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Risk Management Challenges for Sustainability and Wellbeing

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (15 March 2022) | Viewed by 35668

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Prof. Dr. Simon Grima

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1. Faculty of Economics, Management and Accountancy, Insurance and Risk Management Department, University of Malta, MSD 2080 Msida, Malta
2. Faculty of Business, Management and Economics, University of Latvia, LV-1050 Riga, Latvia
Interests: financial technologies; financial management and asset management; risk management; compliance and regulations; corporate finance; corporate governance; audit management; financial services; behavioral economics
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Dear Colleagues,

The great challenge of our time is to create a sustainable and desirable future—one that the achieves Sustainable Development Goals (SDGs). In today’s “Anthropocene” world, human impacts on ecological life support systems are increasingly complex and far-reaching. At the same time, there are increased demands on the planet’s life support functions to maintain living standards in developed nations, and to reduce poverty in developing nations. In this “full” world, the emphasis in research, education, and policy needs to shift from addressing problems in isolation to studying whole, complex, and interconnected systems and the dynamic interactions between the parts. Several scholars have focused on how the concepts of vulnerability and resilience may be employed in the analysis of and to ensure future sustainability and wellbeing. Various approaches have been proposed, concerning different fields of applications spreading from environmental to financial settings. While much of the existing literature on vulnerability and resilience is sector- or country-specific, in this volume, we are proposing a more holistic approach that allows for the sustainability of human well-being to be analyzed as a whole. Our understanding is that well-being equals sustainability, where several domains are interlinked. Moreover, while the majority of studies consider vulnerability and resilience as aspects of the sustainability of a “system”, that is a society, a country, an organization, or even the whole planet; this volume’s focus is on the interrelated dimension of well-being, considering the exposure to risk and the ability to manage it. We are seeking the use of both objective and subjective indicators of well-being, in case studies, theory, and practice.

Dr. Simon Grima
Guest Editor

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Keywords

air pollution
climate change
water pollution and sanitation
pandemics, finance and the economy
industrial development
energy crisis
toxic chemicals and hazardous and radioactive wastes
population explosion and urbanization
impact of globalization
degradation of ecosystems and species
education
health

Published Papers (12 papers)

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Research

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13 pages, 267 KiB

Open AccessArticle

Does Financial Knowledge Matter in Using Fintech Services? Evidence from an Emerging Economy

by Thi Anh Nhu Nguyen

Sustainability 2022, 14(9), 5083; https://doi.org/10.3390/su14095083 - 23 Apr 2022

Cited by 18 | Viewed by 3498

Abstract

Financial technology (FinTech) is one of the most important contributors applying technological applications to access financial products in financial markets. This research analyzes the determinants of financial knowledge and its impact on using FinTech services by employing survey data from a sample of 527 individuals in the southeast region of Vietnam, an emerging economy. The results indicate that women have a lower level of both actual financial knowledge and perceived financial knowledge than men. Moreover, men have a higher propensity to use FinTech services than women. Younger people also have higher FinTech usage compared with older people. Unlike previous studies in the financial field, an interesting finding emphasizes that actual financial knowledge does not affect the use of FinTech services but perceived financial knowledge does. To ensure the findings are robust, the research uses instrumental variable (IV) method, and 2SLS (two-stage least squares) estimation to resolve endogenous problems. Accordingly, to promote financial well-being, the findings suggest that financial institutions or FinTech firms should design and develop more user-friendly FinTech products and services so even older people can gain access to FinTech usage. Additionally, policymakers should devote attention to user protection in emerging economies where people are considered less financially literate. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

15 pages, 1567 KiB

Open AccessArticle

The Effect of the Subsidiary on the Ultimate Controller’s Private Benefits: Enlightenment to the Risk Management Challenges for Sustainability of the Corporate

by Ming Cai, Zhong Ma and Youhua Li

Sustainability 2022, 14(8), 4837; https://doi.org/10.3390/su14084837 - 18 Apr 2022

