Warwick Business School Alumni Association magazine: summer 08
Release your potential
H The Warwick MBA
Having studied at WBS, you already know the quality One of the world’s leading MBA programmes. For the
of our expertise and teaching. But did you know that ultimate flexibility in work life balance, study full time,
WBS can help you and your organisation at every by distance learning, or in modular format
step of the way?
H The Warwick MPA
We offer a range of flexible, post-experience The public and voluntary sector equivalent of the MBA,
qualifications for individuals, many of whom are study part time in modular format
sponsored by their organisation.
H Doctoral Programme
Find out more about any of our programmes: To pursue an academic interest in a highly specialised
W wbs.ac.uk area, study with one of the world’s top programmes
T +44 (0)24 7652 4306
E email@example.com H The Warwick Diploma in Applied Management
A broad management course delivered part time in
modular format over 18 months
H The Warwick Diploma in Public Leadership & Management
An 18-month, part-time modular course for middle to
senior managers in the public sector
H The Warwick Diploma in Service Leadership
Delivered by WBS academics, at the Singapore Institute
of Management (SIM), a modular course for middle and
senior managers of customer facing operations
H Financial & Management Accounting
A highly focused development course for managers with
little or no finance training. Launching Autumn 2008
message from the dean 3
2008 has been a momentous year embedded DNA of strong innovation a global perspective, we
on many fronts and one I am sure will enhance our research output, through inter-disciplinary
we will all have firmly placed in our initiatives and through dialogue and contribution from
minds in the future. business, industry and government. We will develop our
curriculum, our delivery and our accessibility. All of this
Not only has the impact of sub- will be developed through completing the WBS building
prime lending and mortgages been development on campus and by advancing our brand
significant, but the importance globally through institutional and business partnerships and
of strong leadership within advancing our global alumni network.
business, industry and government
is increasingly scrutinised. WBS has come a long way in a short period of time and we
Organisations and countries are naturally striving to address have the wide community to thank for that – staff, students,
increasingly pressing global issues – from liquidity, inflation, friends, donors, associates and you, our increasingly successful
interest rates and investments, to climate change, carbon alumni body. Thank you. Working together we can achieve
footprint, uncertainty and political instability. As a leading so much more which will benefit everyone in the WBS and
European business school with an international faculty and Warwick community.
curriculum, we are working with governments and business
leaders to address many of these issues. So here’s to the challenges that lie ahead and embracing the
solutions – from addressing global issues, to advancing the
Last year the Vice Chancellor, Professor Nigel Thrift, service we offer through your Alumni Association, to securing
announced a dynamic and challenging, but exciting, vision your help, expertise and support to build our global brand and
to firmly place Warwick in the top 50 global institutions by improving our School offering. From our oldest graduates to
our 50th anniversary in 2015 (Vision 2015). In parallel with our new alumni who have just graduated – we look forward
the University at large, at WBS we have built upon our strong to working with you in the year ahead and sharing a mutually
vision and mission, developing an overall strategic vision with beneficial relationship.
supporting strategies to firmly place us in the top echelon of
European business schools where we can seriously compete with
the top global schools by 2015.
We have a big challenge ahead of us, but we have never been
an institution to rest on our laurels. As we build upon our
focus on finance 4 development and alumni relations
5 alumni board
One of the key 6–9 WBS news
values of WBS’ 10 holy simplicity?
Alumni Association Professor Anthony Neuberger
is our commitment 11 credit crunch
to relevant lifelong Phil Ashdown
learning in business 12 climate change and financial markets
and management. Professor Mark Salmon
13 raising the standard
In this edition of nexus Anne Gunther
we focus on finance, 14 crisis and currency
drawing upon research Professor Lucio Sarno 6 13
being undertaken by 15 aligning the objectives
leading faculty at WBS Bo Kratz
and from our alumni 16 the credit spread puzzle
who are leaders within Professor Gordon Gemmill
their field. 17 hurdles… what hurdles
Rob Cooper and Jon Hill
18 raising funds for future leaders
19 WBSS update
20—22 UK event reviews, SIGs and regional groups
23 Overseas event reviews
24–26 alumni news
27 hot off the press 23
the development and alumni relations office
on-line forums. We aim to advance the ways in which you
can learn from and connect to the valuable research coming
from WBS. We now have over 23,000 alumni, over 35 percent
based overseas and you are all continually moving and
wanting to connect. We aim to connect you better through
technological advancements and through ensuring we have
active networks and groups around the world.
Finally, as Baroness Julia Neuberger DBE, (Chair, Commission
on the Future of Volunteering), reflects, ‘Volunteering plays
a vital part in the life of our communities, our nation and
our world.’ But only where there is effective volunteer
management in place. Many of you have offered to be and are
active volunteers of WBS. We want to leverage this immense
resource to enable you to advance your Alumni Association
You will have noticed many changes over the past year in through our facilitation and management. To do this the
your Alumni Association – from staffing to Board activity, Alumni Board is working with our regional, international and
and events around the world to academic updates. We industry volunteer leaders to empower groups to become
are continually striving to improve our service to you and more engaged and active, bringing value to the alumni body.
to advance your involvement and support. Our sincere (Further details of this are shared by Gill Thewlis, Chair of the
thanks for all your support over the past year. Alumni Board, P5).
As we now move towards 2015, we have a clear set of We look forward to working with you to advance your Alumni
objectives and supporting strategies to deliver greater Association and to see WBS and Warwick grow successfully.
value and relevance to our global alumni body. There are
three key values that will help us to achieve this – lifelong Alison Bond
learning, global networking and volunteering. We are Deputy Director
committed to provide relevant business and management Development and Alumni Relations
learning throughout your lifetime – from your alumni
magazine to tailored events, specific industry groups to
Alumni Association Kathryn Chedgzoy Tracy Lynch Charlotte Wilkes
Warwick Business School Development and Alumni Relations Officer Development and Alumni Associate Director,
University of Warwick (Corporate Affairs) Relations Officer (Student & Development
Coventry CV4 7AL t +44 (0)24 7615 0515 Regional Affairs) T +44(0)24 7615 0075
United Kingdom e Kathryn.firstname.lastname@example.org t +44 (0)24 7657 5835 E email@example.com
t +44 (0)24 7652 2813 e firstname.lastname@example.org
f +44 (0)24 7652 3719 Development and Alumni Relations In–house photography by
E email@example.com Administration Faith Plevin John Weatherly
W www.wbs.ac.uk/alumni t +44 (0)24 7652 2813 Development and Alumni
E firstname.lastname@example.org Relations Officer nexus is the magazine of the
Pam Barnes (Corporate Affairs) Alumni Association, Warwick
Alumni Publications Officer Ann Jackson t +44 (0)24 7615 0372 Business School
t +44 (0)24 7652 4396 Development and Alumni Relations Officer e email@example.com T +44 (0)24 7652 4306
e firstname.lastname@example.org (International Affairs) The views contained in nexus are those
T +44 (0)24 7652 8197 Ben Plummer of contributors and not necessarily
Alison Bond E email@example.com Director of Development and those of Warwick Business School or
the University of Warwick
Deputy Director, Development Alumni Relations
and Alumni Relations Paula Kersten T +44(0)24 7652 4188
T +44 (0)24 7652 4176 Events Coordinator E firstname.lastname@example.org Design by Morse–Brown Design
E email@example.com t +44 (0)24 7615 0171 w www.morsebrowndesign.co.uk
Your alumni board has 15 members drawn from across the
alumni community, as well as three student members and five
WBS Staff members. Together we are focused on building
engagement across the alumni body, with a specific focus this
year on recognising our existing active volunteer base across the
world, and building on it. To that end we are organised into
four working groups, oriented around the main routes alumni
can take to connecting with the alumni network.
Chair of the Alumni Board
where we are... what we do... who we know...
