully assess the identified risks and enhance the performance of the organization. The risk that could potentially affect the organization should be well communicated during the process of the risk assessment, particularly if it is related to the employees of the A4A. The perception of the stakeholders is also very important whi le communicating about the identified risks during the process of risk management. Risk Monitoring and Review This is also one of the important guidelines for risk management processes for the information security. Following are the considerable facts that could be included in this process: Does transforming manual system into technology based operation have a continuous program or not and the cloud vendors have it or not (Layton 2016). The controls and their strategy of implementation can play an effective role or not such as tokenization and encrypting the files before saving into the cloud or database. The controls or the processes that are being introduced are cost effective and efficient or not that means considering other facts that might be applicable to reduce the threat. The introduced controls and changes complying with the legal requirements or not (Baskerville, Spangnoletti, and Kim 2014). For example Cloud solution meets the legislative requirements of Australia. Documenting the Risk Assessment and Risk Treatment At the final stage the A4A management should document all the considerable, acceptable, and calculated that can be associated with the security risks in the arrangements that is about to change within the organization (Haufe, Dzombeta and Brandis 2014). Approval Process The delegates and the heads of the organization need to consider the risk assessment before transforming the whole system into technological way. Ultimately this implies that the head of the A4A will also be responsible for managing risk into the organization, and the acceptance and understanding of the risks manifested through transformation, outsourcing, and cloud integration within the system (Luthra et al. 2014). Conclusion Based on above report it can be concluded that there should be proper management process in order to enhance the information security system within an organization. The guidelines that have stated above can play very important role in managing the information and data those are being stored into the system and keep it well secured and protected from unauthorized user that could lead to serious damage through exposing, manipulating or deleting the saved data. Cybercrimes can be considered as the most important issue regarding the information security and these guidelines can prevent the organization from being looted by such intruders and protect the assets of the organization. Other than the above guidelines it can be recommended that the security levels should be divided into the categories based on the level of authorization or posts. This could help in two ways the higher post individual will be able to monitor the individuals those are at lower post and the confidential informati on will be much safer. Through the guidelines mentioned above, A4A can achieve the highest level of security for the information related to the organization and be safer from any loss. References: Albakri, S.H., Shanmugam, B., Samy, G.N., Idris, N.B. and Ahmed, A., 2014. Security risk assessment framework for cloud computing environments.Security and Communication Networks,7(11), pp.2114-2124. Arregui, D.A., Maynard, S.B. and Ahmad, A., 2016. Mitigating BYOD Information Security Risks. Baskerville, R., Spagnoletti, P. and Kim, J., 2014. Incident-centered information security: Managing a strategic balance between prevention and response.Information Management,51(1), pp.138-151. Beckers, K., Ct, I., Fabender, S., Heisel, M. and Hofbauer, S., 2013. A pattern-based method for establishing a cloud-specific information security management system.Requirements Engineering,18(4), pp.343-395. Boyens, J., Paulsen, C., Moorthy, R., Bartol, N. and Shankles, S.A., 2014. Supply chain risk management practices for federal information systems and organizations.NIST Special Publication,800(161), p.1. Dhillon, G., Syed, R. and de S-Soares, F., 2017. Information security concerns in IT outsourcing: Identifying (in) congruence between clients and vendors.Information Management,54(4), pp.452-464. Draper, R. and Ritchie, J., 2014. Principles of security management: Applying the lessons from crime prevention science.Professional Practice in Crime Prevention and Security Management, p.91. Feng, N., Wang, H.J. and Li, M., 2014. A security risk analysis model for information systems: Causal relationships of risk factors and vulnerability propagation analysis.Information sciences,256, pp.57-73. Haufe, K., Dzombeta, S. and Brandis, K., 2014. Proposal for a security management in cloud computing for health care.The Scientific World Journal,2014. Itradat, A., Sultan, S., Al-Junaidi, M., Qaffaf, R., Mashal, F. and Daas, F., 2014. Developing an ISO27001 Information Security Management System for an Educational Institute: Hashemite University as a Case Study.Jordan Journal of Mechanical Industrial Engineering,8(2). Layton, T.P., 2016.Information Security: Design, implementation, measurement, and compliance. CRC Press. Luthra, R., Lombardo, J.A., Wang, T.Y., Gresh, M. and Brusowankin, D., Citibank and NA, 2014.Corporate infrastructure management system. U.S. Patent 8,706,692. Oppliger, R., Pernul, G. and Katsikas, S., 2017. New Frontiers: Assessing and Managing Security Risks.Computer,50(4), pp.48-51. Peltier, T.R., 2016.Information Security Policies, Procedures, and Standards: guidelines for effective information security management. CRC Press. Peppard, J. and Ward, J., 2016.The strategic management of information systems: Building a digital strategy. John Wiley Sons. Raghupathi, W. and Raghupathi, V., 2014. Big data analytics in healthcare: promise and potential.Health information science and systems,2(1), p.3. Rebollo, O., Mellado, D., Fernndez-Medina, E. and Mouratidis, H., 2015. Empirical evaluation of a cloud computing information security governance framework.Information and Software Technology,58, pp.44-57. Saint-Germain, R., 2005. Information security management best practice based on ISO/IEC 17799.Information Management,39(4), p.60. Soomro, Z.A., Shah, M.H. and Ahmed, J., 2016. Information security management needs more holistic approach: A literature review.International Journal of Information Management,36(2), pp.215-225. Sylves, R., 2014.Disaster policy and politics: Emergency management and homeland security. CQ Press. Webb, J., Ahmad, A., Maynard, S.B. and Shanks, G., 2014. A situation awareness model for information security risk management.Computers security,44, pp.1-15. Wensveen, J.G., 2016.Air transportation: A management perspective. Routledge. Whitman, M. and Mattord, H., 2013.Management of information security. Nelson Education. Yang, Y.P.O., Shieh, H.M. and Tzeng, G.H., 2013. A VIKOR technique based on DEMATEL and ANP for information security risk control assessment.Information Sciences,232, pp.482-500. Zetler, J.A., 2015. The legal and ethical implications of electronic patient health records and e-health on Australian privacy and confidentiality law.

