KAP015-3 Advances in Accounting: Risk Management in DBS Bank

This report aims to identify suitable risk management techniques for investors in DBS Bank, focusing on portfolio setting and risk management using Value at Risk (VAR) and the Capital Asset Pricing Model (CAPM). The research explores the effectiveness of CAPM and the impact of VAR on investors, using secondary data from sources like Bloomberg and DBS Bank's annual reports. The methodology involves a quantitative approach, employing CAPM for stability testing of Beta Coefficients and VAR for assessing risk preferences. Ethical considerations, such as privacy and confidentiality, are addressed, and the validity of the analysis is ensured through reliable financial data. The research contributes to understanding the quantitative measurement of anticipated risk for DBS Bank investors, with limitations acknowledged regarding the scope of risk assessment within the banking sector and the specific techniques employed.

Running head: ADVANCES IN ACCOUNTING
Advances in Accounting
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction..........................................................................................................................3
1.1 Background of the study............................................................................................3
1.2 Research Aim.............................................................................................................3
1.3 Research Objective....................................................................................................3
1.4 Research Question.....................................................................................................3
1.5 Rationale for the research..........................................................................................4
2.0 Literature Review..........................................................................................................4
2.1 Process associated to Risk Management...................................................................4
2.2 Capital Asset Pricing Model......................................................................................4
2.3 Value at Risk (VAR).................................................................................................5
3.0 Research Methodology..................................................................................................5
3.1 Research Approach....................................................................................................5
3.2 Data Collection and Analysis....................................................................................6
3.3 Method of Analysis....................................................................................................6
3.4 Data Analysis.............................................................................................................6
3.5 Planning Horizon.......................................................................................................7
3.6 Ethical Issues.............................................................................................................8
3.7 Validity of Analysis...................................................................................................8
3.8 Limitations of the Research.......................................................................................8
4.0 Conclusion.....................................................................................................................9
References..........................................................................................................................10

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Introduction
1.1 Background of the study
The decisions pertaining to investments are generally related to initiate specific actions
which will be able to improve the overall strategic position of any company. This is needed to be
related to the analysis which are needed to be related to the various aspects of the basic changes
which are to be brought in the areas of decision making. The determination of the risk factors is
inferred as per considering the relationship of the technological parameters, cost and time (Buyl,
Boone and Wade 2017).
1.2 Research Aim
The aim of the research is to identify the suitable risk management technique for the
investors in DBS Bank.
1.3 Research Objective
The main objectives of the research are listed as follows:
 Identification of the most suitable portfolio setting and management of the risk of
investors in DBS Bank
 Risk management of investors in DBS Bank by VAR and CPM
1.4 Research Question
The questions for the research are listed as follows:
 What is effectiveness of the risk management with the application of CAPM?
 What is impact of risk management VAR on the investors?

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1.5 Rationale for the research
The risk of the investment decision is understood in terms of quantitatively measuring the
anticipated risk associated to the risk of the investors in the shares of DBS Bank. In various ways
the risks are depicted with the identification of the best portfolio setting and also the method to
manage the risks in portfolio which are considered among the investors of the bank.
2.0 Literature Review
2.1 Process associated to Risk Management
The risk management process begins with identifying the potential factors of risk among
the investors. These are significantly ranging in term of sourcing the issues associated with
changes in the return in portfolio of the bank. The implementation of the risk management is
inferred in terms of commencement of the different types of the strategies associated to
definition of risk used with the decision-making factors (Schanzenbach and Sitkoff 2017).
2.2 Capital Asset Pricing Model
The CAPM is set on the model of portfolio designed by Harry Markowitz in 1959. This
particular model is seen to be based on the use “mean-variance of the efficient portfolio”. The
risk management procedure in general inferred with ideal systematic management of the
investor’s risk. The systematic risk is referred as the related investment risks. In case the interest
rate is considerably high then an individual can consider the rate of inflation for resistant factors
(Greenwood, Landier and Thesmar 2015). The CAPM model is also considered with the mean-
variance of two more assumptions which were seen to be added in the assumptions proposed by
Markowitz. The vast degree of practical application is seen to be ideal for the estimation of cost
of capital which is necessary for the evaluation of the effectiveness of managing the portfolio.
The important assumptions for this model as per the investors is seen to be based on attaining the

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target point of the effective frontier in which the return may be capitalized as per similar risk
level (Yet et al. 2016).
2.3 Value at Risk (VAR)
The depictions of the VAR are further seen to be largest pertaining to the reduction in the
value in a specific period for a certain degree of confidence. This particular technique will be
applied in consideration with the historical data as per non-parametric data. The computation of
the VAR is seen to be done as per the use of the percentile technique as per the desired
confidence interval. The application of the non-parametric VAR is regardless of the distribution
type (Arnold and Yildiz 2015).
3.0 Research Methodology
3.1 Research Approach
The main approach of the research is seen to be used with the use of suitable setting of
portfolio for the investors of DBS Bank. The contributing elements of the research is related to
the identification of the portfolio risk management among the investors in the bank. In addition
to this, the research horizon will be inferred in five stages. The first stage relates to ideation of
the research study (Karneyeva and Wüstenhagen 2017). This will be followed with stages such
as designing of the research, collection of data, publication of the data and analysis of the same.
It is seen to be important for understanding the research process which are formulated as per
important methods necessary for the process of risk management. The risk management process
will be further able to reveal about the information associated to the secondary resources (Brink
2017).