We all live and work Whatever discipline
somewhere, and brought us to WBS
our aim is to get in the first place,
to the point where we have current
every alumnus and professional interests
alumna can access a either in terms
WBS network close of our functional
to where they live or specialism or our
work. Manny Coulon Nick Jessett industry. There are Jemima Tomlinson Kate Spencer
Manny Coulon leads the group high concentrations
focused on this route of WBS alumni in many of the world’s largest Whenever we completed our studies at WBS,
to connecting, so if you’ve volunteered in global organisations, and so there are many we were (or for current students, still are)
the past to do something or represent the ways of connecting with the WBS network part of a ‘Class of…’ Many of our alumni
network in your locality, particularly if you through your professional interests. Nick are keen to stay in touch with or re-connect
are outside the UK, you can expect to receive Jessett leads the team focused on developing with the people they knew when at Warwick.
some contact soon from Manny’s team. new Special Interest Groups and advising the We’re going to build a network of class
central Alumni Relations and Development representatives, so that everyone can connect
team on where to focus their energies in with someone they recognise from their class
Manny Coulon FTMBA 1998–99
building WBS corporate partnership networks. – however long ago that was. We’re also keen
Rob McCulloch BSc Management to make sure the existing student body see
Sciences 1972–75 the value of connecting with alumni whilst
Nick Jessett EXMBA 1985–89
Karamjit Singh MAIR 1973–76 still at Warwick. Jemima Tomlinson and Kate
Issam Hamid FTMBA 2002–03 Spencer lead this group.
Janet White DLMBA 2002–06
David Myers FTMBA 1999–2000
If you would like to help set up an alumni Paul Nicholson FTMBA 1971–72 Kate Spencer Current DLMBA student
group in your area please contact Ananda Roy FTMBA 2005–06 Jemima Tomlinson EXMBA 2003–07
Alison Bond, Deputy Director at
Cristiano Coppola Current FTMBA student
If you would like more information on joining
Paul Edwards WBS Professor of
a Special Interest Group or establishing a
and bringing the corporate partnership, contact Faith Plevin at
e firstname.lastname@example.org Richard Hughes DLMBA 2003–06
Francis Lootes Current Undergraduate
David Allan leads the team focused on organising the first ever event and President of WBSS
to bring as many as possible of our active volunteers together on
27 September 2008 at WBS, physically, virtually and in spirit. The If you would like to become a class
programme is evolving but is already packed with activity and we hope representative or would like to nominate
to shrink the world with technology so that as many people as possible someone from your class, please contact
can take part. The day is intended to become an annual event and a core Tracy Lynch at e email@example.com
part of supporting and
thanking our active David Allan MPA 2000–04
If you would like to attend the Volunteer Day,
volunteers – we look for- David Sykes FTMBA 1986–87 in person or ‘virtually’, please contact Tracy
ward to seeing as many of Lynch at e firstname.lastname@example.org
David Allan Mark Whitley FTMBA 1999–2000
you as possible on the day.
6 nexus: summer 08 WBS news
winter graduation celebrations
On 23 January around 620 people gathered at WBS to celebrate the
successful completion of study by over 300 WBS students. Winter
graduation is primarily for postgraduate students, and many of their
families and friends came along and joined the celebrations.
The ever-present theme of ‘rankings’ brought some pleasing news for
WBS. The first ever ranking of Distance Learning MBAs, carried out by
the Economist Intelligence Unit, placed WBS third in the world and
first in the UK.
It was also good to see that our Full-time MBA rose into the top 30 in
the Financial Times’ world ranking, climbing seven places in one year. MSc Finance prizewinners Thierry Cambray, Wael Hathout and
Chan Tong Ong with Professor Howard Thomas, Dean of WBS
Our undergraduate programme continues to remain in the top
echelons in the UK.
WBS Dean, Howard Thomas, commented: ‘Media-based rankings are student competitions
now a fact of life for business schools and universities. Our aim is to be
the best European, University-based business school and our rankings WBS undergraduates seem to have been even more involved than usual
show that we are well on the way to this.’ this year in competing in external business student competitions.
Five teams took part in the IBM Universities Business Challenge, with a
a new masters degree team of second years making it through the semi-finals, coming top in
their own stream of 8 teams.
In January, a new Masters degree, the MSc in Business Analytics &
Consulting (MSBAC), was launched, with the first intake starting in Other WBS teams were the Warwick Trio in the L’Oreal Brandstorm
October. This 12-month full-time degree brings to ten the number of competition, and football4future, Frontier, and Potentia Events in the
specialist masters courses on offer at WBS, which together with the Ernst & Young Profitunity competition.
non-specialist Masters in Management, are aimed at new and recently-
graduated students. The Warwick Bears in the Global Management Challenge, who
finished in the top eight worldwide, beat over 1,000 students from over
MSBAC will run as a sister programme to the existing MSc in 300 teams. All teams were a credit to themselves and to WBS.
Management Science & Operational Research (MSOR), which has a
strong reputation in the OR community and is the longest-running
specialist masters course at WBS.
WBS attained ‘business superbrand’ status in a survey highlighted in
the UK’s Daily Telegraph newspaper in February. Stephen Cheliotis,
Chairman of the Superbrands Council said, ‘It is no surprise that
the high regard in which Warwick Business School is held by the
international business community has translated into being recognised
as a UK Business Superbrand. It is a brand that continues to gain
momentum and every year is a more compelling challenger to its often
older and more established rivals. As the most improved brand in its
category, jumping almost 100 places in the rankings, it is clear that its
influence on both experts and business professionals alike is growing.’
Members of one of the five WBS teams in the IBM Universities
w www.superbrands.uk.com/bsb/index.html Business Challenge
WBS news nexus: summer 08 7
staff successes student successes
WBS Dean, Howard Thomas, was confirmed as Chair of both the Former British Olympic marathon runner and current DLMBA
AACSB (the US-based Association to Advance Collegiate Schools of student, Richard Nerurkar has been working in Ethiopia for the past
Business) and the ABS (UK-based Association of Business Schools) for seven years, staging athletic competitions for the Ethiopian public.
2007–8. Howard is the first Brit to hold the position at AACSB and Working with Olympic gold medallist Haile Gebrselassie, he has set
the first to hold both posts. up the Great Ethiopian Run, an organisation which has now staged
more than 35 races in different parts of Ethiopia for more than
Another busy person is Martin Cave, director of the WBS research 200,000 participants. ‘These races are more than just athletic events,’
Centre for Management under Regulation. In February the UK explains Richard, ‘We also use the races as a way of publicising
government asked him to lead a year-long review of the UK water health and social messages.’
industry, then in April came a request from the Secretary of State for
Transport which he could not refuse! Announcing a review of the BSc Management finalist Philip Craig went to the University of
economic regulation of the UK airport system, she appointed Martin Wisconsin-Madison for an extra year’s study last year, and ended up
to chair a panel of experts to carry out this review. researching and delivering several lectures to fellow students!
In April, Linda Dickens MBE, Industrial Relations & Organisational MSc in Management Science & Operational Research students won
Behaviour group, delivered the annual Warwick-Acas Lowry lecture on a cash prize and certificates from business process analysis company
campus to an audience of senior HR managers, trade union officials, The Lanner Group for the best consulting report.
employment relations professionals and academics. She reviewed
the last 25 years of employment relations and related legislation in
the UK, arguing that the cumulative result of ad hoc responses to
particular problems has been growing institutional fragmentation,
complexity and an increasing lack of regulatory coherence.
The Lanner Group prize winners
In April, WBS hosted a successful conference organised by doctoral
students for doctoral students from three of the world’s best business
schools: Judge Business School at Cambridge, the Saïd Business
This year’s Warwick-Acas Lowry lecture presenter Linda Dickens MBE (centre)
School from Oxford, and WBS itself.
Simon Collinson, Marketing & Strategic Management group, was
one of a group of experts to speak on new perspectives in Chinese
innovation at Demos, the independent think tank based in London.
Other speakers represented organisations including the OECD, the
Asia Pacific Technology Network, and the China-Britain Business
Council. Simon’s two year research project, carried out through
AIM Research (the ESRC-funded UK-based Advanced Institute
of Management Research) interviewed managers from British,
European and US firms operating in China.
Also from MSM, Professor Nigel Piercy and WBS doctoral graduate
Ken Le Meunier-Fitzhugh were awarded the US Marvin Jolson Prize
for the Best Contribution to Selling and Sales Management Practice Concentration levels are high at one of the presentations
for 2007 by the Journal of Personal Selling & Sales Management. This at the doctoral conference
is the second time Nigel has won this award.
