3/21/2020 Quiz: 10.2 Core Module Assignment #10 https://psu.instructure.com/courses/2043139/quizzes/3773906/take 1/8 10.2 Core Module Assignment #10 Started: Mar 15 at 5:54pm Quiz Instructions 4 pts...

Question 1: Define: (a) “warning,” (b) “warning system,” (c) “formal warning system,” and (d) “informal warning system.”
“Warning”: Warning is sign / signal that intended focused objective is on verge of breach / break down. Generally, it refers to signal to act on set objective. For example: In financial markets limits are set as warning, crossing which will trigger designed monetary action upon breaching party. Warning can also base on prediction to optimise resources for managing risk.
“Warning system”: It is set of design / framework that provides working mechanism based on laid down procedure, standard, policies, assigned input, desired outcome and modelled around assumption for set objective. For example: Taking above example of financial market limits, when a limit is breached a system generated / manual call will be trigged to set in motion action of monetary obligations to be fulfilled by obligor.
“Formal warning system”: Formal warning system is method of addressing an issue with proper recording of issue and issuing letter or other means to communicate earning.
“Informal waning system”: It is a way to resolve a matter / issue based on communication. Dialogue is the key.
Question 2: Do some thinking and search the Internet to find information on a formal warning system that is presently in place to protect US citizens. How does this warning system reduce risk? Explain.
In US, Avalanche warning system conveyed through national service system is an example of formal warning system. In US a sophisticated weather reporting system is developed that provides detailed records and prediction. A warning of Avalanche will enable sky posts, mountain climbers, travellers and other public in general to get sense / information from weather system warning. Having formal warning system enables not put lives at risk.
References:
https://books.google.co.in/books?id=c_IOAQAAMAAJ&pg=PA40-IA21&lpg=PA40-IA21&dq=what+is+informal+warning+system+in+US&source=bl&ots=ZQyx5vxVhR&sig=ACfU3U3BLMppVvNm9YnRl8WreRety2KnaQ&hl=en&sa=X&ved=2ahUKEwjo-4WHoLLoAhXyxDgGHVXWAzQQ6AEwEHoECAkQAQ#v=onepage&q=what%20is%20informal%20warning%20system%20in%20US&f=false
Question 3: Bracken Identifies six (and only six) ways to manage uncertainty. Identify these six approaches and describe what they are?
Bracken risk management approach is based on three pillars, namely (a) surprise can be managed (b) Getting away from prediction and finally (c) Six ways to managing risk.
(a) Surprise can be managed takes an optimistic view with prudent judgement that surprises do happen. Emphasis is placed on stronger balance sheet, protecting balance sheet, borrowing money and renegotiation for netter deal for company’s balance sheet.
(b) Getting away from prediction does in direction of warning given by prediction and conflict with using these results with intelligence. This argues that placing failure at centre leads to cynicism, destruction and damming of morale as this shows only one way to managing surprise, warning while other ways being overlooked. Therefore, getting away from prediction is one of the pillars included by Brecken.
(c) The last and final is 6 ways to managing risk. The six ways are (1) Isolating critical asset from Uncertainty: This places emphasis on isolating critical / key assets for the reason of protecting against cost to survival of human race. Examples are surviving without building nuclear deterrent and keeping back command-and-control aircraft in battel. (2) Smoothening: Involves managing a problem by dissecting it in smaller pieces. Example includes scaling sensor and collection with simultaneous emphasis on threat that comes along with it. (3) Warning: Is prediction for tailored responses when viewed from risk management perspective. It is hardly considered good and usually warrant marginal investment. (4) Agility: An example of consumer goods sector is taken in context of demand as warning. End to end approach to managing demand as warning requires logistic agility keeping in mind cost. In current scenario of COVID-19 running across the world, is good case study of demand and supply warning with global impact evident unfolding every day. (5) Alliance: Another word can be used is diversification meaning spreading / weighing risk over several assets. In risk management several measures like Value at Risk (VaR), Expected Shortfall (ES) and spectral risk measure are compared to arrive at capital needed. In-fact Basel committee for Banking regulation has recently proposed amendment with Base III for switch the regulatory capital requirement to be calculated with Expected short fall at 97.5% confidence interval. One of the reasons for the change is that VaR is not able to account for...