Frankenstein an early form of science fiction? Essay

† Many individuals accept this was only a reason for Victor’s botches, however I accept that it was Mary Shelley’s impact crawling into the storyline once more. Shelley was a sentimental; she went through her time on earth against the realities of the world, seeking after the close to incomprehensible. She drove herself to the miracles of destiny, much like Victor is doing as of now in the book. He disclosed to himself that he had little control, and that destiny and strange marvels had him like a manikin on a string. Demise is in a manner the focal point of the story. All the more then 50% of the characters themselves pass on, and the animal is made of dead issue. It is surprising that Mary Shelley would expound on death on the off chance that she was a sentimental. Is considerably all the more amazing that she composed such a great amount about science! In any case, I think there is a potential connection that doesn't negate any of the realities or thought processes. In the event that Shelley needed to demonstrate how ghastly science was, at that point what could convince individuals all the more then passing? I believe that she composed the story to outline what science could truly do to someone’s life. While the â€Å"guardian angel† referenced in the story (which I believe is representative for the sentimental people Shelley adored), could have spared their lives. The passing introduced can be gotten as though it were a repulsiveness story, and it in part is, however the measure of death and torment recommends something else. Despite the fact that the possibility of death is critical, without it the book would be inconsequential and exhausting. Truth be told, in this circumstance, the demise makes life, the animal. â€Å"With a tension that nearly added up to anguish, I gathered the instruments of life around me that I may imbue a flash of being into the inert thing that lay at my feet. † Victor’s tries different things with dead issue and power should likewise give a huge contribution to the closing choice. It contains logical information, experience and language, and consequently enables the sci-fi to request. Indeed, even the way that Victor talks sounds sufficiently logical to make you feel that it’s sci-fi. â€Å"I believed that on the off chance that I could present liveliness to inert issue, I may in procedure of time reestablish life where passing had clearly committed the body to defilement. † Although in the film certain pieces of substance are lost and an embellishment of the power utilized is inputted, the blueprints, structure and fundamental plot remain. Furthermore, on the off chance that the film was characterized as a science fiction ghastliness, at that point undeniably the book should likewise be respected with comparable benefits. There are such a significant number of manners by which science is alluded to in the book that it is practically difficult to envision what number of there really are. On the off chance that Victor as the principle character is exploring different avenues regarding science, at that point apparently the story is testing as well, bringing to the end that Frankenstein is a right on time from of sci-fi, based on the importance of sci-fi itself. Sci-fi itself is characterized as â€Å"a bit of anecdotal composing including a type of logical information or plot. † Therefore, hypothetically Frankenstein would fall into this classification. The main obstruction forestalling this is whether it ought to be something different, similar to gothic repulsiveness or even sentimental spine chiller. There are around equivalent measures of proof that would at last order the novel. There are such a large number of classifications it may be the case that it is incredibly hard to grasp which one it would unmistakably fall into. The issue is how would we pick which one? Be that as it may, one thing a great many people don't consider is the reason can’t something be more than a certain something? For a considerable length of time individuals have joined plans to spare time or only for it. Things like two of every one shampoos, or multi nutrient tablets or even TV programs. So what a few people concur upon in this circumstance is: the reason can’t Mary Shelley’s Frankenstein be three classes folded up into one? All things considered, this exposition has discovered no motivation to propose why it shouldn’t be articulated sci-fi, and I am certain that there will be no real way to state how it isn't some other sort. On the off chance that we rejected one classification from the depiction, at that point it would not completely portray the book to its full personality. Notwithstanding, against whatever else and for responding to the first exposition question, I will consider it an early type of sci-fi, simply because there was not at all like it before it was composed, and in the event that it hadn’t been, there may not be a sci-fi at any rate. Show review just The above see is unformatted content This understudy composed bit of work is one of numerous that can be found in our GCSE Mary Shelley area.

Stephen B. Oates, Lincoln’s Journey to Emancipation free essay sample

He comes to us, as well, as the Great Emancipator who took the North off to Civil War to free the slaves and in this manner offered his related Southerners a fragile and overlooking hand. Lincoln was the man who headed the slaves into the basic war and in the long run freed them from the Southerners, whom hed lended a hand after the war. This is the as a rule point of view of Lincoln, which isnt completely exact, and is exhibited to not be absolutely right anyway history, showing that he didnt have absolutely serious and solid viewpoints and didnt constantly help invalidation. He recognized how wrong it was that coercion should exist at all in a self reported free and illuminated republic. Lincolns feelings of the Declaration of Independence, which all around state that all men are made comparable, disaffirm his countries pleasantness and shared characteristics around servitude. This finally pushes Lincoln to change his points of view on coercion, rather than supporting it previously and all around the war, while it was indispensable. We will compose a custom article test on Stephen B. Oates, Lincoln’s Journey to Emancipation or then again any comparative point explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Kansas-Nebraska Act - The order toppled the old Missouri Compromise line, which dismissed coercion from the boundless northern zone of the old Louisiana Purchase space. The showing at that point manufactured another formula for overseeing coercion in the national grounds: presently Congress may avoid the issue, and the people of each district may pick whether to hold or scoundrel the association. This motion toppled the Missouri Compromise which had for some time prior maintained a strategic distance from area in the Louisiana Purchase space what's more checked Congress from intervening, allowing the people to deal with their own issues with conspicuous force. This motion propelled Congress opportunity to its country and made it withdraw and accommodated it no power in the deals and conflicts its country was overseeing and also left open a yawning opening of chance for proficient subjugation control. By then in 1857 came the famous Dred Scott decision, passed on by the star Southern Supreme Court, which concluded that not Congress or a local government could boycott coercion, since that may pollute the Southern property rights. The court concluded that just since Dred Scott, a dull man who went with his master to a free locale, should have been free, that he couldnt considering the way that he was in the hands of his master and couldnt boycott enslavement as a delayed consequence of an infringement in the Kansas-Nebraska Act. This helped the little control that Congress had over the country and underlined the control that slave-holders had over their own specific slaves. Lincolns Proclamation, of course, was a clearing blow against oppression as a foundation in the extreme expresses, a blow that may free all slaves there those of secessionists and supporters much the equivalent. This statement freed slaves and was a far reaching hit to the power of the Southerners and the foundation of enslavement. This was one of the principal commitments that Congress had with oppression, and inevitably provoked pounding the progressives and making the association that didnt hold coercion. Not simply that it was the most progressive measure ever to start from an American president up to that time. Curiously enough, this impelled African American men who were for a spell prior captives to rising up and join the association furnished power, adding numerous strong men to its vitality and further supporting its favorable luck. Counting to that, the order stayed detested since it allowed dull men to take the occupations in the northern states and all around.