Julia Kotlarsky, ISM, was joint author of an article on outsourcing
published in the Wall Street Journal this May. A Corporate Social
Responsibility paper by Industrial Relations Research Unit’s Paul For more news items, features, media coverage and podcasts visit our
Marginson and Tony Edwards (IRRU associate fellow) and others, Press Centre W www.wbs.ac.uk/news/
following on from research on multi-national companies, has been
placed in the top ten HR listings in the influential newsletter of the
US-based Academy of Management (AoM).
8 nexus: summer 08 research review
Dr Qing Wang,
of Marketing &
Innovation, has been
the driving force
in launching a new
research network to
explore key issues
Qing Wang where marketing John Benington Jean Hartley Colin Clubb Shahed Imam
meet with regard to fast-growing economies The 6th International Studying Leadership Research by Dr Shahed Imam and Professor
such as China and India. The cross-border Conference took place at WBS in December, Colin Clubb, WBS Accounting group, with
research network on Marketing, Innovation on the theme of Leadership: Purposes, Politics Richard Barker, Judge Business School, on
and Chinese Economy (MICE) has already and Praxis. Academics convened for a two-day The Use of Valuation Models by UK Investment
received funding for specific projects from the set of plenary sessions and individual papers. Analysts will feature in the European
US-based Marketing Science Institute and the There were 59 papers and over 100 delegates. Accounting Review.
Chinese Natural Science Foundation. There will be a special issue of the journal
Leadership based on some of the papers, The study is based on semi-structured
Main research themes include: edited by conference organisers Professors interviews with 35 sell-side analysts from ten
• Firm’s marketing capabilities and John Benington and Jean Hartley, IGPM. leading investment banks and seven buy-side
technological capabilities for radical vs analysts from three asset management firms;
incremental innovations The conference got off to a strong start with and content analysis based on 98 equity
• Consumer characteristics and behaviour for an introduction from the Deputy Dean of research reports for FTSE-100 companies
really-new products and services WBS, Professor David Wilson, followed by an covered by the sell-side interviewees.
• Aesthetics of innovation and the effect on electrifying keynote talk from Professor Jean- They conclude that, while the literature
adoption intention: exploring cross-cultural Louis Denis from the University of Montreal, has focused on the technical merits of
differences and similarities who spoke on the topic of The practice of alternative valuation models, analysts’ actual
• Innovation and branding strategies of leadership in the messy world of organisations. usage of valuation models also requires
Chinese high-tech firms. an understanding of social and economic
Another highlight was the plenary session context and motivations.
MICE members come from UK institutions with David Blunkett, MP and Sir Michael
including WBS, Cambridge, Tanaka Bichard, in conversation with John Another research paper from Dr Shahed
Imperial, and Sussex University, and four Benington, as they reflected on the purposes, Imam and Richard Barker, Judge, Analysts’
institutions in China including Tsinghua and politics and praxis of leadership from their Perceptions of ‘Earnings Quality will feature
Zhejiang universities. The first workshop, in respective roles and working relationship as in the Accounting and Business Research
collaboration with Tsinghua University, took former Secretary of State for Education and Journal. This research seeks to understand
place on 30 March (see P23). Permanent Secretary for Education. earnings quality as interpreted by analysts
w www.wbs.ac.uk/faculty/research/mice.cfm and then tests this interpretation against its
Jean Hartley and actual usage in analysts’ research reports. An
Lyndsay Rashman, inductive approach is used that combines
In their work for interview data with content analysis, and
the Warwick Local of the Institute of
Governance and the findings are interpreted in the light
Authority Local of findings from market-based and other
Authorities Research Public Management,
were commissioned research.
Acting Director by the UK’s
Howard Davis and Renew Northwest Research papers by Dr
Maggie Rust, Local Lyndsay Rashman organisation to Philip Stern, Associate
Howard Davis Government Centre, see how public Professor, MSM, are
have produced a service organisations can share knowledge to to appear in two
guide to Understanding the Governance and bring about regeneration. Their report was leading international
Accountability of Partnerships. Partnership published in April, and outlined a knowledge journals.
working is an increasingly vital element of transfer framework including advice on how
the day-to-day working of local authorities organisations can adapt the lessons learned Physicians’ Persistence
and other local public services. by peers and competitors to meet their own Philip Stern and Its Implication
specific needs. for Their Response to
In early March LGC coorganised a seminar Promotion of Prescription Drugs (2008) with R
to explore the challenges of urban transport Variable pay systems or collective bargaining? Jarakiraman, S Dutta, C Sismero will feature in
governance facing city regions and other Research by members of the WBS Industrial Management Science.
major urban areas in England in the Relations Research Unit (IRRU) found
context of the Government’s emerging two major trends characterising recent Stochastic Modelling and Industrial Networks –
city regions agenda. Attended by senior developments in pay setting in the UK: the Complementary views of organisational buyer
officer representatives of the majority of city continued retreat of collective bargaining behaviour, co-authored with PhD candidate
regions in England, the seminar sought to go in the private sector, and growing emphasis Jim McCabe, in the Journal of the Academy of
beyond merely repeating the key elements of on variable pay systems (VPS). They looked Marketing Science.
legislation by constructively challenging the at these two trends and found a complex
Government’s proposals and considering the relationship, varying according to the type of
practical and political issues concerned with VPS and features of the firms or organisations
its implementation. involved.
research review nexus: summer 08 9
Their paper provides a comprehensive evaluation of the short-horizon
predictive ability of economic fundamentals and forward premia on
monthly exchange rate returns in a framework that allows for volatility
timing. They implement Bayesian methods for estimation and ranking
of a set of empirical exchange rate models, and construct combined
forecasts based on Bayesian Model Averaging. Their assessment of the
economic value of the in-sample and out-of-sample forecasting power
of the empirical models finds two key results:
Pasquale Della Corte Lucio Sarno Ilias Tsiakas
• a risk averse investor will pay a high performance fee to switch from
An Economic Evaluation of Empirical Exchange Rate Models, co-authored a dynamic portfolio strategy based on the random walk model to one
by Dr Pasquale Della Corte, Professor Lucio Sarno and Dr Ilias Tsiakas, which conditions on the forward premium with stochastic volatility
WBS Finance group, featured in the top finance journal Review of innovations
• strategies based on combined forecasts yield large economic gains
The paper recently appeared as a working paper for the CEPR (Centre over the random walk benchmark. These two results are robust to
for Economic Policy Research). The authors also received an invitation reasonably high transaction costs.
from VoxEU.org to write a short research column. Established by
leading economists, this well-respected website provides research-based w www.voxeu.org/index.php?q=node/876
policy analysis and commentary.
post-conflict reconstruction and governance
Professor John Benington and IGPM up action is being planned and a proposal Kathy Johnson (a graduate from
colleagues have begun to develop being prepared for a longer term programme our Postgraduate Diploma in Local
of capacity building. Government Management) has been
active working links with the new appointed to work in Juba for a year as a
Governments of Sierra Leone and of research and policy officer in the office
the Southern Sudan, both of which of the Minister for Commerce and Trade,
are struggling to restore democracy to analyse the context, to assess needs on
the ground, and to develop pilot training
and public services after bitter civil
war. Warwick IGPM has been invited
to contribute to the training and The first of these
development of Ministers and senior took place in Juba
civil servants in each of these two in February 2008,
Southern Sudan when John, Jean
countries. Hartley and Kathy
Johnson ran a
Sierra Leone Southern Sudan
one week training
The elections which swept the All People’s Southern Sudan is in a very difficult period
Congress (APC) into government in Sierra of transition, with peace and democracy
Leone in October 2007 have created a by no means yet certain. After more than
Kathy Johnson and Performance’
historic moment of opportunity for this 20 years of civil war, the Comprehensive
for the top 50
war torn country to make a significant Peace Agreement makes provision for a
managers in the Ministry of Commerce.
transition to peace, democracy and possible secession of the largely African and
A second workshop on ‘Managing
economic and social development. Christian South from the largely Arabic and
Finance’ took place in June and a third on
Muslim North. An interim Government of
‘Managing Projects’ in July.
