Emerging Systemic Risks - Research Paper Example

A review of Studies on the Emerging Business risks and security management strategies in the 21st century: Research Proposal Student Number: UP715320 Submission Date: 17 February 2014 Word Count: 2000 Table of Contents 1.0Summary 3 1.2 Research Objectives 4 1.3 Significance of this Research 4 1.4 Previous Work 5 1.5 Design and methodology 9 1.6 Theoretical Perspectives 10 1.7 Research Ethics 10 References 12 Appendices 14 1.Research Timetable 14 2. Resources and Costs 14 1.0Summary Emerging Risks are new risks that have not been fully understood and quantified. Security Management on the other hand, is a field of management services that relates to the safety of information, safety, protection of information, and telecommunication. In the wake of the 21st century, the world has witnessed new and challenging security issues for all multi-national enterprises and governments alike (Strzelecki, 2008), from the hugely damaging windstorms and flooding in Europe and the ice storms witnessed in Canada, to the new breeds of diseases for both humans and animals (OECD 2003). Apart from that, the 21st century has also been abhorrent with a host of security threats and disasters in harrowing magnitudes, including terrorist attacks such as the September 11 attack on the US in 2001, and other major breakdowns of critical infrastructures due to cyber-attacks or technical failures making news headlines all over the world (Strzelecki, 2008). Although various studies have documented the emerging risks, it should be noted that the world is dynamic and each day, new issues have to be encountered. The purpose of this research is twofold: to conduct an evaluation on the emerging risks as well as identify security management strategies deployed by these firms in coping with such risks The study will employ a Qualitative research methodology, drawing on qualitative research methods such as library research, and desktop research to generate data and information regarding the present study that seek to understand the emerging risks and security management strategies in the 21st century. It is hoped that the findings from this research will be helpful to various stakeholders including governments, business organizations, and scholars and researchers. 1.1Aims This study aims to a) Critically evaluate the emerging business risks in this 21st century b) Critically examine the security management strategies deployed by firms in coping with the emerging risks. 1.2 Research Objectives i) To identify the main emerging business risks in the world today ii) Find out the types of emerging risks existing in the world today iii) Find out security management strategies in coping with the emerging risks iv) To find out the effective security management strategies in dealing with the emerging risks. 1.3 Significance of this Research In the recent past, massive disasters have been realized and continue to be realized such as the huge flooding in some parts of Europe, emergency of infectious diseases, devastating bush fires in countries such as Australia and the ice storms in Canada among others. These aspects have made governments and the private sector to realize that something is happening. The emerging risks have the potential for inflicting immense damage on the infrastructure and systems upon which the economies and societies depend. Further, these emerging risks have created difficulties for traditional risk management strategies to work. It has also become a challenge for government entities and private sectors to effectively deal with the complex security threats of this century (Johnson, 2003). Various researchers have conducted studies on the topic of “Emerging risks and security management strategies in the 21st century”. However, it should be noted that the trend of the emerging risks is a day-to-day issue. In other words, security risks emerge on a daily basis, and therefore, studies on the topic need to be conducted regularly to identify this trend as well as finding new strategies of coping with these risks. It is hoped that the findings from this research will be helpful to various stakeholders including governments, private entities and scholars. In particular, governments and private entities will be introduced to the emerging risks, and the strategies which have been used by various firms in coping with them. This way, they will be able to select the most effective strategies and decide if they will incorporate the same. On the other hand, this study will trigger other researchers who are interested in this topic to conduct an in-depth study in finding more insights. 1.4 Previous Work A review of literature in this topic underscores the point that the 21st century has indeed witnessed the emergence of a new breed of complex and challenging systemic risks because of globalization forces. This has subsequently led to the increased interconnectedness of global zones and openness of national frontiers. The literature reviewed highlights that the emerging corporate risks that result from the increased global interdependence and interconnectedness, have imposed new strains on corporations since they are tasked with the challenge of conceptualizing these new risks for the purpose of planning and preparing to respond to them. A meta-analysis of the literature reviewed reveals that insofar as businesses in the highly complex and dynamic global corporate world are concerned; financial, pandemic, infrastructure, supply chain, as well as