Associate Level Material Essay

As a component of your Research Plan, you should draft an examination question for your exploration paper. An examination question, which is increasingly explicit and concentrated then a general subject, is the issue that you will reply in your paper. For instance, if your general zone of premium is Social Security, a potential research inquiry may pose, â€Å"How may low-salary families set aside more cash under an improved Social Security plan that incorporates individual retirement accounts? As you build up an exploration question, remember that you will look into sources with both supporting and various perspectives. Try not to choose a thin or uneven issue that will confine your examination; rather, build up an exploration question that fits further investigation and discussion. What is you subject or territory of intrigue? My subject region of intrigue is early media introduction and the resulting consideration issues in youngsters. In what ways is this subject proper for a powerful exposition? This subject is suitable for an enticing paper since it asks what consideration issues can happen from youngsters being presented to media at an early age. One of the consideration gives this could involve is a lack of ability to concentrate consistently clutter. What is your exploration question? My exploration question is does early introduction to TV and web identify with consideration, conduct and rest issues in youngsters. How is your exploration question critical or pertinent to the more extensive network? My examination question is pertinent to the more extensive network on the grounds that the crowd perusing the paper would incorporate guardians, educators, and those working with kids. What foundation data gives the primer grounds to your examination? The foundation data that gives the starter grounds to my exploration are examines I found directed by kid therapists, and pediatricians. What are some master or definitive wellsprings of data for your point? I intend to utilize the diagrams, and data from contemplates directed from kid analysts and pediatricians inside my paper to give a more extensive scoop of the negative and constructive outcomes media has on youngsters. What kinds of materials do you hope to audit for your exploration paper? I hope to audit books, news stories, and research materials, for example, diagrams and graph when leading my examination regarding this matter. What methods will you follow to direct your exploration? I will follow the methods of the SQ3R framework, just as APA design. I will likewise utilize networks and diagrams to write thoughts and free compose. What challenges do you foresee in directing your examination and supporting your side of the issue? The main challenges I foresee in directing my exploration is an inability to write and the conceivable absence of legitimate source alternatives as I prefer not to utilize wikipedia and writes in any paper they essentially are not dependable nor fitting for a school level paper. ï » ¿Associate Level Material Essay Insights UCR and Self-Report Data Complete the framework underneath. To finish this network, list two aces and two cons of Uniform Crime Report (UCR) information and two stars and two cons of self-report information. Measurable Information Geniuses Cons Official Information: Uniform Crime Report (UCR) As indicated by â€Å"Uniform Crime Reporting Statistics† (n.d.), † The UCR Program gathers insights on vicious wrongdoing (murder and nonnegligent homicide, persuasive assault, burglary, and irritated attack) and property related misconduct (thievery, robbery, and engine vehicle theft)†. â€Å"By congressional command, fire related crime was included as the eighth Part I offense in 1979. Torching measurements are not accessible for access on this site† (â€Å"Uniform Crime Reporting Statistics†, n.d.). Substantial appraisals are conceivable just with cautious examination and investigation of the different exceptional conditions influencing every neighborhood law implementation purview (â€Å"Uniform Crime Reporting Statistics†, n.d.). As indicated by â€Å"Uniform Crime Reporting Statistics† (n.d.), â€Å"Until information clients analyze all the factors that influence wrongdoing in a town, city, province, state, area, or other purview, they can make no significant comparisons.† Informal Information: Self-Report Data â€Å"The incredible bit of leeway of self-report is that it gives you the respondents’ own perspectives directly† (Barker, Pistrang, and Elliott, 2005). â€Å"The self-report strategies can be utilized to acquire data in circumstances where observational information are not regularly available† (Barker, Pistrang, and Elliott, 2005). â€Å"People are not constantly honest or pending with data during studies† (Barker, Pistrang, and Elliott, 2005). â€Å"The examine participantsâ may not have the option to give the degree of detail, or utilize the ideas, that the specialist is intrigued in† (Barker, Pistrang, and Elliott, 2005). Web Resources Recognize one Web asset of authentic data and one Web asset of informal data about the event of wrongdoing in the United States. Reorder the URL addresses into the spaces gave. Official Information URL of Web website: http://www.ucrdatatool.gov/ranking.cfm Name of Web website: Uniform Crime Reporting Statistics Informal Information URL of Web website: http://www.wiley.com/inheritance/wileychi/barker/supp/excerpt.pdf Name of Web webpage: Self-Report Methods ï » ¿Associate Level Material Essay Plate Tectonics Worksheet Answer the lab inquiries during the current week and sum up the lab experience utilizing this structure. Painstakingly read Ch. 8 of Geoscience Laboratory.  Complete this week’s lab by filling in your reactions to the inquiries from Geoscience Laboratory. Despite the fact that you are just required to react to the inquiries in this worksheet, you are urged to answer others from the content all alone. Questions and outlines are from Geoscience Laboratory, fifth ed. (p. 133-150), by T. Freeman, 2009, New York, NY: John Wiley and Sons. Republished with authorization. Lab Questions: 8.4 Which has the more prominent extent of Iron, Magnetite, or Hematite? Hematite 8.7 When the converse switch of a drill is tossed the drill turns the other way. How does that influence the drill’s hardware? The progression of power creates an attractive field and a circle of wire inside an attractive field delivers a progression of power, when the switch is tossed it inverts the attractive field making drill turn toward the present stream. .9 Name the 2 different circles. 8.11 As Columbus’s armada cruised westbound the inconsistency between attractive north and divine north changed. Did it increment of diminishing? Diminished, North attractive shaft goes astray roughly 11 percent from the geographic post. 8.12 Explain the distinction in the directions of the slanted compass needles in figure 8.18. Toward which cardinal heading is the eyewitness confronting? The needle of the compass plunges descending in the northern half of the globe and upward in the southern side of the equator. 8.16 During which of these 5 geologic periods were Europe and North America generally unique in their situations with Earth’s attractive field? Triassic 8.17 Place the 3 sorts of reefs in figure 8.26 in their request for progression from most seasoned first to most youthful last. Bordering reefs are the most seasoned, the following most established would be the hindrance reefs, and the most youthful reefs are the atoll. 8.18 What clarifies the contracting of sea covering as the outside moves from volcanoes? As the sea outside moves from the volcanoes the therapist in light of the fact that there is lower temperatures. Once the volcanoes structure them they start moving endlessly descending. 8.20 Does it show up in figure 8.29 that the inversions in Earth’s attractive field are isolated in equivalent timeframes, or would they say they are irregular in their events? They are arbitrary in their events in light of the fact that for instance, a few periods they switched multiple times, while in different periods they didn't turn around by any stretch of the imagination. 8.21 What were the three perceptions that Vine and Mathews made about the stripes? 1. Directional patterns stripes will in general alter all on a similar course. 2. Request of the shading coding on sides of the edges the request for the hues on the edges relates to the shading on the ocean bottom. 3. Widths of stripes contrasted with the term of stripes-the more extensive the stripes are the more drawn out the stripes lived. 8.25 Why doesn’t the South American plate dive underneath the Nazca plate? The Nazca plate is denser than the South American plate. 8.26 what number years will it be until Los Angeles and San Francisco are next to each other? Around in 12.5 million years 8.27 What is the normal pace of northward development of India during the previous 71 million years (in centimeters every year)? 15/71= around 2.12 cm every year 8.28 In centimeters every year, ascertain the rate at which the Pacific plate is moving northwestern to the hotspot (which is set apart by present day volcanoes). 50/5= 10 centimeters for every year 8.30 Describe the heading of development of the Pacific plate during the improvement of the volcanic islands that include the Seamounts. How has that bearing changed? During the advancement of volcanic islands, the pacific plates used to move all the more northward, yet because of the curve in the seamounts made the plates move its development more on the northwest heading. Lab Summary: Address the accompanying in a 200-300 word synopsis: Sum up the general standards and reason for the lab. Clarify how this lab helped you better comprehend the themes and ideas tended to this week. Depict what you discovered testing about this lab. Portray what you discovered intriguing about this lab. Compose your outline here: This lab was instructive about plate tectonics I adapt a considerable amount of new data during this examination. There were a couple of thing that I can recall concentrating during secondary school, for example, mainland float and how landmasses shaped from one single land mass called Pangaea. One thing that I discovered testing was about the earthâ€

Comparison of Governmental Policies of India and China Regarding Essay

Correlation of Governmental Policies of India and China Regarding Economic Progress and Social Wellbeing - Essay Example This article is perhaps the best case of similar monetary investigation of the administration inclusion in advancing financial development in China and India from 1950s to 2010s. Endeavors to improve the social, monetary and political frameworks in the nations around the globe lies on the hands of the political pioneers speaking to these sovereign states. In any case, this obligation doesn't lie exclusively on one explicit system of initiative. Rather, it relies upon the recorded setting of issues and arrangements that a progression of governments in the nations set up. The best economies around the world associate their financial strength with the key committed interest of the past government establishments in the countries’ history. Ideal instances of nations with improved monetary status are China and India. Nonetheless, the degrees and methodologies utilized in these states vary. Essentially, the social prosperity of the residents of every one of the named nations vary significantly. China and India have long financial narratives. A progression of difficulties presented by the worldwide monetary powers may have assumed a foremost job in the advancement of counter-procedures in the two nations. Chinese government has been exceptionally dynamic in guaranteeing that the social government assistance of the residents turns into a need. For example, the Indian government encouraged the moderate advancement of the economy regardless of expanded suggestions by famous economies. The rate at which two governments encouraged modern advancement contrasts considerably.