Moving quickly after the elections, John the Southern Sudan has been established,
and IGPM associate fellow Mark Sheldrake and elections are planned for 2009 and a full
helped to run a one week workshop for all referendum in 2010.
the new Ministers and their Permanent
Secretaries, in Freetown in December. Having hosted a visit to Warwick in February
They had the privilege of contributing 2007 by the Minister of Commerce and
to a series of Policy Development and Trade in the Government of the Southern
The spring 2009 issue of nexus will
Strategic Leadership Forums for the Sudan and his Director General of Finance
focus on Entrepreneurship. If you run
newly elected Ministers and their senior and Resources, John Benington made a
civil servants, sponsored by the Sierra visit to the capital Juba in June 2007 to your own business and would like to
Leone government’s Public Service assess the Government’s development and contribute to your alumni magazine,
Reform Programme and Institute of training needs. Subsequently John and then do email the editor
Public Administration and Management IGPM colleagues have been developing pilot E email@example.com
(IPAM), and supported by DfID and Public programmes of support.
Administration International (PAI). Follow
10 nexus: summer 08 finance
Professor Anthony Neuberger examines the reality of the latest pensions policy reform
Now that all the dust has settled, it is time
to look back at what has been described the author in minute
by Ministers as the most radical reform of
pensions policy since Beveridge. The rhetoric
Anthony Neuberger is Professor of Finance at
suggests a grand and elegant vision. The WBS and current Head of the Finance Group.
reality is rather more prosaic.
His previous experience includes the Institute
Rarely has such care and deliberation gone of Finance and Accounting, London Business
into an area of public policy. A Pensions School (1985–2004), the UK Department of
Commission, under Adair Turner, has Energy (1975–83), and he was a member of
Central Policy Review Staff, UK Cabinet Office
deliberated for three years, produced two
major interim reports, and one final report.
Evidence has been taken, White Papers Anthony consults for a variety of investment
have been written, bills enacted, quangos banks, exchanges, government departments
established. The timescale is leisurely. The and trade associations.
reforms to the UK state pension system will
only be implemented in full by 2080. His research interests are: derivatives;
commodities; market microstructure;
investment management; pensions policy.
It is easy to mock the pretentiousness of the
plan. What confidence can there be in any
planned sequence of changes unrolling over
such long horizons when the Department
of Work and Pensions itself has only been in
existence for seven years and when, during with pensioner income, and the savings present measures to dismantle past reforms
its brief life, it has had no fewer than seven credit that first increases and then declines (such as the state earnings related pension)
Secretaries of State? with income. as radical new initiatives. Complexity also
makes it easier to provide goodies – by
But the need for reform is patent. The The New Jerusalem to which we are heading relaxing a contribution requirement here, by
Pensions Commission described the UK looks like a pretty messy, complex sort of adding a credit there – to buy off particular
pension system as the most complex in the place. And that matters. pressure groups without spending too much
world. Unravelling the complexity is bound money.
to take time. Pensions policy is intended to enhance
social security. It is hard to see how people Complexity is an effective device for
can get security from a system that is so keeping costs down. The system will end
complex that they cannot understand it. The up delivering what is in fact very close to
Pensions policy is intended state provision is intended to complement a flat rate universal pension – the so called
to enhance social security. occupational pensions and private pension Citizen’s Pension. But if there were a single,
It is hard to see how people can savings. The complexity of the state system universal flat rate pension, the pressure to
get security from a system that makes it hard to give sound advice to people raise the level of the pension would be hard
on moderate incomes who may well be to resist. By having a system of multiple
is so complex that they cannot means-tested in retirement. interlocking pensions and credits, the target
understand it. of campaigners for change is diffused. Any
Why the system has not really been proposal for changing part of the system
simplified can be resisted on the grounds of its adverse
Radical change creates losers. To create a effects elsewhere in the system.
The Grand Design consensus for change you have to buy off the
So what is the grand design towards which losers. But despite all the rhetoric, there is no Our mean and complex state pension system
we are moving at such a stately pace? consensus to spend more on pensions. True, is likely to remain substantially unreformed
By 2080 the UK will still have two state the expenditure on pensions is expected to because there is no desire to spend more on
pensions: the Basic State Pension and the rise as a proportion of GDP, but not nearly the state pension, and the complexity makes
State Second Pension. They will both be so fast as the proportion of pensioners in the the meanness politically feasible.
flat rate, but will be computed on the basis population. The UK state pension system is
of different criteria, with different rules of notably meaner than almost any other in the
entitlement. Actually, it is not quite true developed world, and it will stay that way.
that the state pension will comprise just
two components. There will also continue I suspect that the real reason is that Ministers
to be two other components of the pension are addicted to complexity. Only because the
package – the guarantee credit that declines system is so poorly understood can Ministers
nexus: summer 08 finance 11
Phil Ashdown (FTMBA 1996–97) Director, Altima Partners LLP, gives his thoughts on how to prepare for the opportunities
We have just experienced the worst
financial markets since the 1930s. The the author in minute
world’s leading financial institutions are
successfully repairing their balance sheets Phil Ashdown has over 25 years of diverse
having taken combined losses of c.$380bn experience gained within banking and advisory
since last summer. Globally, central businesses. He is currently Director, Altima Partners
bankers, regulators and governments have LLP and is responsible for building their credit
engineered an unprecedented yet highly strategies business and is presently raising a bespoke
successful coordinated approach to address stressed/distressed fund from institutional investors
and family wealth offices, globally. Altima currently
immediate liquidity concerns and systemic has in excess of $4.5bn assets under management.
risk within the financial system. Despite
the dramatic news flow around the credit Previously, Phil was Managing Director, Head of
crunch, stock prices continue on the whole, Acquisition Finance and Sponsor Coverage for
to be relatively robust (ex of the financial ING Bank in London, where he was responsible
institutions sector). We can, it seems, look for the strategic development of an integrated
business model covering, Acquisition and Leveraged
back and be confident that the worst crisis Finance, Advisory and Debt Capital Markets. He has
to impact financial markets since the 1930s successfully led financings for in excess of €20bn,
is over. during his career.
Or is it? The US economy is fully expected Phil became an Honorary Professor at Warwick
Business School in May 2008.
to enter into a recession, or at the very least
a period of ‘sub-normal’ growth, since last
summer house prices have fallen 14 percent
in the USA, some cities have seen prices fall rate of economic growth within the BRICs they sought. Nevertheless, it is increasingly
c.25 percent; Main Street is very wary of the continue to run at levels outside all historic likely that at the very least, timing and
impending fall-out from Wall Street. The boundaries. Has there been a de-coupling of holding periods will be longer than perhaps
US Fed economic policies are in complete emerging markets? There appear to be new envisaged/expected; equity returns will be
divergence with the ECB, concerning fundamental drivers behind commodity, lower whilst risk has undoubtedly increased.
differences of opinion over near term growth energy and food prices as a consequence of
prospects and inflation concerns. In large the growth in BRICs. Does this underpin the However, growing realism amongst
part this has lead to the rapid appreciation of sustainability of such prices at the current vendors (either ‘forced’ or ‘willing’) and
the Euro/$ rate. trends/levels? What impact will this have on the substantial availability of liquidity and
USA and Euro economies? capital appropriately structured for the new
More broadly, currency rates have shifted post credit crunch environment will drive
swiftly since last summer, impacting There is a paradox and we are I feel, just many excellent investment opportunities
purchasing power parity, revenue and cost part way through the consequences of the over the next few years. Timing is critical.
inputs aggressively. The UK is beginning credit crunch; the eye of the storm perhaps. The adage of ‘avoid the falling knife’
to experience a very real housing problem, Immediate concerns of systemic risk and strongly prevails. Some investors are
with prices now expected to fall by as much liquidity within the financial services sector beginning to utilise their liquid resources
as 7 percent this year alone (revised from appear to have been addressed; much credit now, time will tell whether they are right.
+3 percent since last summer), the retail should go to the leadership taken by the Most probably, it is the eye of the storm
and building and construction sectors are Fed in this regard. However, we are at the however. Huge opportunity is out there
now operating under increased economic beginning of more fundamentally driven as the feedback mechanisms from the
and financial strain. Globally, financial consequences of the credit crunch and their credit crunch impact fundamental drivers
institutions have substantially tightened impact upon the wider and ‘real’ economy. across all sectors and asset classes. As more
their lending criteria, risk spreads and Caution is the key watch word. fundamental drivers unfold, vendors and
associated costs have risen dramatically. acquirers will be able to undertake robust
Those long of assets, at the wrong time and diligent appraisal of valuation and assess
Availability and cost of finance is a very real (notably 2006 and 2007 vintages) and with risk/reward, bottom up.
issue for consumers and those corporates too much leverage will be harshly hit as the
and sectors facing even just mild stress, consequences of the new post credit crunch On balance, it remains a little too early
both in Euro-land and the USA. Default and environment become reality over the next to take advantage… get ready this is
distress rates, across all forms of consumer two years. Globally, financial institutions undoubtedly an exciting time. Time
and corporate debt are predicted to increase have seen this already (IMF has said losses compression is typically prevalent as markets
from record all time lows of 0.8 percent could reach $1trillion globally). Those in the rapidly adjust downwards and strategic
to in excess of 10 percent of total debt in fortunate position of having locked capital and sustainable competitive advantage can
issue, by year end 2009. Whilst globally, and sufficient cash flow to ride out the next be rapidly built and/or expanded at this
commodity, energy and food prices and the 2/3 years may ultimately achieve the returns juncture, for those ready and bold. Be bold!
