Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

7. Appendix

Table 8.1.1: Country difference-to-mean of the importance of major non-financial risks [1] [2] [3] [4]

[5]

[6]

[7]

Full sample mean

2.24

2.17

2.2

2.2

2.16

1.94

2.14

Group 0 diff-to-mean (RoE)

0.02

-0.12

0.1

0.16

0.12

0.01

0.19 ***

Group 1 diff-to-mean (Fr)

-0.24 ***

-0.03

-0.15

-0.31 **

-0.27 **

-0.16

-0.2

Group 2 diff-to-mean (UK)

0.3 ***

0.03

0.13

0.22

0.05

0.06

0.07

Group 3 diff-to-mean (Ge+Au+Nl)

0.02

0.3

0.17

0.12

0.1

0.22

0.12

Group 4 diff-to-mean (Lux+Irl)

-0.02

0.05

-0.24

-0.2

-0.01

-0.01

-0.29 ***

ANOVA F 1.93 *** * denotes significance at the 10% level, ** at the 5% level and *** at the 1% level. “Fr” is France, “UK” is the United Kingdom, “Ge+Au+Nl” is Germany, Austria and the Netherlands, “Lux+Irl” is Luxembourg and Ireland, and “RoE” is the rest of Europe. Answers are coded in the following manner: 0 for 1.18 0.7 1.24 2.16 *** 1.42 0.49

Irrelevant, 1 for Slightly important, 2 for Important, 3 for Very important. [1] Bankruptcy of a financial intermediary (broker, sub-custodian, etc.) [2] Collateral risk (no restitution of collateralised assets) [3] Liquidity risk (freezing of shares or units) [4] Fraud (internal or external) [5] Mispricing, misevaluation, or bad accounting [6] Mis-selling (inappropriate information or inadequate product/advice) [7] Breach of investment rules

Table 8.1.2: Country group average of the protection against major non-financial risks [1] [2] [3] [4]

[5]

[6]

[7]

Full sample mean

2.12

2.24

1.97

2.14

2.33

2.27

2.57

Group 0 diff-to-mean (RoE)

-0.02

0

0.08

-0.04

0.01

-0.06

0.02

Group 1 diff-to-mean (Fr)

-0.12

-0.09

-0.24

-0.25 ***

0.11

-0.15

-0.04

Group 2 diff-to-mean (UK)

0.01

-0.03

0.03

0.34 **

-0.07

0.3

-0.1

Group 3 diff-to-mean (Ge+Au+Nl)

0.36 **

0.23

0.19

0.02

0.09

0.15

0.48 **

Group 4 diff-to-mean (Lux+Irl)

-0.08

-0.04

-0.02

0.11

-0.2

-0.06

-0.27

ANOVA F 1.81 * denotes significance at the 10% level, ** at the 5% level and *** at the 1% level. “Fr” is France, “UK” is the United Kingdom, “Ge+Au+Nl” is Germany, Austria and the Netherlands, “Lux+Irl” is Luxembourg and Ireland, and “RoE” is the rest of Europe. Answers are coded in the following manner: 0 for 1.02 0.35 0.69 1.69 0.5 0.93

Not at all, 1 for Poorly, 2 for Rather well, 3 for Very well, 4 for Completely. [1] Bankruptcy of a financial intermediary (broker, sub-custodian, etc.) [2] Collateral risk (no restitution of collateralised assets) [3] Liquidity risk (freezing of shares or units) [4] Fraud (internal or external) [5] Mispricing, misevaluation, or bad accounting [6] Mis-selling (inappropriate information or inadequate product/advice) [7] Breach of investment rules

Table 8.1.3: Country group average of the causes of increased non-financial risks [1] [2] [3] [4]

[5]

[6]

[7]

Full sample mean

0.04

-0.46

-0.37

-0.41

-0.58

-0.32

-0.55

Group 0 diff-to-mean (RoE)

0.05

0.12

0.01

0.03

0.18

0.2

0.25 ***

Group 1 diff-to-mean (Fr)

0.31 **

-0.11

-0.19

-0.14

-0.08

0.13

-0.21

Group 2 diff-to-mean (UK)

-0.25 ***

-0.06

0.07

0.23

0.06

-0.16

0.03

Group 3 diff-to-mean (Ge+Au+Nl)

-0.2

0.09

0.22

-0.07

-0.05

-0.05

0.07

Group 4 diff-to-mean (Lux+Irl)

-0.15

-0.13

0

-0.04

-0.27

-0.42 **

-0.34 ***

ANOVA F 1.5 * denotes significance at the 10% level, ** at the 5% level and *** at the 1% level. “Fr” is France, “UK” is the United Kingdom, “Ge+Au+Nl” is Germany, Austria and the Netherlands, “Lux+Irl” is Luxembourg and Ireland, and “RoE” is the rest of Europe. Answers are coded in the following manner: -2 for Irrelevant, -1 for Slightly important, 0 for Important, 1 for Very important. [1] Increased sophistication of operations [2] Lack of professionalism or poor training of some intermediaries [3] Inadequate and/or unclear regulation (especially related to non-financial risks) [4] Reduced capacity of some intermediary to guarantee deposits [5] Absence of responsibility of management companies regarding restitution [6] Lack of harmonisation of rules [7] Internationalisation of the fund management industry 2.43 ** 0.44 0.55 0.46 0.93 1.68

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An EDHEC-Risk Institute Publication