Stone Goose Resort and Social Media - Free Essay Example

Social media will help Stone Goose Resort with growth, as will help us to generate more audience that eventually will be customers and that means more revenue with a cost-effective means. At the same time social media does come with some challenges. This is where a strong social media policy guides us in effectively using this medium. Social media is the big opportunity to have communication with the customers, ask them what they think about the services we provide, what can be improved, what else can be offered, what about customer services and the price. Another benefit of the social media is the publicity. You dont have to spend too much money on publicity as social media will produce word of mouth advertising. Needs During our brainstorming meetings it was clear as to what our needs are concerning social media. Stone Goose needs to grow its online presence. The future of resort guests will be using social media to decide where to spend vacation. Customers will use social media to make reservations. This platform has a potential impact to the business in revenue. People are more mobile now than in the past Instant gratification Business Goals Each business goals or objectives listed below is specific, measurable, attainable, realistic, and timely. Business Goal No. 1 Grow the business Business Goal No. 2 Grow the business revenue Business Goal No. 3 Appeal to younger customers Social Media Goals State the social media goals or objectives that will roll up to your business goals. Social Media Goal No. 1 Increase Twitter followers by 20% by the end of Q4 Social Media Goal No. 2 Convert 25% of inquiries to committed reservations Social Media Goal No. 3 Grow our Brand by staying relevant Scope of Work Details about the proposed procedures and social media activities that support the social media goals or objectives. Social Media Activities Make post once a day Social Media Campaigns Execute four Twitter campaigns by end of Q4 Content Creation Implement a $50 coupon for using site Social Media Monitoring Create Excel Spreadsheet for Data Social Media Engagement Answer all inquiries within 24 hours Timetable Twitter Campaigns Deadline Create creative Assets Create graphics to accompany Twitter campaign December 1, 2018 Create Copy Copywriting for campaign December 1, 2018 Launch Campaign Deadline to launch campaign January 10, 2019 Monitor Campaign Monitor and report the success of the campaign February 10, 2019 Database Create Excel Database to monitor campaign February 10, 2019 Revise Campaign Revise campaign and test Ongoing Detailed Project Timetable: Activity Execution Responsibility 1. Twitter Campaigns Month 1 Month 2 Month 3 X IT Manager 2. Content Creation X Content Specialist 3. Social Media Monitoring X Social Media Specialist Conclusion In the future, people will no longer surf online to seek a product or service, they will constantly be connected to the brands they love via social networks. So, people will first ask the brands they like what they have to offer. We need to offer a social experience to potential customers. We need to put ourselves in a position in which our followers can fluently try our services. Call to action is a strategy of the last decade. Classic ads like banners and AdWords will no longer be relevant. We are in a world of connections. You are either connected, or you are invisible. Social media is writing the future of online advertising and by creating a strong social media campaign we can compete or even edge out our competition.

Coca Cola As A Leading Manufacturer Business Essay - Free Essay Example

Coca Cola is one of the leading manufacturers of carbonated drinks. It has remained on the top position for decades. However, the carbon drinks industry is changing continuously and Coca Cola as a company has been able to implement changes in its organization through its effective leaders and managers with the help of strategic management (Coca Cola, 2011). Strategic management has been defined as the highest level of managerial activity. It is mostly undertaken by chief executive officer of a firm which is Coca Cola here, after the approval from board of directors. The key stages of strategic management are divided into six stages. The first stage is that the manager will assess the current position of the company in relation to the market along with its competitors and external environment. Coca Colas current position in the market is good but with a high existing competition from its competitors like as Pepsi Cola Company. It has been observed that those decisions that ignore the observation of where the business currently stands are mostly inappropriate or ineffective. The second key stage is that after assessing the companys current position, its vision, objectives and mission are set. All three can be relatively new if the company has completely changed its direction or is planning to undergo a change. The third stage is taking long term decisions that will go along with the objectives that had been set. Coordinating and integrating different functions, activities and behaviors of different functional areas is the fourth stage of strategic management. Strategic decisions are mostly cross functional. Hence, all departments must work together to implement the decisions successfully. An example is when the Coca Cola decides to extend one of its products life like as Diet Coke. For this extension strategy, it will need input from finance, marketing and operations management. Allocating resources to make the decisions work, is the fifth stage and one of the most important stages. Strategies require that resources must be provided on time and in adequate amounts so that decisions can work. The last stage is assessing success and evaluating the overall performance of the business and the progress that it is making towards its objectives (May, 2010) A leader is a person who influences people to achieve certain goals. He is the one person who sets a clear direction for his employees and comes up with new visions when situation demands it. Certain qualities are said to make a person an effective leader. One of these is the natural ability and the desire to succeed. Being creative and thinking beyond the obvious is also included in the list along with being multi talented so as to cater to different problems. Last but not the least is having a penetrating mind so that the problem itself is recognized rather than the unnecessary details (Moniz, 2008). Leadership comes in various forms in a business. A manager, directors, supervisors and workers representatives, all need to have good leadership qualities so as to lead people properly and succeed in their goals and tasks (Moniz, 2008). This is one of the most important assets of Coca Cola as a company since its senior department has all the qualities of being an effective leader for the company to maintain its leading position (Coca Cola, 2 011) These days indirect leadership has also gained a lot of importance. These are those leaders that are not elected or recognized by the company but still they have such charm and aura that employees listen to them and carry out their orders. These are those leaders whom employees consider one of their own; hence the sense of relating to such leaders increases. For a companys benefit like as a multinational company like Coca Cola, the managers and supervisors should work alongside these informal leaders and keep the employees happy (Stimpson, 2002). Leaders today in companies like as Coca Cola have to take up many different roles to ensure that they are working effectively. If a leader is only performing one role, and neglecting the others, he will not be able to brand himself as being an effective leader and manager. Some of the roles that a leader can take up to ensure effectiveness in him and in his organization are as following: Interpersonal roles: these roles are fo cused to deal with and motivate employees at all levels of organization. They concerned with relationships with others and are related to human skills. In the interpersonal roles, three distinct roles are seen. Figurehead role: this is defined as being a representative leader of the organization and under this managers undertake duties of social or legal nature. Like as Coca cola that works actively for corporate social responsibility. Leader: this particular role is very crucial for any organization to thrive. If a manager lacks leadership qualities, he will not be able to keep employees motivated and engaged in their work. Leaders have been seen to make changes that have amazed people throughout the world since they have the respect and full attention of their workers. Liaison: this role is the one where a manager keeps in touch with managers of other branch and divisions which is essential for a company like coca cola that has operations worldwide. Informational roles : According to Barrett (2006). under this role a manager acts as a source, receiver and transmitter of information. Monitor: through this data which is relevant to the business operations is collected. Disseminator: by adopting the role of a disseminator, a manager is able to transfer information from internal and external sources to the desired people within the organization for completion of a task. Spokesperson: information regarding the company and its operations is communicated to stake holders and external groups. Decisional roles: this is an important role that a manager has to accept. Under this role, a manager makes decisions regarding key factors of organization and allocates resources to meet organizations objectives. Entrepreneur: under this role, new opportunities are sought to develop the business like as finding new markets for their products. Coca cola has operations from dense cities in China to sparse villages in Africa Disturbance handler: this i s an important role. If a manger is able to perform this role well, he is able to respond to the changing environment to reduce risks for the company and assume accountability when hostile factors rise. Resource allocator: a manager through this role is able to allocate resources efficiently. Not only are the financial resources allocated properly, but also the human and physical resources of the company. Negotiator: a manger by being a negotiator is able to represent his organization to external forces like as government and peer groups. There are four leadership styles that have been