12 nexus: summer 08 finance
climate change and financial markets:
risk or uncertainty?
Professor Mark Salmon addresses the issue of how financial markets can be best employed to manage the risks
associated with climate change
The ability of financial markets to bear risk The major factors behind these escalating The extent to which the redistribution of
is central to economic welfare and stability. costs are economic and population growth risks by financial markets (after securitisation
Growth and economic wellbeing is inhibited with accompanying land-use changes of assets) can be a benefit or a danger to
if financial markets are unable to transfer and movements of capital and people to society as a whole is a critical issue. How far
resources efficiently from the suppliers of vulnerable regions. In other words, the main can we rely on financial markets to efficiently
liquidity to risk takers or entrepreneurs. cause is global change and development price and transfer risks? The repackaging
Ensuring a proper return to capital and risk is in its broadest sense. At the same time as and reselling of US subprime mortgage debt
the function of a market and market stability such profound and sustained global change through CDOs exactly mimics the way in
enables proper long run planning and the is occurring, it is expected that long-term which insurance has traditionally managed
efficient allocation of resources to productive worsening of weather extremes due to or diversified risk through re-insurance. If
activities. These statements underlie the free climate change will also accelerate if action recent experience has shown us anything
market philosophy that drives our economy. is not taken. it has shown us that we currently can’t
What happens when this belief system is price these instruments correctly and rating
confronted with global warming? Specific events such as hurricanes Katrina agencies are unable to properly assign risks
and Andrew in 1992, the Northridge so how can we hope that environmental
There is real concern within the insurance earthquake in 1994, or even the bombing risks will be properly priced and traded in
industry that the true costs of climate change of the World Trade Centre in 2001, have financial markets? Uncertainty is perhaps
have not been fully recognised and hence all served to underline the increasingly more important than Risk.
priced (see for instance the Swiss Re, Munich stretched capacity of global insurance
Re, OECD, and World Bank web pages). markets. This has in turn sparked an These are some of the issues the Finance
Equally there has been a growing realisation increasingly active debate among actuaries, group at WBS is currently addressing.
that the capital base of financial markets has economists and politicians over how
to be employed to manage the risks associated financial markets could, or indeed should,
with climate change. The traditional route be used to hedge risk that has previously the author in minute
of insurance and the diversification of risks been covered using other channels. A
through reinsurance is simply unable to carry symptom of the debate and of the increasing
the potential burden. The implications of linkage and possible convergence between
liquidity failure and default on a large scale the insurance and financial markets has
within the insurance industry could have a been the steadily increasing stream of
major impact on the global economy. financial instruments that contain some
form of insurance product and vice versa.
We are faced with two options; either various
climate-related insurance lines, say flooding, The lines between the industries have
are simply withdrawn and environmental become increasingly blurred and this
risks become uninsurable or we start to use has stimulated the tailoring of products
financial markets to manage (and price) these to the risk preferences, capacities and
risks. The issue facing us then is, given the demands of both buyers and sellers of risk
uncertainty regarding the physical processes based products. Securitisation of risks in
underlying climate change, how can financial both areas has generated a concomitant
markets be best employed to manage the development in the pricing of products
associated risks? containing both insurance and financial Mark Salmon is Professor of Finance at WBS
elements, the result of which has been a and Director of the Financial Econometrics
Research Centre (FERC), which forms part
According to the 2003 report by the search for an appropriate class of processes of the Warwick Finance Research Institute.
International Institute for Applied Systems to solve the problem of price determination He was formerly Deutsche Morgan Grenfell
Analysis, more than 700 major ‘natural’ for extreme risks. Arguably one of the most Professor of Financial Markets at Cass Business
catastrophes occur every year. Since the important aspects in this process is the way School, London. Mark previously held the
1950s alone, economic losses from disasters in which risk and perhaps more importantly position of Professor at the European University
of either natural or man-made causes have uncertainty are handled in each discipline. Institute in Florence. He has been an advisor to
increased 14-fold. Although the developed the Bank of England for the last five years and
has many links with City institutions.
world generally suffers the greatest absolute Uncertainty arises when we do not know the
economic losses, when seen as a percentage probability distribution of random events, His research interests are: financial
of GNP the losses in the less developed world risk applies when we assume we do. Finance econometrics; behavioural finance;
are 150 times greater in terms of human has critically focused on risk not uncertainty asset pricing; knightian uncertainty; risk
victims and apparently 20 times greater in and new methods of financial analysis need management; asset management.
terms of economic loss. to be developed.
nexus: summer 08 finance 13
raising the standard
Anne Gunther (FTMBA 1989–91), Chief Executive of Standard Life Bank, examines the greater challenges of managing
risk now facing the financial services industry
Standard Life has been my working life for on top of the current liquidity risks. Risk
the last six years and it’s proven to be far management, always the bankers’ bread and
more fascinating than I ever imagined when butter, is now unimaginably wider, deeper
I moved to Edinburgh. I was heavily involved and more complex than even ten years ago.
in the run up to our demutualisation and
our Initial Public Offering (IPO) in 2006, an Did my time at Warwick Business School
event that wasn’t even on the horizon when prepare me for this? It certainly taught
I joined in 2002. After IPO, my role began me to think much more globally, and
to expand, from focusing on the Bank, our I remember, with mixed emotions, the
mortgage and savings business, to a wider debates I had with Peter Doyle about the
role increasingly looking across the retail Japanese approach to competing on the
propositions used by Standard Life’s customer world stage. He also taught me the huge
base of c.7m. importance of brand and brand values; not
what a company’s advertising looks like but
the overall image projected, ‘the sum total of
Pundits had been asserting what everyone thinks and feels about you’.
Your reputation is your single biggest asset
that the US subprime and the risks I’ve discussed above, or rather
mortgage problems wouldn’t lack of management of those risks, are the
spread to the UK as our surest way to destroy your reputation.
mortgage books were great
My lasting impression of Warwick has
quality and our securitisation therefore changed over the last 12 months
issues were different. No-one as I’ve realised just how much it did teach
had thought through the new me and how that has equipped me to help
concept of contagion risk! my team manage through a very different
Pundits had been asserting that the US environment.
subprime mortgage problems wouldn’t
spread to the UK as our mortgage books Looking to the future, my widening retail
However, banking activities have become were great quality and our securitisation portfolio within Standard Life gives me
centre stage, once more, as a result of the issues were different. No-one had thought plenty to think about as we move from a
current credit crunch. It has become clear to through the new concept of contagion risk! traditional pensions company to a major
the financial services industry, as a whole, If one market doesn’t know enough about asset managing organisation, working across
that the challenges of managing risk have another market, the safest bet is to assume the full range of corporate and retail assets.
become much greater with the impact of that it’s all the same. Hence, very quickly,
globalisation which first showed up, truly, in UK institutions could no longer source
the Stock Market crash following the dot com well priced long term funding through the the author in minute
boom, coming into play across a much wider securitisation markets and the Northern
range of risks than the traditional credit Rock implosion was the all too public Anne is currently CEO of Standard Life Bank
risks associated with banking. 9 August 2007 face of this. Since then, write-downs of with further responsibilities as CEO Designate
will remain engrained on many bankers’ unprecedented size, capital raising of equally of their Healthcare division and MD of
memories as the day the structured finance unprecedented size and continued suspicion Customer Relationship Development. Prior
markets, and the asset backed securitisation in the markets regarding who still holds the to SLB, Anne’s career began at NatWest as a
Graduate Management Trainee, before moving
market in particular, slammed shut. remaining subprime mortgage risks has led
to Lloyds TSB, eventually becoming MD of
to the Bank of England taking the major step Direct Channels.