Cited by 1 | Viewed by 1489

Abstract

In a period of uncertainty about economic development, it is particularly important to maintain corporate sustainable growth in order to deal with the risk management challenge of sustainability. Private benefits of control in corporate governance play a crucial role in ensuring corporate financial sustainability to face the risk. The existing literature about private benefits of control mainly focuses on the assumption of absolute control by the ultimate controller, ignoring the influence of subsidiaries. This paper constructs a model of private benefits, based on a framework of the interaction of ultimate controllers and subsidiaries, and investigates how subsidiaries influence the ultimate controller’s expropriation. The model has proposed that: Subsidiary’s self-interest demand can prevent the ultimate controller’s private benefits; the autonomy owned by the subsidiary can be used to allocate resources, inhibiting the private benefits of control to some extent. Further research has found that when the proportion of funds that can be arranged by the subsidiary’s autonomy can meet the proportion of funds required for the subsidiary’s self-interest demand, as the subsidiary’s self-interest demand increases, the ultimate controller’s expropriation is reduced. This paper reveals the internal mechanism that private benefits of control are jointly determined by the ultimate controller and the subsidiary, expands the research on the decision mechanism of private benefits and provides new ideas for understanding the expropriation of the ultimate controller. Additionally, the solution to this problem can provide help and inspiration for risk management challenges for the sustainability of the corporate, as well as provide reference significance for economic sustainability. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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21 pages, 1268 KiB

Open AccessArticle

An Asymmetric Analysis of the Influence That Economic Policy Uncertainty, Institutional Quality, and Corruption Level Have on India’s Digital Banking Services and Banking Stability

by Aamir Aijaz Syed, Muhammad Abdul Kamal, Assad Ullah and Simon Grima

Sustainability 2022, 14(6), 3238; https://doi.org/10.3390/su14063238 - 10 Mar 2022

Cited by 10 | Viewed by 3020

Abstract

Motivated by the unprecedented high levels of recent economic policy uncertainty, the current study examines the influence of economic policy uncertainty, institutional quality, and corruption level on the Indian banking stability and the growth of digital financial services. Using the Baker et al.’s economic policy uncertainty index and nonlinear autoregressive distribution lag model on the data set of banking variables from 2004 to 2019, we infer the following findings. The unit root and the structural break tests confirm the presence of structural breaks and mixed order of integrations. Besides, the long-run nonlinear autoregressive distribution lag results substantiate a long-run asymmetric relationship between the explanatory variables (economic policy uncertainty, institutional quality, corruption level) and the outcome variables (digital banking services and banking stability). The study reveals that a 1 percent increase in the economic policy uncertainty increases nonperforming loans (proxy to measure banking stability) by 1.48 percent and decreases Z-score (proxy to measure banking stability) by −1.12 percent. Likewise, a 1 percent increase in policy uncertainty reduces the progress of digital financial services by −1.23 percent in India. In addition, the study also depicts a long-run cointegration between the explanatory and the outcome variables. Overall, the study shows significant evidence that policy uncertainty, corruption, and institutional regulation hampers Indian banking stability and digital growth. The study offers several policy implications to understand the adverse effects of economic policy uncertainty on the Indian banking sector. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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15 pages, 957 KiB

Open AccessArticle

Relations of COVID-19 and the Risk Management Framework

by Jozef Klucka, Rudolf Gruenbichler and Jozef Ristvej

Sustainability 2021, 13(21), 11854; https://doi.org/10.3390/su132111854 - 27 Oct 2021