geo-political risks, are the main emerging challenges in the 21st century. A remarkable feature of systemic risks facing organizations in the 21st century is that they are wide-ranging and ever changing. Although businesses may continuously benefit from the continued global integration and growth of markets beyond national frontiers, the risks associated with this increasing interconnectedness and interdependence will continue to rise. In this respect, corporate security management strategies should be a core aspect of every business’s operational framework, to ensure the establishment of a unified corporate security management capability within the organization. Previous research works such as those of Braun; M et al. (2008) have noted that among the greatest risks in this 21st century are the economic and financial risks. Goldin(2010) backs this assumption by arguing that financial crisis has led to a decline in the availability of credit from banks and other financial institutions, reducing the level of credit available to corporations thereby constraining their investment potential. In essence, social inequality and economic imbalances are reversing the gains that have been so far made from globalization. According to the report from the world economic forum, a further social upheaval and economic degradation could severely interfere with the process of globalization and the gains made from it. There is also a feeling among many analysts that many global institutions are not fully prepared or equipped in coping with the present day interconnected, swiftly evolving risks. Other types of risks that have been identified include pandemic risks, infrastructure, risks, supply chain risks, risk in food shortage and Geo-political risk. The pandemic risk in the 21st century is according to research attributed to the openness of national frontiers, which continuously increases exposure to a wider range of pathogens and parasites. In connection to this, the increased global interconnectedness has created the conditions that promise to propel pandemics across the globe, thus, endangering business operations. Apparently, for abusiness to thrive, critical infrastructure such as energy supply, transport and communications, as well as financial systems, among others, must be in proper condition. Because of the increasing pressure on infrastructure assets as well as the accompanying increase in network dependencies, multinational corporations are highly susceptible to supply chain failures resulting from poor infrastructure (Roy &Sivakumar, 2007). A review of literature has noted that the potential piracy threat contributes to the escalating costs of businesses. This is due to ransom fees and the rise in average insurance premiums on voyages that aggravates the geopolitical risk of our century. Alongside this is terrorism activities in various parts of the world which threaten the modern public security machinery. Food shortage is yet another significant risk in the 21st century. This has been attributed to rapidly increasing populations coupled with the rising poverty levels in some parts if the world. The review articulates that consumer attitude regarding genetically modified foods (GMOs) also constrain food supplies further aggravating the risk to the future security of food to an ever-growing population across the world, while also limiting the amount of food that commercial agribusiness can produce profitably. In another spectrum, the massive broadening of supply chains, with their increased complexity over the decades due to rapid emergence of new global opportunities for production and sales of goods and products across national frontiers, has resulted in supply chain risk (Leckey1995). Further, the extensive supply chains increase the levels of risk associated with the increasing interconnectedness of global markets in the 21st century, especially because businesses may not have any control over their extensive and complex supply chains. Sharp shifts in exchange rates along the global supply chains are a common risk that multinational corporations always run, thereby leading to currency losses; furthermore, a globalized supply chain makes it hard to rectify disruptions in the just-in-time business model corporations. In order to survive and become profitable in the market organizations must “reengineer their security” systems to cope with the emerging security risks. Owing to the dynamism in global business context, security leaders must also be prepared to change with it, which underscores the need to explore the diversity of future scenarios. Adequate planning and preparation for low-probability events, increases the businesses level of preparedness in managing the particular risks in the event that they suddenly occur. Further, corporations are also mandated to examine all industry codes of conduct that supply the coordination mechanism that enables businesses to observe a set of safety rules in their operations. The review further noted that interaction with the government helps organizations to raise their awareness of the emerging and potentially damaging systemic risks facing businesses in the highly complex and dynamic global corporate environment in the 21st century (Tse-Kang 2005). An evaluation of the industry codes of conduct, which supply the coordination mechanism, will enable businesses to observe a set of safety rules in their operations. Other researchers have emphasize that risk management is inevitably an organizational function. Industry codes highlight the various situations in the global corporate world and increase organizational capacity to detect and spot risks before they can occur, leading to catastrophic events that destabilize business operations. Generally, the guidelines for multinational corporations include a set of voluntary principles and standards for responsible business conduct in the global market system. 