This market had been widely used by the of providing an alternative securitisation
mortgage industry to diversify funding away market to begin to redevelop liquidity and Anne holds a degree in physics, a Warwick
from total reliance on the retail savings confidence in those instruments. MBA and an honorary doctorate from
market and to spread credit risk. In the US, Edinburgh. She has chaired the industry trade
however, the ability to pass on most, if not Meanwhile, further shocks around inflation, body of the Council of Mortgage Lenders; is
all, credit risk with the bonds backed by stemming from tightening of oil supplies a Trustee of Arts & Business, and is a member
of the advisory board of Warwick Business
mortgages was taken to extremes, and hence and somewhat associated price rises for School.
the underlying credit quality of the mortgages food, driven by the rush to bio fuels using
themselves became less and less important. up agricultural land and the increasing Anne’s weekends are split between houses
Bankers were ignoring the core risk in wealth of and changing taste for food of in Edinburgh and Devon. She enjoys sailing,
banking – whether a borrower could repay. the Asia Pacific region doing the same, is walking and cooking for friends.
overlaying a major spectre of inflation risk
14 nexus: summer 08 finance
crisis and currency
Professor Lucio Sarno addresses the question of the future of the currency ‘carry trade’ in the light of the
subprime crisis in the US
The subprime crisis that began in the
summer of 2007 has its origins in the the author in minute
generation of easy access to credit offered
to risky borrowers for purchasing real estate Lucio Sarno is Professor of Finance at WBS and
in the US. While the origin of the problem Director of Currency Research, AXA Investment
is localised (US-based) and confined to one Managers.
specific asset class (real estate), the crisis
has affected several geographical areas He was previously fellow in Economics,
(Continental Europe, the UK, and various University College, Oxford; Research Fellow,
emerging economies) and asset classes (eg Dept of Economics, Oxford University; Rotary
equities, bonds, currencies), leading in turn Ambassadorial Scholar, Department of
Economics, Columbia University, New York.
to instability of the financial markets and to
Lucio is currently Research Affiliate at the
a recession in the US that will soon spill over Centre of Economic Policy Research, London;
elsewhere. The focus of this article is the Consultant, International Monetary Fund, Bank
specific impact these events have had on the of Canada, Bank of Norway, Federal Reserve
currency markets and on the widespread use Bank of St Louis, USA; Committee Member
of the ‘carry trade’ as a simple investment of the Macro Money and Finance Research
strategy. Group. He also provides consultancy for several
companies in Wall Street and the City.
The carry trade is a strategy where an investor
His research interests are: international
borrows in a currency with a lower interest
economics, financial economics, international
rate and uses the funds to purchase another money and finance, monetary economics;
currency that yield a higher interest rate. financial econometrics.
An investor who adopts this strategy is
attempting to capture the difference between
the two interest rates. This difference in rates The sceptics have traditionally taken the Cumulative returns from carry trades in currencies
can be substantial, depending on the amount view that returns from carry trades represent 12
of leverage the investor chooses to use. anomalies, puzzles, inefficiencies, which
cannot continue forever in a rational
The risk inherent in simple carry-trade world. This cohort includes many academic 8
strategies is that an adverse movement in the economists, policy makers and a small set 6
exchange rate will wipe out the gain from of contrarian financial practitioners. With
the differential in the interest rate. According the advent of the subprime crisis and the 4
to standard finance theory, based on the huge losses of carry-trade strategies that have 2
simplest version of the efficiency markets followed, these sceptics have typically reacted
hypothesis (EMH), the return from a carry by saying: ‘I told you so’. The main point of 0
trade strategy should, on average, be zero. this article is to argue that this reaction is at Calendar time
This is because the currency of the higher best premature and, most likely, incorrect. 08.01.95 08.06.99 06.11.03 05.04.08
interest rate country should depreciate in This is because the losses incurred by carry
the future to offset the differential in interest trades (no matter how important one thinks One thing is for sure: someone who has
rates, so that the returns from holding a low the subprime crisis is) are nowhere near the invested in carry-trade strategies for the past ten
interest rate currency and from holding a magnitude that is required to offset the large years is not going to be concerned about the
high interest rate currency should equalise gains that these strategies have delivered in subprime crisis at this stage and will persist with
once the exchange rate risk is taken into the past. the same strategy for the foreseeable future. To
account. avoid any misunderstanding, I do not suggest
Figure 1 below shows the cumulative that carry trades are all that one needs to know
In contrast to the EMH, there is ample returns from a simple carry-trade strategy to be a successful investor. I do suggest that the
evidence in the data that carry trades in a portfolio that has been invested in 20 dismissive view of the disciples of the simple
deliver positive risk-adjusted returns to currencies since 1995. Note that the vertical version of the EMH is far too simplistic to be
investors. Given their intrinsic simplicity, axis shows the percentage cumulative return taken seriously.
carry trades are used not only by hedge divided by 100, ie 1 represents a 100 percent
funds, investment banks and other financial cumulative return. If the EMH were correct, Policy makers and regulators should continue
practitioners, but also a number of laymen the graph of cumulative returns should to think about the destabilising effects of
and housewives. Given the huge leverage revert to zero over time. Instead, we note the excess leverage and about designing a system
often involved in carry trades and their dramatic positive trend in these returns. This which prevents excess risk taking in carry
potential for disrupting financial stability, trend has been mitigated by the subprime trades, because – given the returns from these
these strategies have attracted a lot of crisis, but clearly not sufficiently to affect the strategies – the market is not going to moderate
attention from policy makers, regulators, long-run gains from carry trades or to justify their risk taking without some harder evidence
academics and the media. the statement ‘I told you so’. that carry trades are not profitable.
nexus: summer 08 finance 15
aligning the objectives
Bo Kratz (FTMBA 1987–88) details his journey from Sweden via Warwick to Singapore
Leaving the shores of my native Sweden,
literally on a boat, I arrived at WBS in the author in minute
1987 to participate in the full-time MBA
programme. The year at Warwick was in Bo Kratz is Managing Director, Asia, at Permal
many ways an important milestone in my Group. Bo joined the Permal Group in 2006
life. Not only did I enroll in a fascinating and his main responsibility is to oversee and
academic programme, but I also became a coordinate the business activities in Asia Pacific.
passionate ‘cosmopolitan’. The most obvious
proof of the latter was the young Taiwanese Before joining Permal, Bo spent ten years with
girl that I met in my Tocil kitchen and with ABN AMRO Asset Management, the first five in
whom I now have two children. I enjoyed Stockholm, culminating as Head of the Equity
Department. Between 2001 and 2004, he was
all of the courses at Warwick, but Finance
CEO of ABN AMRO Asset Management in
and Organisational Behaviour were my clear Singapore and before joining Permal, he was
favourites. Consequently, the memories of Head of Institutional Sales Asia, based in Hong
Professors Andrew Pettigrew and the late Kong. Prior to joining the Asset Management
Anthony Steele are particularly strong. industry, he spent eight years in Stockholm as a
research analyst and a stockbroker.