Cited by 2 | Viewed by 2879

Abstract

The routine approach used in risk management is based on the scheme that within the prevention period an organisation or a state prepares for the expected risks and once the risks occur, resources and internal procedures are implemented to mitigate their negative consequences. The objective of the paper is to analyse risk management and its constraints, its application in COVID-19 period and based on it provide mitigating strategies for specific problems/risks related to COVID-19. The research methods related to the topics are: (a) study of books, newspapers and other internet resources and (b) interviews with COVID-19 managers at district and regional level in the north of Slovakia. The proposals for mitigation strategies are based on the basic assumption relevant for COVID-19 that there are risks with unknown probability and unknown consequences. Therefore, the mitigation strategies are adapted to the current situation, which includes lack of data and know-how, lack of experience, political and economic unrest and social problems. The impact of constraints is based on an ad-hoc or unplanned and clearly structured approach. Problems and risks are identified and mitigation strategies are proposed. The proposed measures (quantitative/qualitative) should be evaluated and via benchmarking the development and efficiency of applied measures monitored and assessed. The output of identified risk-known and –unknown creates a framework for implementation. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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18 pages, 959 KiB

Open AccessArticle

Consumer Financial Knowledge and Cashless Payment Behavior for Sustainable Development in Poland

by Beata Świecka, Paweł Terefenko, Tomasz Wiśniewski and Jingjian Xiao

Sustainability 2021, 13(11), 6401; https://doi.org/10.3390/su13116401 - 4 Jun 2021

Cited by 12 | Viewed by 6455

Abstract

Financial knowledge is the main element of financial literacy, which is important for the sustainable development of individuals and society. Sustainability is a complex concept that spans many fields, including financial knowledge for all ages. Financial knowledge requires significant scientific research showing its impact on individuals and the economy, including non-cash payments. Consumer payment knowledge and its association with consumer financial behavior have long been a matter of widespread interest by researchers, but no in-depth, empirically based scientific research has been completed for Poland. The objective of this study was to examine factors associated with cashless payment behavior with an emphasis on the role of consumer financial knowledge. A total of 1100 interviews were carried out with Polish nationals aged 15 and above. The collected data were analyzed with the use of statistical methods, including analysis of variances (ANOVA), in order to examine consumers’ financial knowledge by basic economic and non-economic factors. Additionally, a data-mining method known as Random Forests was implemented for finding the variable importance in correlations between consumer financial knowledge and preferred methods of payment. The results revealed the diversity of factors influencing consumer behavior. Among the consumers’ personal traits, financial knowledge was one of the most important determinants of their payment choices. The results have implications for the design of payment processes. The results can be used by central banks to determine the directions of financial inclusion, as well as for stakeholders in the payments market. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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13 pages, 745 KiB

Open AccessArticle

The Impact of Macroeconomic, Social and Governance Factors on the Sustainability and Well-Being of the Economic Environment and the Robustness of the Banking System

by Vasile Dedu, Dan-Costin Nițescu and Maria-Alexandra Cristea

Sustainability 2021, 13(10), 5713; https://doi.org/10.3390/su13105713 - 19 May 2021

Cited by 3 | Viewed by 2542

Abstract

The paper highlights the connection between the European Union banking system and a set of representative factors—macroeconomic, social, and governance factors—selected from the perspective of sustainability and well-being. The analysis is carried out as a panel regression on EU member countries with annual data for 2005–2018, and it explores the impact of the selected factors on the robustness of the banking systems in the European Union countries. The analyzed variables to reflect the robustness of the banking system were the domestic credit to the private sector and the nonperforming loans (NPL) rate. Those indicators are of high relevance and concern within the current pandemic context. The results show that the banking development degree influences the increase of private-sector lending and the decrease of the NPL rate. Social and governance factors impact differently the level of private sector and NPL rate. All macroeconomic indicators used to influence the level of private-sector lending. The research reflects the fact that to promote and adopt a culture of sustainability and to ensure well-being, a close collaboration between all sectors of an economy is needed, together with a strong policy interconnection and harmonization between micro and macro. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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13 pages, 922 KiB

Open AccessArticle

Risk Management and Learning Climate in Emergency Contexts: A Qualitative Study

by Teresa Galanti

Sustainability 2021, 13(10), 5485; https://doi.org/10.3390/su13105485 - 14 May 2021

