Spare the Kids Please

There was the deep relationship between child and the kids. It was also true that kids’ first love was parents and then the toys. They loved toys so much as they thought as if they were the true entities and they would be playing with it as if they were the real master of the toys and in seeing them play had been one of the most fascinating exercises. One could understand the psychology of the child after seeing what they were playing and their intentions and the way they wanted to have the different kind of toys at their perusal and that made parents happier.

It was true from time to time the preferences of toys were on change , during my time it was different and now it had changed almost differently as the psychology of child had been on change persistently. Now , with the advent of modern age and wide spread use of computers , the toys and its definitions were on the change as well and now more and more digitized toys were available and also more and more computer gadgets like toys were there. Now , there were modern brands that were entering into this field , in my recent visit to the metro ,

I had seen many multi national companies were now endorsing the toys and these were the smartest options that were available and also now the definitions of toys had to change with the advent of children who were more and more clever and they could sense the difference and if these were not being done in good manners by the companies then there could be very high chances that these could be discarded by the children. Now there were the trends among families to gift costly toys gifts to children in many occasions be it birthdays or any other happy occasions that to be remembered.

China market was also the leading market of toys as it had been making low cost, beautiful and attractive toys for children and these were also been accepted by the children . At some homes you could not believe with vast number of toys, you would feel as it you reached at a museum. The collection was so vast that you could not believe with such collection. Now, with the advent of nuclear family and that too when both parents had been at the job the child’s best friend was always been the toys and with vast toys around in its room he would not feel the time and he would be playing there all the time.

Now with toys they would understand about many facets of life starting from social sciences, services, welfare of the humanities and other related essential messages, and it was believed that with the toys at hands the kids would learn more from it that from the talking and it was proved to be scientifically correct.

Sometimes there were the exceptions to it and there were instances when some times the laxman rekha would be crossed and in that time these should be rectified. Here was one such illustration, at Spain famous toy company had opened to the market a new doll named as breast milk baby doll and this had led in the world widespread condemnation and also criticise.

There had been criticism as well as heavy sells of these toys and now after such storms in Europe, this toy entered into US market. The aim of this toy was to introduce the mother feelings among the girl kids since child as with this they would know the importance of breast feed and when they would become mother they would be more and more concerned with their children and they would be breast feed instead of tin milk feed, this was a true concept as it was evident from scientific understandings that , mother’s milk would be the best food for toddlers as it would save them from various diseases, but on the other hand , a small girl child should understand it and is it ethically nice to taught her this aspect from her playing days and was this not out of the boundary thoughts to perceive.

Many guardians as well as parents did not support this thought by toy manufacturer, somewhere it was mixed responses, the company was the big company and it had been in the toy market since 1977 and this proved that the toy company had social responsibility.

This company had been doing many researches in the toy filed to attract kids and it had been doing many researches there and in each year it did come our with new wonderful researched products with some theme and teachings for kids.

What was surprising was that its toy breast milk baby doll had won international acclaimed prize Doctor Troy last year. No doubt it was an innovative concept and what child learned from its child hood would imprint in its mind forever, but the ethics did tell some other stories.

The toy costs about 70 dollars and it was in controversy, now we would try to understand what the real story behind it was. With this doll, there were some freebies like that of a halter top, looked like that of a blouse and in the front side of this halter top there were two artificial nipples.

Small girl kids had to wear first the halter top and then when they put the mouth of doll into that halter top nipple, the doll would act its mouth as if it was drinking milk and it would also be making sound of drinking milk, it seemed as if a mother was breast feeding her baby. Before particular interval if that nipple withdrawal to the doll, they it would cry, and if that nipple again to the mouth of doll then it would stop crying.

As this doll was being done as if the small kids would learn from its infant days as to how to breast feed her children when she would be mother in future and the whole concept did seem to laughable as the kids were innocent. It was also true that if a mother did breast feeding then with it her own dangers of breast cancer and other disease related with bones would not be there, as it was good for mother.

The question was that this should be done with adults not with kids. Before this there was one more controversy related to Mees and baby where there was a doll inside the doll and that related to pregnancy and that was unwanted and now this controversy, it was the high time to target the innocent kids, instead they should be taught about benefits of conscience, good mannerisms and other intentions so that they would be knowing the tits and bits about manners and etiquette.

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Financial Risk Management

Introduction: Going by experience and common sense, it seems that there cannot be any human activity that does not expose the people involved in that activity to some form of risk or the other. Whether it is the common activity of taking food and the possibility that bits of it may get lodged in the windpipe, or it relates to taking a vital investment decision, everywhere we find that risk is unavoidable. Therefore, we can say, “risk taking is a way of life”. It is said: “ a person who does not take risk in life, risks everything in life”.