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3.2 Data Collection and Analysis
The process of collection of the information will be taken into account with the depiction
of the secondary information. The secondary information will also include the value in returns
pertaining to the portfolio available website like Bloomberg and annual report of the company.
The information available as per the return of the portfolio is seen to be useful as per the
financial health of the company (Adhikari and Agrawal 2016). This information may be used by
the investors pertaining to the risk management process based on the identification of the
available information like risk mitigation and risk identification with CAPM and VAR. The
information collected from the annual report will be related to inferring the financial health of a
company. This information needs to be considered as per risk management process and use of
available information such as liquidity position. The financial position of the company will be
also inferred in terms of extracting information such as efficiency ratio and leverage ratio
(Calomiris and Carlson 2016).
3.3 Method of Analysis
The interpretation of the data will be further used as per quantitative research technique.
The analysis technique of the research will be inferred with the use of CAPM and VAR. The
CAPM will include the Stability of test for the Beta Coefficients. The portfolio effectiveness is
further seen with measurement pertaining to managing the portfolio. The assumption of the
CAPM will be depicted as frontier in which the return will be capitalized as per similar level of
risk (Kumar et al. 2016).
3.4 Data Analysis
The analysis with the use of mean variance shall be considered with specific aspects of
the risk. The research results will be analysed with the grouping of data within 50 investors who
will be able to provide a rationale on the use of definite method for the risk management in DBS

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Bank (Baker and Wurgler 2015). The VAR will be inferred with the indicator returns. This will
be able to provide a considerable amount of information which will be based on lower risk
preference. The Coefficient of Variation will be considered with the particular focus on the risk
taker as pe the matter associated to the investors who are seen to eb having a similar value when
it is compared with lower risk preference (Aven 2015).
3.5 Planning Horizon
Periodical
Sequential
Activities
Week 1 Week 2 Week 3 &4 Week 5 & 6
Creating the idea
for the research

Preparing the
design for the
study

Collecting of the
relevant
 
Identification
results collected
for the data

Proceeding with
the publication
process


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3.6 Ethical Issues
The ethical issues of the study will be evaluated with respect for privacy of confidential
information of DBS Bank. The increased concern for the vulnerable group is seen to be based on
the various types of the considerations pertaining to the vulnerability and welfare of the
individuals. The ethical aspect of the research will be also ensured with the principle of
Beneficence- Do not harm. This aspect will be able to make sure that research will consider all
the possible consequence for the research and at the same time balance the risks pertaining to the
proportionate benefit (Bromiley et al. 2015).
3.7 Validity of Analysis
The validity of the research analysis will be ensured with including relevant financial
information only as per annual report of the company. In addition to this, information about the
stock of the company will be seen to inferred as per the use of website such as Yahoo Finance
and Bloomberg.
3.8 Limitations of the Research
The main limitation of the research shall be considered only as per the risk assessment in
the banking sectors. Therefore, the use of the different types of the research techniques may be
differing in other form of research process. The limitation of the risk is also inferred as per
effectiveness of the risk management with the application of CAPM and impact of risk
management VAR on the investors. Therefore, different types of the other factors shall be
inferred as per use of only these techniques (Guiso, Sapienza and Zingales 2018).

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4.0 Conclusion
The research will be essential in understanding the of quantitatively measuring the
anticipated risk of the investors in the shares of DBS Bank. In various ways the risks are depicted
with the identification of the best portfolio setting and also the method to manage the risks in
portfolio among the investors of the bank. The main method for the research will be based on
designing of the research, collection of data, publication of the data and analysis of the same.
The analysis and collection of the data will be considered as per risk identification with CAPM
and VAR. Furthermore, the ethical issues of the study will be evaluated with respect for privacy
of confidential information of DBS Bank.

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References
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Arnold, U. and Yildiz, Ö., 2015. Economic risk analysis of decentralized renewable energy
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Aven, T., 2015. Risk analysis. John Wiley & Sons.
Baker, M. and Wurgler, J., 2015. Do strict capital requirements raise the cost of capital? Bank
regulation, capital structure, and the low-risk anomaly. American Economic Review, 105(5),
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Brink, C.H., 2017. Measuring political risk: risks to foreign investment. Routledge.
Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk management:
Review, critique, and research directions. Long range planning, 48(4), pp.265-276.
Buyl, T., Boone, C. and Wade, J.B., 2017. CEO narcissism, risk-taking, and resilience: An
empirical analysis in US commercial banks. Journal of Management, p.0149206317699521.
Calomiris, C.W. and Carlson, M., 2016. Corporate governance and risk management at
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Greenwood, R., Landier, A. and Thesmar, D., 2015. Vulnerable banks. Journal of Financial
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Economics, 128(3), pp.403-421.

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