Risk and Safety Management of the nuclear industry

The Manhattan Project

The Manhattan Project did more than allow the United States to knock Japan out of World War II: it allowed the United States to lead the way into the Nuclear Age. The United States needed a way to end the war quickly without losing many of its own lives, so the president ordered scientists and generals to work on the making of an atomic bomb. This was called the Manhattan Project. There was a sense of urgency because the Americans feared that the Germans were on the brink of making an atomic bomb themselves. If the Nazis made an atomic bomb before the Allies, Hitler might have been able to conquer all of Europe by forcing the countries to surrender. The work which was done in the Manhattan Project and the knowledge we have gained from the work are leading into a revolution in our sources of energy. President Harry Truman realized that Japans desperation caused its soldiers to fight with fanatical courage. They would not give in to the Americans. Propaganda caused the Japanese to think that the Americans were mean and would torture them if they were caught. People were so mislead and confused that they agreed to be kamikazes and kill themselves for the sake of winning the war. Japanese officials convinced them that it was an honor to die for the well being of Japan. There was a battle on Okinawa, a Pacific island, which cost the Americans 50,000 soldiers dead or wounded. The ruthless and stubborn leaders were not going to surrender easily, so an invasion of each of the tiny islands of Japan was necessary in order for the Americans to force the Japanese into surrendering. Experts figure that an invasion of each of these islands would cost the However, a bomb of mass destruction would force the Japanese to surrender. The leaders would see that a few well-placed bombs would blow Japan right off the map. Four or five bombs could ruin everything th...

WestMercia Notebooks Ltd Essay Example | Topics and Well Written Essays - 1500 words