Cited by 9 | Viewed by 1884

Abstract

Background: Several researchers have questioned the strategies necessary for effective risk management as well as of human error and its consequences, looking at both positive and negative consequences. Starting from this perspective, this study intended to investigate risk management in the emergency context due to the COVID-19 pandemic. Methods: A total of five in-depth interviews were conducted with senior managers of multinationals, asking them to talk about the management of their human capital and the policies of error and safety management adopted in their organizations before, during, and after the pandemic. Results: Qualitative interviews analysis revealed three interesting clusters related to crisis, trust, and risk management; quantitative results, instead, confirmed the existent link between crisis and error management and the strategic role of organizational management in the diffusion of a climate in which is possible to learn from both success and failure. Conclusion: In summary, preliminary results seemed to confirm what emerged from the most recent literature, which is the urgency for organizations to create a culture of intelligent risk-taking that leads to learning and improved knowledge and that includes the participation of all workers. Moreover, this study also underlines the possibility of extending the advantages of Error Management Training in emergency context. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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16 pages, 240 KiB

Open AccessArticle

The Role of Appreciative Inquiry to Supporting Students’ Healthy Transition into the Post-Graduate World: A Case Study at the University of Malta

by Rebecca Dalli Gonzi and Joan Camilleri

Sustainability 2021, 13(10), 5365; https://doi.org/10.3390/su13105365 - 11 May 2021

Cited by 1 | Viewed by 1905

Abstract

The purpose of this study is to explore ways to integrate student self-development into preparation for a post-graduate internship. The research problem to be investigated is the identified gap in support services for student wellbeing and self-esteem alongside academic development prior to entering the professional sphere. The Faculty for the Built Environment within the University of Malta conducted this as a pilot study in collaboration with the Counselling Services Unit to support students in finding ways to improve their work/study balance. The methodology used was an appreciative inquiry through workshops and focus groups over two academic years. The main findings suggest that students requested time management and resilience techniques to strengthen their study–work–life balance and develop an improved work ethic once university life is complete. Students who felt valued throughout the study period appreciated their ideas and self-identity more than others. Results were presented to the faculty staff who suggested an action–response approach to transition management. Conclusions indicated that the strength of the approach undertaken served to manage students’ transition from academic life to career entry, conduct a gap analysis to identify issues between students and staff, and facilitate a discussion of values and ethics in preparation for post-graduation career performance. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

25 pages, 308 KiB

Open AccessArticle

The Influence of Liberalization on Innovation, Performance, and Competition Level of Insurance Industry in Indonesia

by Tulus Suryanto, Darul Dimasqy, Reza Ronaldo, Mahjus Ekananda, Teuku Heru Dinata and Indra Tumbelaka

Sustainability 2020, 12(24), 10620; https://doi.org/10.3390/su122410620 - 18 Dec 2020

Cited by 3 | Viewed by 3197

Abstract

This study aims to reveal the impact of liberalization on innovation, performance, and the level of competition for insurance industry players in Indonesia based on insurance data from 2006 to 2018. The research method used is quantitative with the support of panel data. The analysis technique to explain the findings uses an aggregate model and Threshold Regression analysis. Descriptive and econometric research types were chosen to make it easier to explain the findings. From the results of data analysis using three experimental models, it shows three findings. First, in the aggregate, there is a significant negative relationship between liberalization and innovation. In the Threshold Regression model, a negative impact occurs on companies with low premium income, whereas in high premium income companies, the result is positive. This is due to the availability of resources to large companies to optimize the adaptation of liberalization in terms of innovation. Second, higher liberalization can encourage insurance companies to perform more efficiently and increase net premium income. Third, the negative impact of liberalization on competition shows that the higher the deregulation, the lower the game. These findings indicate that in the aggregate, global insurance financial liberalization has had a significant impact on the development of the insurance industry sector in Indonesia. However, liberalization can be different for groups of small companies and groups of large companies. The expected implication is that the government needs to adopt a long-term policy strategy that can encourage the sustainability of insurance companies: both high-income companies and low-premium-income companies. Besides this, it is hoped that insurance companies pay more attention to innovation, significantly improving the quality of human resources as a competitive advantage in facing global competition. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