1.5 Design and methodology In this study, qualitative and desk approach will be used in finding common literature in a partial sampling of the related literature that dealt with the research topic and objectives. Most of the literature used in this study will b accessed from research findings, government agencies, trade associations and other organizations that had conducted studies on the same area. In addition, peer-reviewed journals such as Academic Search Premier, JSTOR and Business Source Premier will be helpful in exploring the topic under study. The technique employed in finding these journals, studies and information will include using key search words associated with the topic in the identified websites and databases. Once the articles were accessed, they were stratified with regard to the questions, which they addressed. Afterwards, analysis of the main themes was conducted by relating the findings with the operations. 1.6 Theoretical Perspectives Acharya, V., et al. (2010), through their simplified model of systemic risk, claim that the manner in which an individual institution contributes to systemic risk (denoted as Systemic Expected Shortfall) can be measured and priced. According to them, institutions have a high propensity to be under-capitalized when the whole system is undercapitalized and this inevitably increases their advantage, volatility, correlation, as well as tail-dependence. In the same line of thought, De Bandt& Hartmann (2000) argue that a broad concept of systemic risk should incorporate systemic events in financial markets as well as in the connected payment and settlement systems. Consistent with the other perspectives, Scharcz(2008) observes that systemic risk emanates from a type of calamity existing in the financial markets, in which market players have scarce inducements, and lack regulation, to control risk taking, which will contain the systemic danger by preventing it from spilling over to others. 1.7 Research Ethics This research was considered to have no specific ethical risks and fully meet with Academic Ethical Framework. All the information sought from various sources will be properly cited and referenced accordingly. However, the researcher will be careful in selecting studies that had secured the consent of participants at the time of data collection. This is because I do understand that implication of the data protection act (1998) which stipulates that it is illegal to re- use data from a study whose participants had not consented to the same. According to this act, participants in a study are to be asked if they are willing for their information to be archived and availed for future research. The researcher will consider this while undertaking the study. For studies that had identified or exposed the participants, the researcher duly understands his obligations in protecting the confidentiality and anonymity of these participants. Finally, I will limit the analysis in such a way that confidentiality and anonymity of the participants are maintained. References Acharya, V. V. (2009). A theory of systemic risk and design of prudential bank regulation. Journal of Financial Stability, 5(3), 224-255. Braun, M., et al. (2008).Understanding risk management in emerging retail payments. Economic Policy Review - Federal Reserve Bank of New York, 14(2), 137-159.  Goldin, Ian. (2010). Globalization and Risk for Business: Implications of an increasingly interconnected world. Retrieved from http://www.lloyds.com/~/media/lloyds/reports/360/360%20globalisation/lloyds_360_globalisaton.pdf Hyde, R. C. (2002). The new reality: Response to 21st century threats. Public Relations Strategist, 8(4), 8-13. Johnson, D (2003), Emerging Systemic Risks in the 21st Century, Available from http://www.oecd.org/futures/globalprospects/37944611.pdf Leckey, A. (1995). Investing for the 21st century. The Futurist, 29(4), 8.  OECD. (2003). Emerging Risks in the 21st Century: An agenda for action. Retrieved from: http://www.oecd.org/futures/globalprospects/37944611.pdf Roy, S., &Sivakumar, K. (2007). The role of information technology adoption in the globalization of business buying behavior: A conceptual model and research propositions. The Journal of Business & Industrial Marketing, 22(4), 220-227. Schwarcz, S. L. (2008, May). Systemic risk.In American Law & Economics Association Annual Meetings paper. 20. Strzelecki, M. (2008).Globalization... and the pursuit of business. Flexible Packaging, 10(10), 12-14,16,18. Tse-Kang, L. (2005). State and business in the era of globalization: The case of cross-strait linkages in the computer industry. The China Journal, (53), 63-79.  Appendices 1.Research Timetable Task February March April May June July Literature review / planning / research proposal             Literature review extended and deepened             Locating and collating primary visual records and books             Analysis of literature review and conclusion             Production of the first draft             Production of final draft           2. Resources and Costs Resources Cost Accessing Libraries $100  Internet $50 Mis-llaneous $150  Total $300   Read More