WestMercia Notebooks Ltd - Essay Example As and when such orders come, the company can deliver it immediately. Notebooks prepared on order, generally carry the name of the college, institute, corporate house etc. who is ordering it. When WestMercia starts keeping some minimum stock of readymade notebooks, carrying the name of the company, it is bound to help the company in establishing a brand identity. An entity is something that is supposed to have a distinct, separate existence and identity. In this category, generally we take person, place, thing, event, or concept, about which information is to be stored. WestMercia Notebooks mainly has the following entities; Entity Life History (ELH) analyses the life cycle of the entities in the WestMercia Notebooks Ltd. ELH diagram also includes sequencing, iteration or timing of events in the system. It also investigates the integrity requirements and successor actions relevant for each entity, the administration of the entity, and the deletion of the entity. ELH is thus used to define the rules and regulations determining the life cycle of the entities and how do we perform actions like insert, update, and delete. ELH Diagram for 'Notebook': Event-1: The Customer i.e. college/ institution/ retailer/ wholesaler approaches the company with the specification of the notebook. Event-2: After WestMercia Notebooks Ltd. receives the orders, it starts processing it with the help of different departments Event-3: The production department makes the notebooks with appropriate specifications and sends them for being delivered to the customer. Event-4: The notebook is distributed amongst students, employees by the colleges or institutions and sold by retailers and wholesalers. Students and employees in turn use the notebooks and thus the notebook completes its useful life. ELH Diagram for 'Order': Event-1: Marketing team starts negotiations on the order. Negotiations take place regarding order size, prices, expected time of delivery etc. Such negotiations also often involve some discounts, if the customer has been a regular one for the company, with good payment record. Event-2: Once the negotiations are over, a consolidated order is prepared, with details like terms of payments, advances, discounts etc. Event-3: The production department starts working on the order, places order for raw material and once the notebooks are ready, sends it across to the dispatch sections for packaging and delivery. Event-4: The account department takes a look at the payment position, and accordingly gives a go ahead to the dispatch department for sending it across to the customer. Thus the order is completed within couple of days or weeks, depending upon the order

Health Insurance - Obama Care Essay Example | Topics and Well Written Essays - 750 words

Health Insurance - Obama Care - Essay Example The law was meant to eliminate the current pre-existing health conditions in the state, stop the insurance companies from getting rid of the customers when they fall sick, protect any form of gender discrimination that exists in the healthcare industry and expand on the existing preventive services and health benefits available (Noonan). Furthermore, the law stipulates that big organizations insure all their employees, create a subsidised insurance in order to lower the cost of insurance and consequently reduce the cost of healthcare spending and the discrepancy. As much as the idea was taken well by many, this was not the case with everyone. This is especially so with the religious community, which believed that the law raised many controversies in terms of the morals and ethics of the religious groups. This was in relation to the laws of the birth control mandate. The ObamaCare plan requires that all for-profit employer’s health plan to provide insurance for up to twenty contraception methods. Among the twenty contraception methods, five of them in the eyes of the religious community was viewed as a form of abortion or sterilization. The basis the religious leaders used in their defence was the Religious Freedom Restoration Act, which was passed in 1993 (Tate, 106). The statute merely stipulated that if the government at any point interferes in any way with the free exercise of religion, it must narrowly alter its regulations to serve a persuasive concern and inflict the least â€Å"oppressive† option. Most religions are against the idea of the use of contraceptives, especially in an instance when the mod e of contraception seems to be a form of taking away life. This, therefore, necessitated the need for the law to be adjusted such that it suits the needs of everyone in the community.   Consequently, the Health and Human Services was forced to make an exemption for churches from the mandate, which implied that religious non-profits were allowed to apply for quasi-exemption from the rule.

Falcon Computer Company Essay Example | Topics and Well Written Essays - 1250 words

Falcon Computer Company - Essay Example The higher management was great in formulating the values to be followed by the employees but only formulation was not the very success of it. The prime influencing factor is in appropriately propagating the values and the support of the management to exercise in practice. â€Å"Attention to detail is our trademark; our goal is to do it right the first time†. However it was observed that the design flaws caused the main hurdle and in the first place it needed to be corrected to prevent flaws in the forthcoming steps. Employees were pressurized to rush for getting the product out to the customers without putting a check on the quality. Employees were afraid of their immediate manager which would result in insult and embarrassment. The employees did not feel safe to stand up to the problems they were facing. The culture statement promising to encourage open, direct, person-to-person communication as part of the daily routine was not at all followed in practice. At Flacon it was more of secrecy than openness. Even after the value document was formulated and was expected to be followed, lack of management enforcement was greatly lacking to get the values embedded into the employees. If the formulators are themselves lack the will t support the values and make sure they create examples so that there is an evidence of its usage in the proper context, the employees cannot be expected to envelope anything from it. It will stay in the books only. Lack of interest from the employee side was a turnaround feature in exercising the values. They did not take it seriously and never bothered to come up with valuable suggestions so as to prove that there was an initiative from their side. They have never held the management accountable for the non-compliance of values. They instead have understood what was really emphasized in the organization namely hierarchy, secrecy and expediency. They never moved out of their comfort zone to take a stand. The lack of initiative also made the other employees to follow the similar notion to take a back seat.  Ã‚