observed in leaders. Autocratic or authoritarian leaders take decisions them self. They do not seek advice from their employees and neither do they engage employees in decision making process. This type of style makes the workers used to employers taking decision and hence their motivation levels tend to be very low due to which the leader has to keep a check on them from time to time. Howeve r, when staff wants to contribute and accept responsibility, this style de motivates them and decisions made are likely to not benefit the employees (Stimpson, 2002). This type of leadership style is mostly adopted in police and defense force where quick decisions are required to be made. Hence, a company like Coca Cola should avoid using this leadership style, since it has operations worldwide and employs over 139,600 employees worldwide (Coca Cola, 2011). If it adopts such a leadership style, it will de motivate employees. However, when important and quick decisions are to be made that do not require employees inputs, it can adopt this style of leadership temporarily. For example, when a political disturbance causes serious damage to operations of Coca Cola in that country, it has to make a quick decision whether to close its operation temporarily there or continue operating. Discussing with employees will only waste time in such a case. Democratic leadership style is the most common type of leadership style that exists in world today. This is the leadership style that encourages two way communications where workers are given the chance to voice up their opinions during decision making process. This is most likely to be effective in organizations that want workers to give them responses or in companies which demands new way of thinking, hence making staff input valuable (Dyer and Dyer, 2007). Hence, this leadership style is the most suitable for Coca cola to adopt. For situations like as changing a certain safety policy, this style can be adopted where employees are asked to vote in favor or against the change. Apart from autocratic and democratic leadership styles, other styles include paternalistic style and laissez-faire style. Paternalistic style is the one where the leader acts as a parent and does what he thinks is the best for his employees. The leader does engage employees in decision making but in the end, he is the one who makes the final dec ision. Coca Cola Company can adopt this leadership style but only at certain occasions and not permanently. Laissez- faire leadership style on the other hand gives full control over to its employees. Employees are allowed to make all decisions and they have all the power (Stimpson, 2002). The problem with this type of leadership is that it leaves the employees on the hinges; mostly employees have no idea what they have to do and how to perform a task. They feel de motivated with the lack of support from their supervisors and dissatisfied since their chances of growth in such an atmosphere are very less (Johnson, 2009). Such a leadership style is not acceptable for Coca cola, since it has the objectives and rules and regulations set, that employees are supposed to follow. However, when the company wants to come up with new products to counter the competition, it can give free reign to its scientists, to come up with new flavors or new products. Task Two Fiedlers Contingency theory is based on whether the leadership style is relationship oriented or task oriented. A relationship oriented leader is the one which is concerned with people whereas; a task oriented leader is the one that is motivated by task accomplishment. Leadership can be analyzed in terms of three elements that is the quality of leader-member relationship, task structure and the position power. Each of these elements can be described as being either favorable or unfavorable for any leader. Combining these three situational elements gives rise to eight situations where situation one is most favorable to the leader since it is the one where the leader-member relations are good, task structure is high and leader position is strong. Situation eight is the most unfavorable where leader-member relations are bad, task structure low and leader position is weak (Fiedler et al 1993). A task oriented leader excels in highly favorable or highly unfavorable situations. This i s because, in a favorable condition, everyone gets along, task is clear and the leader has powers which are all factors where a leader can take charge. On the other hand, if a situation is highly unfavorable, a great deal Hence, when Coca Cola Company is any highly favorable situation like as being a market leader in certain country or any highly unfavorable situation such as problems with trade unions, its senior executives can adopt task oriented leadership (London, 2002). Relationship oriented leader performs best in situations of intermediate favorability. The reason for this is that in these situations, the leader will be moderately liked, have some power and can supervise jobs that contain some uncertainty. Example where Coca Cola Company can adopt this leadership style is in the case of researchers where the research team does not like the superiors to form the task for them since they prefer to follow their own creative to structure the task (Tichy and Devanna, 1986). The situational theory of Hersey and Bianchard is based on the importance of the type of employees that an organization has which become the basis for the leader to take up the leadership style accordingly. The telling leadership is the one where the leader has a high concern for production and a low concern for people. This is based on one way communication, where the leader defines the roles of organization. The selling style is the one where there is two way communications but the leader is still providing the directions. The participating style is the one where there is shared decision making about aspects of how a task is accomplished. The last style that is delegating style is the one where the leader is involved but the process and responsibility has been passed on to the workers (Raelin, 2003). For Coca Cola Company, telling style can be adopted in scenarios where the employees lack specific skills for the required job and are unwilling to take the responsibility. This ca n happen when the company operates in developing nations where the workers are usually not educated. Selling style can be adopted by the company where the employees are not willing to take responsibility but are willing to work. This can happen when a major project is in hands that requires a lot of risk. When employees are experienced and are able to perform a task but do not have the confidence, the company should adopt participating style. Whereas, delegating leadership style can be adopted by the company when the employees are experienced as well as confident to do a task. This is suitable when teams are formed for research (Hooper and Potter, 1997). Task Three The skills that are required by leaders of Coca Cola Company are immense since the company is a multinational company with operations all over the world. One of the most important skills is cognitive skills which lay down the foundation of leadership skill requirements. These are those skills that are related to cognitive capacities like as collecting, processing and disseminating information. These skills also include oral communication skills like as speaking to effectively convey their message. Another important part of cognitive skills is to learn and adapt. Business skills are another set of skills that the leaders of Coca Cola require to keep the company as good as it is right now. These skills are important for managers to make decisions like as allocating equipment, technology and materials. Moreover, it also means managing the human resources, motivating and developing them. Strategic skills are also very important for leaders working in a company like Coca Cola. These are needed to understand the complexity, deal with ambiguity and to effect influence in organization (Perren and Burgoyne, 2001). Leadership skills are required for long term future planning. This planning for a company like Coca Cola can be that it wants to become more innovative, along with investing in high growth opportunities. This is because a company like Coca Cola Company has immense competition in the market. Innovation can be implemented in the organization if the greater interdependence is created amongst leaders to create effective collaboration across functions that will help in bringing of new products in the market. Moreover, leaders should anticipate capital, space and talent implications of the rapidly expanding portfolio of the company. There should also be increase in leadership involvement across functions in gathering customer insights and translating these ideas into profitable new and innovative products. For investing in high growth opportunity, the sen ior management of Coca Cola Company should aim to attract attention to talent development. This will accelerate the acquisition and development of talent for key roles. This is essential since sometimes talent becomes the constraint for growth to become stagnant. Moreover, the company should also increase the number of its leaders per year to a certain amount (Perren and Burgoyne, 2001). For a company like Coca Cola Company, which has global operations, leaders should be focused on how to manage diversity in the company. This is because; todays world along with being competitive and complicated has become increasingly diverse. The workplace is not an independent body now; rather it has to deal with the whole world since competition is not only coming from within the country that the organization is set up in, but from every continent. Managers therefore are required to identify how the workplace is changing, evolving and diversifying. However, only identifying is not enough. Rath er the managers have to deal with this changing, evolving and diversifying workplace in the best possible way. Hence, the managers today should have the skills to deal in a multi cultural workplace. For this the leaders should have the good interpersonal skills to understand the employees and make them understand the tasks. They should also have good relationship oriented skills to manage the human resource properly along with having the democratic style to encourage two way communication and increasing delegations and teams in the workplace (Raelin, 2003).

