methods in business research ufone

7/30/2019 Methods in Business Research Ufone

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Topic: Research on Ufone Low MarketShare

Department: Marketing

NICE UNIVERSITY

Presented by:

MahwishBashir

MisbhaBashir


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Management DecisionProblem

Limitation Of the Study

Methodology

Risk in ReserveManagement

Risk Management practices ofRBA

Conclusion

Recommendations

Objectives of presentationincludes to develop your

understanding about:


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History Of Ufone

HISTORY OF UFONE:

Reserve management is a process that ensuresthat adequate official public sector foreign assets arereadily available and controlled by the authorities formeeting a defined range of objectives for a country.


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Cont..

ObjectivesForeign exchange reserves are available formeeting a defined range of objectives.

Market, exchange rate and credit risks are

controlled in a prudent manner.Reasonable earnings are generated over the

medium to long term on the funds invested.

Assist the Govt. in meeting foreign exchange

needs and external debt obligations.


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Cont..Scope

Management of liabilitiesShort foreign exchange positions

The use of derivative financial instruments.

Transparency and Accountability

Clarity of roles, responsibilities, and objectives of financial agenciesresponsible for reserve management

Open process for reserve management market operations

Public availability of information on foreign exchange reserves

Accountability and assurances of integrity by agencies responsible forreserve management


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Governance

Describes the overall management approachthrough which senior executives direct and controlthe entire organization, using a combination ofmanagement information and hierarchical

management control structures.

Internal Governance StructureGuidelines


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Risk

Probability or threat of a damage,injury,loss ornegative occurance

caused by external or internal vulnerabilities

Risk framework

A Model of risks in the organization. Risk frameworks typicallyenumerate the various classes of risk and the degree of Risk thatManagement expected.

Risk Management Framework

o Identifies and assesses the risks of reserve managementoperations

o Allows the risks within acceptable parameters


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EXTERNAL MARKET-BASED RISKS:

Liquidity risk.

Credit risk

Exchange rate risk

OPERATIONAL RISKS

Control system failure risks

Financial error risk

Loss of potential income

Risk in ReserveManagement


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Reserve Bank of Australia

United States Europe Japan

Currency allocation (%) 45 45 10

Asset allocation (%) 45 45 10

Duration (Months) 30 30 30

United States Europe Japan

Asset

Class

% of

Total

Asset Class % of

Total

Asset Class % of

TotalDeposits 22 Deposits 30 Deposits 22

Treasury

bills

21 Treasury bills 15 Treasury bills 33

TreasuryNotes

57 Bonds 55 Bonds 45

Benchmarkportfolio

Composition ofBenchmarks


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No allowance of price volatility and correlation in price

movements between securities and between portfolios.

Ineffective backup arrangement in the event of contingency andfailure to prevent excessive risk taking.

These measures does not measure the risk that the issuer ofsecurity can default at the maturity

RBA focus on VaR and DaR that is more narrow focus onmeasuring the market risk of portfolio exposures.

Fund managers are allowed to deviate from target that is abarrier to measure and incorporate these risks in limit

Weaknesses in system


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There is a latitude for managers to invest and deviate frombenchmark.

Use of benchmark and separation of duties of back, middle andfront offices

The reserve management hierarchy is responsible for defining theobjectives and responsibility of implementing the mandate

All the policies are clearly understood by staff and control system,and the investment mandate is documented

Any needed change requires management approval before thechange is made

Strengths in the system


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CENTRAL RESERVE BANK OFPERU(BCRP)

Currencies Jun-30-2010

Term tomaturity

Jun-30-2010

Long termrating

Jun-30-2010

US$ 82.2

Other

currencies

Gold

82.2

15.7

2.1

0-3 Months

3-12 Months


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The BCRPs reserve management involves a riskneutral and replicable portfolio even when the

market is very volatile.Its portfolio is based on themarket indicies

The purpose is to maximize the return on investmentand latitude also given to the fund managers.Actualand banchmark portfolio is monitored on the daily basisat market prices

The BCRP has managed its liquidity risk by diversifying indifferent investments.Deposits are held with first class

banks that are assigned A-1 and A+ credit rating.

The BCRP manage their interest rate risk by matching theterm structure of assets and liabilities.Most of theirinvestments are in AAA securities.

Strengths


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Weaknesses in system


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Recommendations for effective riskmanagement in reserves

Decision making authority for reservemanagement clearly defined, Authority shoulddevelop the objectives of reserve management.

A strategic long term portfolio that is best trade

off between different riskA latitude for the fund managers to deviate from

benchmark as provided by RBA and BCRP

If SBP dont want to do so then it can transfer

the authority to the treasurer to assign extra limitto fund managers if they can provide the solidreason to invest.


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Cont..


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Cont.. Fund managers should be aware of potential

losses and other consequence of risk exposures

so they could be prepared to accept the results.

The eligibility criteria for the selection of trading

counterparties should be clearly defined. There should be a framework for determining the

maximum credit exposure permitted with eachparty.

Active risk management is good approach tomitigate the risk than passive risk managementpractices.


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