The Risk Institute meets at the intersection of academia and industry and is committed to generating new insights and influencing the adoption of leading risk management practices.  As part of this commitment, The Risk Institute sponsors funding for research ─ area-specific and interdisciplinary ─ seeking to discover and advance risk management concepts that organizations can use to leverage risk management to create value.


The Risk Institute Annual Survey on Integrated Risk Management

This annual survey by The Risk Institute was created in 2014 to better understand how senior executives from both financial and non-financial industries view risk management’s role in their organization; how, if at all, they integrate risk management into business decisions; and how they structure their risk management function to support its role in the firm. 

Third Annual Survey on Integrated Risk Management (Spring 2017)

Second Annual Survey on Integrated Risk Management (Spring 2016)

First Annual Survey on Integrated Risk Management (Fall 2014)


Research Funding Proposals

The Risk Institute invites area-specific and inter-disciplinary proposals to fund research covering all areas of risk management. Grants of up to $30,000 cash will be awarded to support risk-related research from all disciplines and industries.  Priority will be given to topics including political risk, risk resilience and sustainability, reputation risk and culture, enterprise risk managment for nonfinancial firms and risks in mergers and acquisitions. Details about our upcoming RFP will be released in early fall 2017.   
 

Grants Issued - Research in Progress

  • January 2017 Grants
    • Measuring the Economic Consequence of Cyber-Attacks and Cyber Resilience: a Computable General Eqilibrium Modeling Approach by researchers from OSU and University of Southern California will address the following three questions: 1) what are the economic consequences of cyber-attack measured in terms of GDP, employment and industrial output? 2) How do the consequences vary when the attacks are targeted among different critical infrastructure sectors, such as manufacturing, energy, telecommunication, transportation, and water facilities? 3) What is the potential of various cyber-resilience tactics to reduce losses?
      The overall objective of this research is to improve risk management for cyber-threats among both private and public sectors through better understanding of the economic consequence of cyber-attacks and the benefits of various cyber resilience tactics in reducing these consequences.
    • Cultural Fit and Merger Success by researchers from University of British Columbia, Stevens Institute of Technology and University of Dayton, will combine knowledge and expertise from psychology, sociology, economics, finance, management, and computer science to develop operational measures of corporate culture and provide one of the first large-sample empirical studies to show whether and how differences in corporate culture between merging firms can have important implications for different aspects of M&As ranging from deal initiation, merger pairing, to post-merger integration and deal performance. The proposed research and its findings will fill a void in corporate risk management from the perspective of how to assess and mitigate culture clashes when two operating entities are combined.
    • Derivatives Supply and Corporate Hedging: Evidence from the Safe Harbor Reform of 2005 by researchers from Cornell University and Syracuse University studies how supply-side frictions affect corporate risk management. While several studies have documented the importance of supply frictions for corporate borrowing, there are no studies on the effects of supply side frictions for corporate hedging. Theory shows that by hedging, firms can mitigate credit rationing, information asymmetry, or risk of financial distress. Therefore, frictions that limit the availability of hedging instruments to firms are intrinsically detrimental to shareholders. We also plan to test how supply frictions affect firm’s  performance and shareholders’ value. Finally, because hedging reduces the risk of financial distress, our objective is to test also how risk management affects the availability and composition of corporate debt. Critically, our findings could also inform the current policy debate on “derivatives margin requirements”.
    • Improved Power Outage Modeling to Support Risk Management for Electrical Utilities by researchers from OSU and University of Michigan aims to develop state-of-the-art power outage models  for thunderstorms and winter storms. These models will be trained and validated using power systems data provided by three electrical utilities that service Ohio: American Electrical Power (AEP), Duke Energy and FirstEnergy. The research described in this proposal will complement, but not duplicate, the existing power outage modeling/storm preparation efforts that are ongoing within each of these utilities. The research will provide these utilities expertise with data analytics, machine learning and weather forecasting to develop and operationalize state-of-the-art power outage models.
    • Bank Regulations and Cross-border Risk Management - Evidence from Global Syndicated Loans by researchers from Indiana University and Purdue University examines whether the risk management of banks contributes to the formation of global syndicates. In particular, we study the effect of country- level bank regulations on the origination and participation of banks in global syndicated lending. We focus on bank regulations for two reasons. First, bank regulations, especially capital reserve requirement combined with official supervision, specify banks' leverage level, risk tolerance, and credit provision. Second, country-level bank regulations also provide a suitable laboratory to study the determinants of syndicate formation, as these regulations are largely outside of the control of individual banks.
    • Information Institutions And Acquirer Returns In International Acquisitions by researchers from OSU and University of Hong Kong investigates the impact of both country-level and firm-level information asymmetry on the performance and risk management strategies of acquiring firms in international M&As. An examination of how information institutions affect risk in international M&As provides an institutional perspective on the value creation process in international acquisitions and sheds light on the institutional contingencies of firms’ strategic choices and their subsequent performance. We will strive to measure
      information opacity, which is a notoriously difficult construct to measure. Finally, our study will deepen the understanding of the performance of international acquisitions from an institutional perspective. Our project will provide evidence for the cause of risk in international M&As and will examine the coping strategies of risk management aimed at reducing information asymmetry in international M&As.