Financial Institution Management Failures During The Crisis Finance Essay - Free Essay Example

Sample details Pages: 18 Words: 5508 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? The Global Financial Crisis of 2008 was brought about by a confluence of factors such as imbalances in savings-rates, prolonged periods of loose monetary policy and regulatory oversight. Financial Institutions involved in rapid innovation to improve profitability in this environment. With abundant money supply and availability of innovative products, banks continually leveraging themselves and expanded their assets both on the balance sheet and off the balance sheet. However, an important aspect that cannot be ignored in this analysis of the Financial Crisis is that management failed to protect their institutions resulting in the near-collapse of the entire banking system. In particular, management failed to cope with the rapid changes in the environment, to adequately assess the new risks brought about by financial innovation and to arrest the growing culture of greed that ultimately consumed the institutions. Don’t waste time! Our writers will create an original "Financial Institution Management Failures During The Crisis Finance Essay" essay for you Create order In this paper, we analyse the various management failures that eventually led to the financial crisis and attempt to come up with remedies for the core issues. We also look at Credit Suisse and give an insight on how the bank learned from the crisis and on how it is adjusting its business model to the current and future market conditions. Incentive Structures of Front Line Managers Among the many factors that contributed to the financial crisis was the structure of the compensation and reward system, which financial institutions used to attract staff with the motive of increasing profitability. Investment banks allocate an unusually large portion of their revenues about 40 to 50 percent[1] to employee compensation. Instead of having a reward system in place, which protects the shareholders interests and focuses on long-term objectives (i.e. sustainable growth), short-term targets were being generously compensated; this jeopardized the companys long-term strategies. In a system where huge profits bring huge rewards, the set up of the incentive system created a culture of excessive greed that led to the near collapse in the U.S. banking system. Bonus system A big part of the profit, which determined the size of the bonus pool, came from trading and generous fees charged on both sides of client facing transactions. Financial managers were willing to take more risk for higher revenues in order to increase their profit and benefit from bonus increases. This had significant implications for the institution and its shareholder. The transactions with expected ongoing fees feed into the annual total compensation, which meant basically that the immediate reward was financed by the income, which was extrapolated over a number of years. In many cases revenues were not correctly assessed. Profits were not real as many assets turned out to be illiquid. Managers received excessive payouts at the cost of long term unconfirmed income to the financial institution. In other words, managers benefited at the cost of shareholders. The chart below illustrates the bonus distribution on Wall Street prior to the financial crises. The compensation counted in 2006 USD 34.4 billion, USD 33.0 billion in 2007. This also underpins the short-term revenue generating philosophy. Source: www.WallStreetComps.com, 4th Annual Investment Banking Compensation Survey 2009 Commission System Bankers focused excessively on short-term revenue generation and failed to assess product suitability to the clients. High-risk products were being sold to investors with a moderate risk profile such as retail investors and pension funds. This approach was not questioned as long as market rose, however when Global markets collapsed, many investors who thought their money was safely invested, learned that their investments were exposed to high risk and were illiquid. The marketing terminology for certain products was also misleading, for example the term mini-bonds suggesting that these are bond-like instruments whereas in reality they carried much higher risk equivalent, if not higher, to equity. Failure to balance risk-taking and risk-controlling The very nature of banking requires that financial institutions take on some of societys risk. However, the long-term success of these institutions requires them to carefully evaluating and managing the risks with a clear view on the overall risk-appetite of the bank. This is a fundamental conflict that banks are faced with. On the one hand, there is a pull towards higher risk-taking driven by profitability whereas on the other hand the threat of insolvency pulls towards de-risking. Ideally, a bank would organize itself in way that allows these two opposite forces to harmonize and as a result maintain the right balance between risk and reward. The lack of harmony between these two forces has led to many imbalances, which threatened to bring down the global banking system. The pull towards profitability was allowed to dominate over the opposite pull towards de-risking. This was reflected in the organizational structure of major banks, where risk-takers wielded far more power than risk-controllers. Independence and power of risk-controllers The financial crisis revealed the flawed organization structure of the major banks. The risk-controlling functions such as Legal, Compliance, Internal Audit and Risk Management often did not have sufficient power to approve or disapprove key investment decisions. These functions were also often reporting into the business and they only served to make the banks offerings more marketable by working around regulatory constraints and proving that these instruments were low-risk or to find a legal way to participate in more risk-taking activities. With the expectations of generating both high returns for investors and profits for the firm, complex products with underlying structure which carry an element of risk were being executed from the front line without sufficient time to interpret or analyse data on a broad perspective and to consolidate IT infrastructure manage the risk. Many institutions did not integrate early warning signs to capture risk into their Key Performance Indicator (KPI) for financial controls, accounting, funding, treasury, settlement, counterparty and liquidity risk. Top Management involvement in Risk Management Even before the global financial crisis, the importance of Risk Management in financial institutions was widely acknowledged as a key area of organisations overall strategy. However different firms had made varied degrees of progress in strengthening the Risk Management function by the time they were hit by the credit-crisis. A key indicator of the importance risk management function within an organisation is how actively the top management of the firm is involved with risk management. A global risk management survey by Deloitte published in 2007 found that 70% of executives surveyed said, that ultimate responsibility for risk management lies with very top of organization i.e. board of directors. Source: Deloitte Survey 2007 The survey found regional differences in how the ultimate responsibility of risk management is viewed across different regions. While in Asia Pacific, 8 out of 10 respondents thought the responsibility should be with the board of directors, only 6 out 10 of in Europe Americas shared their opinion. Centralised vs. Decentralised Approach The approach towards Risk Management differed in institutions. The Deloitte survey found that 44% of institutions preferred centralized approach in regards of managing risk, while 35% believed in decentralized approach. The rest responded that risk should be managed either by business unit, risk type or by region. Source: Global Risk Management Survey by Deloitte. A centralized approach offers a consistent basis of risk management and fast implementation of decisions. However it suffers from a slow decision making process due to difficulties with data capture and reporting across different areas of organisation. It may also fail to correctly capture the specific risks to some products, functions or customers. A decentralized approach can provide a better insight into product-, function- or customer specific risks. It also provides flexibility in the risk management approach. Some firms try to implement a hybrid model that captures best of both worlds. Intellectual gap between risk-takers and risk-controllers Although a number of factors influence an individuals career choices, there are a certain observable trends in each industry, which show that top talent tends to concentrate in certain professions. In the financial industry, it can be observed that on an average, the trading desks are able to attract top talent more than Internal Audit or Risk Management departments. Certain distinct thinking patterns can also be observed between the two types of professions. It can also be observed that in general, individuals who choose Internal Audit or Risk Management as a profession tend to be conservative and