15 pages, 829 KiB

Open AccessArticle

Modeling the Risk of Extreme Value Dependence in Chinese Regional Carbon Emission Markets

by Hong Qiu, Genhua Hu, Yuhong Yang, Jeffrey Zhang and Ting Zhang

Sustainability 2020, 12(19), 7911; https://doi.org/10.3390/su12197911 - 24 Sep 2020

Cited by 7 | Viewed by 1871

Abstract

In this study, we analyze the risk of extreme value dependence in Chinese regional carbon emission markets. After filtering the daily return data of six carbon markets in China using a generalized autoregressive conditional heteroscedasticity (GARCH) model, we obtain the standardized residual series. Next, the dependence structures in the markets are captured by the Copula function and the Extreme Value theory (EVT). We report high peaks, heavy tails and fluctuation aggregation in the logarithm return series of the markets, as well as significant dependent structures. There are significant extreme value risks in Chinese regional carbon markets, but the risks can be mitigated through appropriate portfolio diversification. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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20 pages, 723 KiB

Open AccessArticle

Resilience through the Financialisation of Risks? The Case of a Dairy System in Northwest Germany

by Thies R. Popp and Wiebke Nowack

Sustainability 2020, 12(15), 6226; https://doi.org/10.3390/su12156226 - 3 Aug 2020

Cited by 4 | Viewed by 3430

Abstract

State support for financial risk management schemes has been introduced in numerous agricultural policies to enhance farming system resilience in response to increased income fluctuations and partially reduced producer support levels in the agricultural sector. In order to better understand how financialisation of risks can contribute to an actual improvement of specific farming systems’ resilience, this study investigates its effects with regards to dairy farming. Based on an in-depth case study of a dairy system in Northwest Germany, multilayered challenges faced by the farm system are identified, resilience strategies investigated and the role of financial risk management evaluated. In doing so, the resilience assessment framework developed by Meuwissen et al. (2019) is applied in order to analyse the systems’ capacity to resist, adapt or transform in response to external challenges threatening the provision of system’ functions. The results indicate a high relevance of insurances and savings with regards to the system’s robustness against short-term shocks. However, to address the various long-term pressures, resilience-enhancing attributes that increase the system’s capacity to adapt and transform would need to be strengthened. In particular, more cooperation and knowledge transfer beyond system boundaries could contribute to a holistic risk management allowing for improved farming system resilience. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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13 pages, 246 KiB

Open AccessPerspective

Managing Risks Arising from Conservation Complexities of Forests: Insights from China’s “Chief Scheme” Practice

by Huijie Li, Ru Jia, Ortwin Renn and Tianjiao Xu

Sustainability 2022, 14(9), 5042; https://doi.org/10.3390/su14095042 - 22 Apr 2022

Viewed by 1439

Abstract

Forests play a critical role in combating climate change. It takes China from timber production to ecosystem rehabilitation and then to the future of carbon neutrality. Even though China’s forestry has made great achievements, there remain many problems with its sustainable management, especially the difficult balance between rural livelihood and forest conservation. Under these circumstances, the forest chief scheme was transformed from local trials to a national mechanism. This article seeks to analyze the origin and evolution of the “forest chief” scheme and the complexities and challenges related to China’s sustainable forestry development. Taking the risk governance framework, this study provides a systematic overview of the functioning of the “forest chiefs” element integral to sustainable governance. It offers innovative ways of top-down participation in the specific context by integrating the adaptive risk governance approach, thereby provoking critical thinking about sustainable forest governance. Full article

(This article belongs to the Special Issue Risk Management Challenges for Sustainability and Wellbeing)

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