    • Educating Risk: Developing a Pedagogical Approach Toward Teaching Compliance Risk by researchers from OSU will address a gap that exists between the expertise of risk managers and the small amount of research that has been conducted on effective methods of educating risk management theory and skills. The researchers propose to address the gap by developing an analytical structure for, and reviewing the pedagogical approaches used in, the risk domain of compliance risk. Specifically, we propose: (1) researching and developing pedagogical precepts for educating on risk generally and on compliance risk in particular; and (2) performing exploratory empirical research of extant pedagogical approaches at business and law schools in the United States used in educating compliance risk. Our research objective is to develop both theory and data informing the education of risk management.
  • January 2016 Grants
    • Global Active Ownership by researchers at University of Cambridge Judge Business School, Boston College Carroll School of Management and Temple University will be built upon the researcher' previous study published in the December 2015 Review of Financial Studies (lead article and Editor's Choice article) which found that major institutional investors, or "universal owners", are increasingly exercising their rights to influence the way businesses are managed. In this proposal, research will broaden the perspective to a global scale and address questions such as how national and institutional characteristics such as legal régime, culture, governance systems, and economic development, as well as collaborations at the national, institutional, international levels influence the active ownership activities.
    • How Management Risk Affects Corporate Debt by researchers at the University of Utah, University of Minnesota, and The Ohio State University Fisher College of Business will identify the effect of management uncertainty on the costs of borrowing, using the idea that a manager's impact on firm value becomes known more precisely over his tenure. Preliminary results suggest that uncertainly about the CEO contributes substantially to a firm's cost of borrowing during the early years of the CEO's tenure and that the sensitivity of firms to a CEO's tenure more than doubles when the CEO is not considered an "heir apparent", when they come from outside of the company and when they are younger. Link to paper.
    • Culture and Risk: An Interdisciplinary Review by researchers at The Ohio State University Fisher College of Business and Tel-Aviv University will conduct an interdisciplinary review of risk, culture, and their interrelationships, consistent with the call heard across multiple disciplines for greater interdisciplinary research as a way to advance knowledge. The researchers hope to create interdiscipliary bridges by recording differences across areas such as conceptual and operational definitions of risk and culture; risk dimensions, manifestations and measures; cultural measures and dimensions, dependent variables used (e.g. home bias in finance, liability of foreignness in international business); and theories underlining the relationship between culture and risk; along with fifteen other areas and disciplines.
    • Relative Performance Evaluation and CEO Risk-Taking by researchers at The Ohio State University Fisher College of Business and National Taiwan University will examine the implications of Relative Performance Evaluation (RPE) vs. Absolute Performance Evaluation (APE) for risk taking by CEOs. Specifically, whether RPE encourages CEO risk-taking (and how it's reflected in components of firm-level risk and investment policies); does RPE affect risk-taking incentive symmetrically or are incentives different for winners vs. losers or firms operating in more vs. less competitive environments; and how do RPE firms set performance targets relative to benchmark performance and the effect of target setting on CEO risk taking.
    • Risk Shifting or Management with Conflicts between Creditors and Owners: Evidence from the Insurance Industry by a researcher from The Ohio State University Fisher College of Business will focus on how companies change the riskiness of their investments when the conflict between the companies' financing providers is exacerbated by financial distress. Also, how different organizational forms (e.g. stock vs. mutual) with different corporate governance structures differ in their response to intensified conflicts among claim holders. Using the insurance industry as an example, the project will explore whether major underwriting losses lead to changes in the riskiness in investments in financial assets as well as risk management strategies.
  • January 2015 Grants
    • Firms’ Health Insurance Risk and the Affordable Care Act by researchers at The Ohio State University College of Public Health, seeks to examine how companies respond to risks related to health insurance arising from the Affordable Care Act (ACA).  The researchers are interested in understanding the ways organizations are managing their exposure related to these risks and the implications of these decisions on corporate and HR strategies. 
    • Managing the Tension between Confidentiality Protection and Innovation: The Impact of Supply Network Structure and Relationship Strength by researchers at Cornell University and The Ohio State University Fisher College of Business involves examining tension which exists between the performance outcomes of confidentiality and innovation capabilities and their associations with the characteristics of the network involved in new product development.
    • How much for a haircut? Illiquidity risk, the secondary market, and the valuation of private equity by researchers at The Ohio State University Fisher College of Business and Vanderbilt University Owen Graduate School of Management focuses on examining whether empirically observed returns and diversification benefits to investors in private equity funds suffice to offset the risks they face, and correspondingly how they affect the investors’ overall portfolio allocations to private equity.  Related blog and link to the paper.

Research Translations

The Risk Institute aims to bring academic research to the business community through our translation of the most compelling risk related research. These brief summaries highlight the current academic findings and make them applicable to the current challenges facing risk management professionals. 

Research Translation Library

Papers and topics are added regularly. Please check back often!

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