risk-averse while those who choose to be traders tend to have higher risk-appetites. It can be argued that there is a divide between the risk-takers and risk-controllers both in intellectual capacity and in thinking patterns and that the odds are skewed in favour of the risk-takers. While this divide can be beneficial because the varying thinking patterns would complement each others, it also opens up the risk that the risk-controllers not being able to keep up with the thinking-speed and thinking-pattern of the risk-takers. Senior Management challenges and failures The ever-increasing complexity of activities conducted by Financial Institutions and particularly the rapid pace of innovation posed a new challenge to the senior management of financial institutions. Information Asymmetry Traditionally, senior management had to deal with the bottom-up flow of information in the institutions. This creates an information asymmetry between the on-the-ground staff and top management. Important information may not reach the top management on a timely basis or there is a lack of quality in this information. The break-neck pace of financial innovation only exacerbates this asymmetry as the top managers lacked experience in dealing with these complex new instruments. This dilutes the effectiveness of top management scrutiny of bank operations. In extreme case, internal fraud is made possible because of this phenomenon. For example, Barrings Bank debacle of 1995 was brought about because of the lack of visibility of top management into the activities of a trader called Nick Leeson who happened to wear multiple hats of General Manager, Head Trader and Head of Back Office Operations. Information asymmetry allowed Nick to carry out fictitious trades to hide his mounting losses for a prolonged period. Lack of Intuition Psychological studies have shown that experts in a field, over the years, develop a certain intuition of understanding the trends in their field[2]. Traditionally, senior management positions are occupied by people who have years of on-the-ground experience in the activities of the institutions. Hence, conventional wisdom expects that these top managers are capable of picking up early signals of things moving in the wrong direction through their intuition. However, given the aggressive pace of financial innovation, the intuition of these managers is either unable to understand the new patterns or even when they do pick up the warning signals, they could be expressly dismissed as being based on old wisdom. Lack of Risk Literacy The senior management did not understand the risks inherent in the products and was not proficient enough in the specifics of risk management or in the new and complex area of structured products (Synthetic Collateralized Debt Obligations Synthetic or CDOs[3]) as these were relatively recent innovations. Pessimism is not well-received during bullish times Pessimism is usually not well received during bullish times, particularly when the bull-run is as prolonged as it was during the years leading up to the Financial Crisis of 2008/2009. This makes it harder for risk-controllers to convince the management to constraint risk-taking activities during bullish times. Peer Pressure Peer pressure has a significant impact on the prudence and decision-making capabilities of bank managers particularly during prolonged bull runs as noted above. Analysts, Shareholders and the Media constantly compare banks with one another and in general (and particularly during bullish times), they tend to over-emphasize profitability and under-emphasis the riskiness of the bank. Shareholders are less likely to be forgiving of the management that produces relatively lacklustre results during bullish times, even though it was done with utmost prudence. This constrains the willingness and courage of the management to apply prudence and refrain from risky behaviour during bull-runs, thus encouraging herd-behaviour among the financial institutions. Failure to make Risk Management functions attractive As mentioned in section 3.4, Top managements failed to make the risk-controlling jobs more attractive and hence allowed this intellectual divide to build up. Failure to empower Risk Management function As mentioned in section 3.1, Top Management failed to provide sufficient empowerment to the risk-controllers to step in and slow down the risk-taking activities. Failure of Information Systems The global financial crisis has exposed many limitations of the internal information systems used in financial institutions for risk identification, measurement and reporting. While financial engineering innovations created many complex products like structured credit products, the risk management systems did not keep pace with these changes with similar innovation and engineering. This gap in the development of these two areas of Front Office Risk Reporting units of the banks meant that the senior management had an incorrect picture of the true risk of the banks portfolio. As per a Global Risk management survey conducted in late 2009 by Deloitte[4], most executives in financial institutions rated their technology platform for operational risk management as not adequately capable. Only roughly one quarter of executives considered their institutions operational risk management technology platforms to be very capable in data gathering, risk assessments, reporting, or risk capital calculations. Ratings were even lower for scenario analysis and causal event analysis Source: Global Risk management survey; 2009 by Deloitte Risk Management in the letter than in the spirit When the credit-crisis occurred, many banks were still implementing the regulatory risk management requirements into the systems mandated by Basel accord. However the main focus of many internal risk management systems in banks was to comply with the regulatory guidelines with bare minimum requirements. Many banks did not invest in internal systems that would measure the true risk of the bank and the capital requirement to cover worst-case losses in the true spirit of managing the risk. In-efficient Models The banks mostly followed Value at Risk (VaR) based statistical technique for measuring market risk. The methodology relies on historical data and fails to predict the catastrophic scenarios or tail events. Despite the obvious limitations of these models, most banks relied heavily on this and other mathematical models for measuring and managing the risk. The rating agencies also used these same flawed models to assess the risk of these complex credit derivatives. The risk engines used simplified factors in the risk calculation, which often underestimated the exposure, as the risks specific to unique product features was not captured. Information Systems lag behind Financial Innovation The technology infrastructure for risk management varied significantly across different firms and also across different product lines within firms. As the structured derivatives desk embarked on newer and more exotic products, the technology infrastructure limitations became more critical in tracking and managing this product proliferation. New products were introduced before the technology infrastructure could develop to correctly evaluate those and capture the risk correctly. Risk Managers across many firms had prevalent practice of risk calculation using legacy end user computing tools like excel spreadsheets. In absence of sophisticated and automated information systems, the risk managers had little time to carry out in-depth analysis or discussion with business units. Fragmented Systems Most banks did not have fully integrated information systems that could give an aggregate picture of enterprise wide risk for the top management. The risk was measured in different systems many times separated for different desks, products or individual positions. These systems even used different approaches to market and credit risk, which means the risk numbers for different desks, or departments were often not compatible. The risk measurement also failed to capture the correlations in the underlying collateral and impacts of potential rise in rate of defaults. The structured credit products, due to their unique nature, required a holistic approach to risk management. Most of these products in a trading portfolio were measured for market risk but the underlying credit risk was not considered with the aggregate enterprise risk. The risk management responsibility for these products fell between market and credit risk functions. Case Study: Credit Suisse Mispricing London CDS In 2008, Credit Suisse London branch faced a penalty of 5.6 million pounds from the Financial Services Authority (FSA) for deliberately mispricing certain CDOs they held. This lead to the $2.65 billion of write-downs. The fine relates to supervision failures by management and the lack of trader monitoring systems and controls. Although this has been primarily a case of rogue traders deliberately mispricing the instruments, it can also be attributed to the lack of information systems that are sophisticated enough to value these instruments. A comprehensive risk management system equipped with the right models to evaluate these complex CDOs would have detected the inconsistencies