When I returned to Sweden (coincidentally
on the same boat), I took up a career Born in Sweden in 1962, Bo has a wife Lian and
two children aged 15 and 11. His home is now
in stockbroking and subsequently asset
in Singapore. He lists his personal interests as:
management. Anthony Steele’s words of everything on two wheels, photography, action
wisdom came in handy straight away as I got sports and admits to a craving for adrenalin.
my hands dirty dissecting corporate profit
and loss accounts. However, as I subsequently
drifted away from managing money into
managing people, I had the opportunity races, religions and ethnic backgrounds globally was great and again gave me the
to revisit some of the concepts from the exceptionally rewarding. I saw the strength opportunity to reflect on the behaviour of
Organisational Behaviour course. in the diversity as opposed to an obstacle. different organisations, or more importantly
After three years in Singapore ABN asked me of the people within them.
to move to Hong Kong to take up a more
regional role, which I did for about two years In addition, after 18 years on the buy as well
After 18 years [in] equity until it was time to move on. as sell side of the equity markets, I became
markets, I became increasingly convinced that the future of
My take from my ten years with ABN is that mutual funds and investment products
increasingly convinced that if you have aspirations and ambitions, do in general lies in aligning the investment
the future of mutual funds and express them, even if they might seem odd objectives with that of your clients as opposed
investment products in general and out of the normal. Good organisations to that of the market as a whole. In other
lies in aligning the investment appreciate people with ambitions and if words, creating a stable return that does not
you can accommodate each other, a very necessarily fluctuate with traditional asset
objectives with that of your strong relationship is formed. Also, if your classes such as equities and bond, not only
clients as opposed to that of the organisation doesn’t appreciate people makes the private investor sleep better, but
market as a whole. with ambitions, you are in the wrong place also has an appeal for institutional investors
anyway. such as pension funds and insurance
companies. Despite these obvious benefits, we
Nevertheless, after ten years it was time to say still spend a lot of time educating our clients
Fast forwarding to 2001: I was then heading farewell to ABN AMRO. I was approached by about so called ‘alternative’ asset classes.
up the investment function of ABN AMRO Permal in 2006. Permal is one of the world’s
Asset Management in Stockholm. With largest Fund of Hedge Fund managers. I was Asia has become my home and the two
one eye on the needs of my two ‘Eurasian’ asked to further expand and strengthen their large international cities of Hong Kong
children and one eye on future growth organisation and presence in Asia. In addition and Singapore both very much mirror the
prospect for me and for them, I quietly to being one of the largest Fund of Hedge composition of our family. We moved our
approached my company expressing a desire Fund managers, Permal is also one of the primary base back to Singapore last summer,
to work in South East Asia. A few weeks later oldest. With 34 years in the industry, Permal but still keep a strong link with Hong Kong.
they came back offering me the position of brings not only a long track record but also There is so much to do in this part of the
CEO in Singapore. My acceptance followed a wealth of experience in an industry that is world so I am pleased to say that my personal
swiftly and in the summer of 2001, we generally perceived as young. and professional aspirations are very much
sold our house, the Volvo, and bought a aligned. Understanding my family helps me
one way ticket to Singapore. I found the Going from an organisation of a few to understand the dynamics of the region and
task of managing a team of many different thousand to one with just over a hundred vice versa.
16 nexus: summer 08 finance
the credit spread puzzle
Professor Gordon Gemmill is conducting research comparing the distributions of returns which are implied by
corporate bonds and by equity-index options in the UK
During the past year investment banks of probability on the downside relative to a
have been surprised to lose more than normal distribution. The smiles, which are
$200 billion on bonds backed by subprime averages over the 1992 to 2002 period, are
mortgages. These losses have mainly arisen very similar for the bonds and the equity
on portfolios of bonds known as collateralised index. The high implied volatilities for
debt obligations (CDOs), which the banks downside events on the left-hand side suggest
thought that they had shifted from their that investors are willing to pay a large risk
balance-sheets only to discover that they had premium in order to avoid low-probability
not. However, bonds backed by low-quality disasters, both in bonds and in equities.
mortgages are rather unusual. One should not
infer from recent events that conventional The subprime crisis has demonstrated the
bonds issued by companies are more likely importance to investment banks of knowing
to default than had previously been thought. precisely where risk is located but tells us little
The historical record shows that corporate about the price of risk. The premium required
bonds hardly ever fail. For example, an AA- by investors for taking risk is fundamental in
rated bond has a 99.75 percent chance on determining the prices of all kinds of risky
average of being paid in full over the next financial assets. The credit spread puzzle and
10 years. Even if a bond is one of the 0.25 the equity-premium puzzle would both seem
percent which do default, investors can still to be closely-related phenomena, with both
expect to recover more than half of their reflecting investors’ complicated downside
money. The default rate does vary slightly preferences.
with the state of the economy, so can be
expected to rise if there is a recession in the The Relationship of Implied Volatility to Leverage
next year or two, but an outbreak of ‘irrational for Bonds and for Equities
pessimism’ in relation to corporate bonds
because of the subprime crisis would not be Kahneman won the Nobel Prize in 2002).
justified. When this idea of loss-aversion is applied to 1
investors with one-year horizons for equity
In fact, the main peculiarity about corporate investments, Benartzi and Thaler (1995) 0.8
bonds is not that they occasionally default have shown that it can generate an equity
but that they have high yields given their very risk premium of about 6 percent per annum. 0.6
low probabilities of default. For example, However, the loss-aversion which Yiran and
a typical AA-rated 10-year corporate bond I find to be important is not a simple dislike 0.4
might yield 5.65 percent when an equivalent of losses, but rather an aversion to extreme
government bond yields 5.00 percent. The downside risks.
expected loss from default on the AA-rated bonds
bond can only account for about 0.05 percent Our work is based on comparing the 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1
(5 basis points) of its extra yield of 0.65 distributions of returns which are implied by exercise price of instrument relative to forward
percent (65 basis points) over the government corporate bonds and by equity-index options price (leverage)
bond. The chance of default is therefore not in the UK. (For the technically-minded, a
the main cause of the extra yield. If we allow corporate bond is equivalent in value to a
for 20 basis points to compensate for the risk-free bond less a put option on the firm’s
lower liquidity of the corporate bond, there assets. It is this put option which we use the author in minute
still remains most of the credit spread (40 to imply returns on the firm’s assets). The
basis points out of a total of 65 basis points) study suggests that investors do not worry too Gordon Gemmill is Professor of Finance at
to be explained. Why is this unexplained risk- much about losses of 10 or 20 percent of their WBS. He directs the new PhD in Finance,
premium so large? wealth, but they will pay almost any risk- started in 2007/08 and from 2005 to 2007 was
Head of the Finance Group.
premium to avoid losses of 60 or 70 percent
Some research I am conducting with Yiran of their wealth. One way to see our results Before joining WBS Gordon was on the staff
Yang, a PhD student, investigates this ‘credit is to plot ‘volatility smiles’ from bonds and of Cass Business School from 1977 – 2004, as
spread puzzle’. What we find is that the from long-term index options (the bonds Professor of Finance since 1988.
character of the risk-premium on corporate and options being matched with respect to
bonds is closely related to the risk-premium maturity and leverage). The shape of the His research interests are: behavioural
on equity. In both markets investors seem smile should indicate the extent to which finance; credit risk and the pricing of bonds;
to exhibit an extreme form of loss aversion. returns on the underlying assets as perceived corporate governance and the performance
Kahneman and Tversky noted in 1979 that by investors to deviate from normality. The of mutual funds; pricing of derivatives; market
investors dislike losses more than they have microstructure.
smiles in the plot shown are both downward-
pleasure in gains (work for which Daniel sloping from left to right, indicating an excess
nexus: summer 08 finance 17
hurdles... what hurdles?
Some thoughts on performance management from Rob Cooper (FTMBA 1994–95) and Jon Hill (DLMBA 1993–98)
The WBS Academic Seminar held in March
was not untypical of previous events – a
mixture of entertainment, the latest in
Warwick research, and a lively debate to
Immediately some of the research was used
by Wexner consultants to challenge and
evolve the thinking of clients during the
following weeks. However, it was an anecdote
from the Naked Leader himself, Professor
David Taylor, which really stuck in the Rob Cooper Jon Hill
mind. When interviewing Colin Jackson, the
champion high-hurdler, David asked him action. We believe that this can be enabled done in the name of ‘Business Performance
how he faced the hurdles in front of him at by improved tools, but not replaced by them. Management’ can actually increase
the start of each race – his reply was ‘hurdles... Truly effective performance management interference, with the associated deterioration
what hurdles?’ is much more than structured, streamlined in performance.
systems and processes.