In this article, we shall discuss some of the basic concepts of financial risks faced by banks and how effectively they are being managed. Till the late eighties, banks in India were following more or less a traditional approach, confining themselves to the basic banking, namely, getting deposits from the public and lending to the business and industry to make a profit out of the differential in interest. In the recent years, the following factors have forced the banks to look beyond traditional banking to broad-base their activities and also for product innovation. •

Deregulation • Liberalisation • Globalisation • Disintermediation • Increasing bankruptcies/conditions of financial distress in the corporate sector • Entry of new banks • Growth of technology •

New products introduced by competitors Broad-basing and innovation essentially mean taking new responsibilities and exposures, which have in-built uncertainties. Banks, while adapting to the changing environment, have to necessarily build a structure which will ensure that they pass through all the uncertainties by guarding themselves against the possible losses. What is the broad meaning of risk (acceptable to the banks/financial institutions)?

The loss suffered by an organisation (in normal circumstances) can be broadly classified into expected loss and unexpected loss. Based on past experience, a statistical measure of loss expected to be incurred in similar situations in future can be rationally thought of. However, unexpected losses are difficult to measure. Unexpected losses are also caused by probable events but their occurrence is uncertain. Nevertheless, unexpected loss can be calculated if the probability distribution of expected loss is known. Risks have been classified in a number of ways, depending on the basis of classification.

For instance, risks can be divided into balance sheet risks and off-balance sheet risks. Risks can also be classified as systemic and non-systemic or controllable and non-controllable. Systemic risks are basically risks associated with the system within which the organisation functions. For an industrial unit, risks associated with the related industry segment are systemic risks since all similarly placed industrial units within that segment are uniformly exposed to the same risks. Systemic risks are largely non-controllable. In contrast, non-systemic risks are organisation-specific and can be controlled in good measure.

Whether it is traditional banking or modern banking, what are the financial risks that banks face in their operations? •

Funds lent or invested may not be recovered – Risk of Default, Transaction Risk, Counter-party Risk or simply, Credit Risk. • Funds lent or invested are recovered, but not when due – Liquidity Risk or Re-pricing Risk • Funds lent or invested may lose value over a period of time because of certain economic factors – Market Risk (Interest Rate Risk, Exchange Risk, Price Risk) • Certain operational mishaps or acts of God (and also acts of man!) may turn into financial loss –

Operational Risk Before proceeding to discuss the risks confronting banks in the Indian context, let us briefly peep into the international arena, because Indian banking industry is in the process of adapting itself to changes at the global level. The Latin American debt crisis of 1980s, the global property downturn of 1990s, the Asian financial crisis of 1997 – all took a heavy toll on the banking and financial industry.

After each crisis, the predictable reaction of the industry was to tighten the standards in the disbursement of advances, thereby restricting the growth in lending. If we look at the response of the banking industry to the changing environment in the economy, it is almost similar through out the world. When excessive opportunity for growth is seen in a particular segment, all banks participate with enthusiasm as if there would be no end to the potential. The moment the cycle turns, they immediately react with strong corrective measures to ensure that the same situation does not affect them again. B

ut, unfortunately, different events strike them in different ways at different times. We can see a cycle, as explained here under, which needs to be corrected. Assume non-viable exposures Go for aggressive marketing Slip into loss Lose market share Impose restrictions Shy away from normal risks With a view to taking care of such situations and to ensure that the banking industry globally is able to withstand any financial crisis, the Basel Committee on Banking Supervision suggested Capital Standards in 1988 and after acceptance of the Standards by most of the countries, it became a Capital Accord, coming into force in 1992.

This mainly achieved two purposes: 1) To withstand any sudden financial shock of loss, a bank should have adequate capital to serve as a cushion. At that time, credit risk was perceived as a major risk. Therefore, Basel Committee suggested that a minimum capital to risk-weighted assets ratio of 8% be uniformly maintained by all commercial banks, in particular by the internationally active banks. 2) As the standard was to be made applicable to all the countries, the term Capital also was defined and made applicable uniformly. Initially, only credit risk was covered by the Accord.

Subsequently, in 1996, the Accord was partially amended to include market risk. The amendment which came into force at the end of 1997. It separates bank’s assets into two categories, namely, the trading book (financial instruments intentionally held for short-term sale and typically marked-to-market), and the banking book (other instruments, meant to be held to maturity). A capital charge for market risk of trading book and the currency and commodity risk of the banking book was also added. Almost simultaneously, it was realised that there was a need to issue specific guiding principles for management of operational risk also. On a review of the Accord, the Basel Committee noted two important factors: a)

The uncertainty faced by banks is not confined to only credit risk. Banks may incur loss on account of operational risks for which also they need to have adequate capital. b) In the existing Accord, the committee has not made any distinction between a highly rated borrower and a not-so-well rated borrower while specifying risk weights for assessing credit risk.

The Accord follows more or less a broad-brush approach as there is no incentive for banks to go in for high quality financial exposures and also no disincentive for those banks who indulge in risky financial exposures. To take care of these aspects, the Basel Committee released a consultative paper in June 1999, which proposed a new approach, built around the following three mutually reinforcing pillars of performance:

 Economic Capital (Minimum Capital Requirements)  Supervisory Review Process, and  Market Discipline.

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