in pricing early on. What are the possible remedies? The financial crisis revealed significant flaws in the management of financial institutions. Banks have managed their business for many years with most senior executives and traders operating on the expectation that the market would grow indefinitely with their investment yielding high returns and that taking risky positions is the way to get paid handsomely through the year-end bonuses. Compensation schemes were very closely linked to top-line performance without adjustment to risk. This fostered a culture of involving in financial transactions without necessarily understanding the inherent risk. Banks should foster a strong culture of risk awareness and accountability at every level in particular Front Office being the first line of defence against risk taking. They should also look at centralising its overall risk-management functions and ensure that all front line managers and subsidiary entities are held accountable for amount of risk they are taking on. Risk culture, infrastructure and flow of information are critical to firms and we identify some of these remedies that need to be established to prevent future crises. Board level focus on risk management The Board of Directors should increase their focus on firm-wide risk management The Board or Board-approved risk management committees need to be competent and understand the inherent risks with innovative products and although they are not responsible for managing risk, they should provide oversight and guidance. There should be a clearly defined risk management framework to define roles and responsibilities. Senior Management, Board of Directors and the Chief Risk Officer should define an enterprise-wide KPIs for risk management and review them periodically. Empower the risk-controlling functions Risk Controllers should be empowered to wield sufficient authority to challenge risky decisions made by risk takers or by Front Office managers. Furthermore it is important that the Risk Controllers have adequate influence over the decision making by rejecting the trading of new innovative products that have not undergone rigorous stress testing and which potentially is putting the firm at risk. The role of Risk Controllers should be made more attractive to encourage top talent into these roles. Maintaining strong independence of risk control functions with oversight as high as possible within the organisation. There must be a true risk management and not just a risk reporting. The Chief Risk Officer and Risk Management Committees functions need to be independent from the business units. Firm-wide integration of risk management functions Business lines and the Front Office managers who are responsible for executing and managing their risk have to ensure a proper implementation of internal risk guidelines. They should also work closely with risk management as trusted partners in the strategic decisions. Effective communication and accurate reporting should be provided by the heads of various risk disciplines to the Risk Management Committee for a complete view of the firms risk. Operation in silos should be replaced with an integrated collaborate among all departments. Review and stress-test risk valuation models Review the current risk valuation models to evaluate whether they are still relevant and also stress test them with new correlation data that has become evident during the financial crisis. Include all types of risk when defining risk appetite, including those that may come from off balance sheet vehicles. Mitigate the significant tail risk, which was not transparent within existing risk methodologies, risk management procedures and their methodologies. It should include firms size, mix of businesses and exposure to leveraged counterparties, market and other systemic factors. Stress-testing techniques are effective to deal with the changing market conditions and to offset deficiencies and the shortcomings from risk tools such as VaR. Organization-wide risk culture Make clear that senior management especially the CEO is ultimately responsible for risk management with the Chief Risk Officer providing leadership in respect of the execution on the organisations risk management plans. Develop and cultivate a robust risk culture embedded in the way that the organisation operates in all areas and activities with accountability for risk management as a priority. Improving the Internal Information Systems There is a need for greater investment in risk management infrastructure, which is scalable and is able to extend to accommodate new products, new type of risks and higher volumes. The firm may need to build a proprietary application or some sort of data warehouse to enhance system integration to have one consolidated robust technology platform Systems should be in place for stress testing for tail risk and analysing the correlation of risk with various components of a product. Aligning Employee incentives to shareholder interests Without doubt, people, rewards and culture played a key role in the development of this crisis where decision-making are made based on a short-term gain rather than a longer-term strategy for the firm. Central to the debate is how firms are going to structure their incentives without encouraging excessive risk. Financial institutions must make it a priority to develop a better way to capture their risk-adjusted-returns and to adopt a fair value approach to compensation aligned to long-term sustainable value. Ensure a risk-adjusted performance based on qualitative measurement and oversight. The new structure should be consistent with the guidelines for best practice as announced at the G-20 summit for the fair, balanced and performance-oriented compensation policies that are aligned with the long-term employee and shareholders interest. Risk adjusted measurement system should be cascaded top down from board level to the various business units. Increase the basic salary with deferment on bonus structure. In order to attract and retain talent from senior executives and front line managers, banks need to strike a balance in the accountability of risk rewards process. Deferment on bonus payout over a course of a few years, which are not guaranteed, may not be for everyone. So banks may wish to consider a higher basic salary. Defer compensation with the compensation value brought closer to the value of the business over a sufficient period of time especially for high earners. There is a need to strike the balance between ensuring individual accountability and also supporting a partnership. Deferment can be in the form of cash and stock. However, there is an inherent challenge if there is business restructuring so such approach should be considered to avoid fragmentation. Banks need to also consider appropriate provisions for claw backs for deterioration in performance. Create a strong accountability culture at all levels within the organization. What has Credit Suisse done so far? Credit Suisse has a business model that is less risky and more capital efficient with increased focus on client flows and reduced proprietary trading activities. With its risk-adjusted returns over a long- term period approach, Credit Suisse did remarkably well during the financial crisis. Prior to the financial crisis, Credit Suisse had already adapted an integrated One Bank strategy with combined strengths of Private Banking, Investment Banking and Asset Management to deliver customized products, comprehensive solutions and advisory services to its global clients. During the crisis, this integrated model proved to be both resilient and flexible, enabling Credit Suisse to respond quickly to market developments. It allowed the bank to stay focused on most attractive markets and client segments providing a solid platform for profitable growth. Under the leadership of the Brady Dougan, the current CEO, Credit Suisse adopted the vision of becoming the most admired bank, which implicitly emphasises reputation over profitability. Strategy: Capital Efficient Flow Based Business Model Credit Suisse fine-tuned its business model[5]for 2009 and 2010 by reducing its risk exposure and introducing a reduced-risk and capital-efficient business model. Furthermore it continued to strengthen its capital base. Increased Capital Base Credit Suisse had already met the BIS Tier 1 capital requirements before the Basel II accords were announced in 2007. Over the past couple of years it strengthened its capital base ratio further. By Q4, 2009 BIS tier 1 ratio of Credit Suisse was 16.4%.[6] Source: Credit Suisse AG In October 2008 Credit Suisse raised 10 billion Swiss francs in capital by selling treasury shares and bonds. Existing shareholders Qatar Holding LLC, Tel-Aviv-based Koor Industries Ltd. and Olayan Investments Co. of Athens took part in the capital increase. Taking into account its fund-raising, Credit Suisses Tier 1 ratio would have been 13.7 percent at the end of September 2008. With this capital raising Credit Suisse capital ratio exceeds the Swiss Federal Banking Commissions 2013 capital targets and minimum leverage requirements. De-leveraging From the lesson learned by the financial crisis, Credit Suisse reduced its leveraged finance exposure continually. In March 2010, its finance exposure was reduced by 97%, from CHF 11.9 billion to less than CHF1 billion. Furthermore it reduced its commercial mortgages by 31%, from CHF12.8 billion to CHF8.8 billion, and RMBS and CDO trading assets were down 25%, from CHF6.8 billion to CHF5.1 billion.[7] Risk Reduction in Investment Banking In December 2009 Credit Suisse realigned the Investment Banking structure aiming for overall risk reduction and diversification of the revenue stream. Within the Equities department, key client businesses were repositioned. Businesses such as high structured derivatives and illiquid principal trading were exited. Instead the concentration was with Equity trading with focus on quantitative and liquidity strategy / convertible. Fixed Income exited mortgage origination and CDO, Non-US leveraged finance trading, Non-US RMBS (Residential Mortgage-Backed Security), highly structured derivatives, Power and Emission trading and focused instead on Emerging Markets by maintaining leading business but with more limited risk/credit provision. Within US Leveraged Finance, maintain leading business but focus on smaller/quicker to market deals. Advisory focused on exiting origination of slow-to-market, capital-intensive financing transaction instead of focusing on corporate lending by improving alignment of lending with business and ability to hedge. Risk Management CRO organization The mission of Credit Suisse risk division is to protect the banks capital by establishing a strong control environment for all kind of risks. The division uses four primary function in order manage all relevant issues. These functions are Strategic Risk Management, Credit Risk Management, Risk Analytics and Reporting and Operational Risk Oversight. Under the leadership of the Chief Risk Officer, the risk division acts as an independent check and balance function, hence the Chief Risk Officer reports directly to the banks CEO. The following chart illustrates the risk interaction across the bank. Source: Credit Suisse AG Employee compensation aligned to Shareholder interest Credit Suisse has taken a number of steps to align employee compensation with long-term shareholder interest, starting in 2004-2005, which was a period of fundamental change for Credit Suisse. Pre-crisis compensation realignment Credit Suisse had introduced its performance oriented compensation policy in 2005, aligning the interests of employees and shareholders in a long-term perspective. The Performance Incentive Plan (PIP), a share based compensation, closely linked senior management with the delivery of Credit Suisses strategy. The plans risk/reward structure allowed for significant upside and also total loss depending on the long-term performance of Credit Suisse. Giving away toxic assets as bonus! In 2008, Credit Suisse used an innovative bonus scheme that took $5 billion worth of illiquid assets off its balance sheet and used units in this asset pool to pay bonuses to Investment Bankers.[8] First bank to align with G-20 recommendations Credit Suisse was the first bank to align its reward system with the best compensation practise announced at the G-20 summit. Furthermore, in response to changes in the financial sector, Credit Suisse revised it Performance Incentive Plan (PIP) for 2009 and 2010. The new compensation policy for Managing Directors and Directors has been divided into two main components: SISU (Scaled Incentive Share Units) and APPA (Adjustable Performance Plan Awards) Scaled Incentive Share Units (SISU) is an equity-based instrument. Managing Directors and Directors will receive an amount of base shares on a four-year pro rata basis. Delivery of additional shares will be depending on average share price and return on equity over a 4 year period. Adjustable Performance Plan Awards (APPA) is a cash-based with a notional value that will be adjust upward annually based on Credit Suisse ROE over a period of 3 years and adjusts downwards should the business unit make losses. Fostering risk-awareness at all levels Credit Suisse has taken up several initiatives to improve the risk-awareness of employees at all levels within the bank. Asset Allocation Framework To provide clients and relationship manager with consistent long-, mid- and short-term investment opinion Credit Suisse harmonized its Asset Allocation Framework in 2009 with the three different time horizons: Benchmark, Strategic and Tactical Asset Allocation. The departments Global Research, Multi Asset Class Solutions (MACS), Investment Advisory Strategies and Global Investment Delivery are now involved in the Strategic Asset Allocation (SAA) process. Global Research and MACS share their views on market developments in the Investment Committee. Investment Advisory Strategies then calculates the SAA based on the data from the Investment Committee. Before the SAA publication, Investment Advisory Strategies and Global Investment Delivery make sure to have products available to map the recommended strategies. Legal and Compliance training To ensure that all employees are familiar with the current legal and compliance regulations, all Credit Suisse employees have to conduct and pass LCD related web based training session on a yearly base. Frontline Training initiative To win back client confidence Credit Suisse set up a frontline Training initiative to further improve its advisory capability by providing general and specific trainings to all relationship managers. Starting in spring 2010 all relationship managers (RMs) will be tested and certified. The new certificate-based quality standard being introduced aims to ensure that all relationship managers are able to provide their clients with comprehensive advice about products, investment risk and earnings potential. The certification of relationship manager not only serves the client, it also sets standards for the largely unregulated profession of relationship manager. Hence this certification increases the market value of the relationship manager. Credit Suisse Suitability Framework (Private Banking) Credit Suisse set up a product suitability framework within Private Banking and adjusted their client advisory procedure further. All actively sold product types sold by Credit Suisse have been categorized along two dimensions Suitable Investment Strategy (Downside Risk) and Suitable Investment Experience level (Complexity), so that they can be easily matched against the clients investment profiles. Private Banking Advisory Process To set new standards in partnering with their clients all over the world, Credit Suisse created the Credit Suisse Advisory Process. Main goal is to understand clients needs and demands and to be able to translate them into integrated, tailored solutions from across the whole bank. In providing a sophisticated advisory process, it will help to build a long-term trusted relationship with the client. Improving Internal Information Systems Investment Banking IT Strategy In the evolving regulatory environment and industry trends, the Credit Suisse IB IT management team have analysed the markets to identify emerging themes that would drive the IT strategy. The business aligned strategy of IB IT now incorporates the three themes identified multi-asset risk management, central clearing and electronic trading. Multi-asset risk management: The goal is to re-engineer our risk and enterprise data systems to cater to the increased inter-dependencies in risk management amongst the various asset classes. Central Clearing: As the industry moves away from bilateral trading and derivative commoditization is becoming ever more prevalent, technologically, the goal is to support higher flow, standardize product offerings and provide clients with better tools and services. Electronic trading: With large volumes and central clearing new market realities, companies will need to improve their electronic trading systems. Credit Suisse is introducing a holistic single-dealer portal to rival competitors offerings and increase its share in e-trading. SDII Program in Credit Suisse Credit Suisses Strategic Derivatives Infrastructure Initiative (SDII) was established in 2002 with an overall objective to reduce Operational Risk and increase the processing capacity of the derivatives infrastructure. SDII is scheduled for completion by the end of 2010. The initiative aims to set up a standard front to back architecture with a consistent set of processes across all relevant entities. In order to value all Over-the-Counter (OTC) transaction during their entire lifecycle and to predict future cash flow, the bank wants to build a single data source. Furthermore all risk management will be processed on robust, scalable and controlled Risk Management Systems, hence excel spreadsheets solutions will be replaced. The key to having the initiative though is the ability to add and integrate new products quickly and efficiently, allowing front to back reporting and monitoring of exposures. This ability will enhance Credit Suisses ability to ensure timely reporting of risk exposures into the next financial crisis. Results achieved so far The results of Credit Suisses consistent efforts to reduce risk and to build a capital efficient business model can be seen in the following graph. Source: Credit Suisse AG