This set us thinking. How did this compare We find that a people-centric approach
with our experience in working with our For those of you with experience of coaching, to managing performance is much more
clients in improving their performance either as a provider or as a recipient, you will successful, focused on increasing awareness,
management? As business teams compete in know that two of the key foundations for ensuring responsibility, and reducing
their races, how do they perceive the hurdles, performance improvement are ‘awareness’ interference. It will probably take longer than
and what is the role of their finance and and ‘responsibility’. An individual or team putting in a dashboard or scorecard, will
other measuring departments relative to these needs good awareness of their capabilities often involve individuals or teams having to
hurdles? Does it help or hinder performance? from both their own and others’ perspective. challenge and maybe change their individual
They also need good awareness of the or collective beliefs, but will progressively
In recent years, the term Business components of the performance level that embed a performance culture. Colin Jackson
Performance Management (BPM) seems to they aspire to, and how it will feel for them. was a great hurdler because he looked forward
have been hijacked by the software houses, In conjunction with this, they need to and didn’t focus on the hurdles.
and is used to describe their products that take responsibility, both individually and
can assist in managing business performance. collectively. This is much more than just
Many organisations, in both the public and saying they will do something. They need to two authors in minute
private sectors, now have impressive looking fit it into their lives, giving it the necessary
dashboards and scorecards that they look at priority and changing other priorities Rob Cooper (MBA 1994–95) is a Director of
frequently or infrequently. The information accordingly. For those of us who have Wexner and has over 20 years of industry and
demands of these has created a cottage ever tried to get fit, lose weight, or give up consulting experience including periods spent
industry in the extraction and cleansing of at Rio Tinto, British Steel, GKN and Deloitte
smoking, we recognise that these are not just
Consulting. Recent client projects include
data. As an FD friend recently observed, his business challenges, they are life challenges. strategy development and implementation,
finance department has become ‘the rework strategic marketing and process optimisation.
centre of excellence’. In addition to ‘awareness’ and ‘responsibility’, Rob has worked in international manufacturing,
we would add a third key foundation – food and general retail, pharmaceuticals,
But has the performance of their ‘interference’. Tim Gallwey, in his Inner Game telecoms, financial services, transport
organisations improved proportionately with series of books, proposed the model: infrastructure and various organisations within
these increases in information and the power the public sector.
of its presentation? Our experience indicates Performance = Potential – Interference
that the most likely answers are ‘no’ and Jonathan Hill (DLMBA 1993–98) co-founded
Wexner in 2002 and is now Managing Director.
‘maybe’. Going back to the hurdle analogy, Interference comes from within each of us, He has over 20 years of industry and consulting
maybe too much emphasis has gone on the often based on fear or doubts. It also comes experience including periods spent at Ford
hurdles and how to measure them? from others, in the way that we interact Motor Company, Ernst & Young and Deloitte
with each other and the inherited wisdom Consulting. Recent client projects include
Peter Drucker observed that the fundamental that shapes our individual and collective building board alignment, governance design
task of management is ‘to make people beliefs. Awareness and management of that and a recovery of a transformational change
capable of joint performance through interference can make the greatest single programme. Jon has worked in telecoms,
common goals, common values, the right international manufacturing, petrochemicals
contribution to improvement in performance.
financial services, transport infrastructure,
structure, and the training and development
FMCG, charity and public sectors.
they need to perform and to respond to Unfortunately, we observe that much of W www.wexner.co.uk
change.’ ‘Managing’ is a verb, implying the measurement and target setting that is
Raising funds for future leaders
Warwick Business School’s Corporate
As the finale to Warwick Business School’s 40th anniversary
celebrations, over 100 people gathered in London on 18
January for our inaugural corporate fundraising dinner.
I was first introduced to
Warwick Business School
by a former employer
who recommended that I
look at the Warwick MBA
programme. The scholarship
was so important in making
my choice as to which business school to come to that,
having applied and received a scholarship offer I didn’t
complete my applications to other business schools that
I had also considered.
Receiving the scholarship meant that I could
concentrate on my academic work and make the most
of the learning opportunities at WBS. It greatly reduced
Sir Malcolm and Lady Bates with Jon Baldwin, Registrar, University of Warwick
financial pressures, and aside from the financial benefits,
being a WBS scholar does add to the overall experience,
as it has given me the opportunity to participate in
Generously sponsored by Jasminder Singh (Chairman of Radisson other activities at the business school.
Edwardian Hotels), the event took place at the flagship May Fair Hotel.
Alumni, friends, associates and corporate partners enjoyed an evening
of business and pleasure, whilst raising funds for scholarships in Reviewing the programme content and comparing it to
support of future leaders. a couple of other schools, I formed the impression that
WBS was just as good as any of the most highly rated
David Richards (Chairman and Chief Executive of Prodrive and business schools in the world, albeit not as celebrated.
Chairman of Aston Martin) gave an entertaining and engaging after-
Its reputation of excellence was an important factor,
dinner speech about the acquisition of Aston Martin and answered
questions on subjects such as his future plans for Formula 1. and here, I will admit that I did have a look at the FT
Everyone had the opportunity to bid in an auction, with incredible
prizes on offer, including VIP tickets for the final of the hit prime-time Now I am here at WBS I have found that the debates
show Dancing on Ice, a football shirt signed by the Arsenal squad and a
in class, with faculty and other students, have all
day with Prodrive and the Subaru World Rally team.
contributed to my learning experience. Having to
Having been entertained by Rachel Kerr (a Warwick alumna and work with very different people, as well as gaining
former Stars in their Eyes finalist) and The Spires Wind Trio, the an understanding of different perspectives has also
occasion ended for some in the small hours of the morning. enhanced my view of the world.
It was a successful evening with a substantial amount raised generating
two scholarships for full-time MBA students who would otherwise Being at WBS has also been rewarding in other ways,
be unable to take up their study at WBS. A huge thank you to all the including the opportunity to make new friends.
individuals and organisations that supported the event, either through Stepping back a bit and seeing the way that my
donating prizes for the auction, for ‘goodie’ bags, or by attending the approach to problems has changed also gives me a lot
For more information on how you can help WBS in Christopher Olotu
raising funds for future leaders, please contact Charlotte Current Warwick MBA scholar
Wilkes by email: e firstname.lastname@example.org or by
telephoning +44 (0)24 7652 2813. Visit our website at
nexus: summer 08 19
Warwick Business School Society – the year ahead
The 2007/2008 academic year proved to achieved through recognition of the diverse
be yet another resounding success for the requirements of members.
WBSS. Membership numbers soared to
over 700 thanks to the fantastic work of the Our first major endeavour will be the launch
Executive Board under Alexander Groenert of a student magazine titled Plutus, targeted
as President. Not only were the social primarily at Undergraduates. The magazine
events as elaborate and entertaining as ever will contain details about the society and
– primarily the fantastic annual Business upcoming events; articles from prominent
Ball, but our careers events became more figures in WBS and the Financial Times plus
diverse, offering networking and advice to messages from our partners. We have very
our members searching for internships and high expectations for Plutus.
graduate positions. Our football team also
won the league remaining the only team to Corporate events are set to become slightly
be unbeaten. On the whole this has provided less structured. I am hoping to offer a wider
a fantastic plateau upon which to build. choice ranging from a golf afternoon to more
open floor topical debates to help further
As the new President I feel that such both networking and interview skills for
considerable and rapid changes also need to members. The new Social Committee also
be recognised with a reviewed strategy. This has exciting plans to make this year’s ball the
year the WBSS is looking to become even highlight of the University’s social calendar.
larger and more successful and this will be a
challenge. Being the largest student society We are looking at a very promising future
independent from the Students’ Union for WBSS. I firmly believe that as a team, the
means we have full control over the events board, members and partners can all help to
and partnerships we hold. However, this all make this year one of the most successful to
has to be maintained without the support date.
of the Union itself. We expect to attain a
member base of over 1000 for the upcoming Francis Lootes
WBSS President Francis Lootes
academic year and believe this will be WBSS President
Development and alumni relations message board
join up and join class representatives
survey alert in ‘Would you like to act as a contact
Are you on
In early autumn we will be contacting all of our alumni with Facebook? Incre for your former classmates,
a very important survey. We have reached a pivotal point in your network by
ase helping to reconnect and perhaps
Alumni Relations and now seek your views on what you want joining the WBS organising a get-together or two?
from your Association. This is your opportunity to tell us what Alumni group. w If you would like to become a class
you think and contribute to the future of the Association. So tinyurl.com/4q9 rep or wish to nominate someone
please look out for the survey, which will be sent to you via g9c from your class, please contact.
email. Do let us know if you prefer to receive the survey in the e Tracy.Lynch@wbs.ac.uk
post. E email@example.com
To receive our monthly eNewsletter, check Motivated to mentor?
calling entrepreneurs out previous issues and subscribe online. We are looking for
The spring 2009 issue of nexus will focus on w www.wbs.ac.uk/alumni/newsletters.cfm alumni to be mentors
Entrepreneurship. If you run your own business
for fellow alumni or
and would like to contribute to nexus then do
students. If you feel
please email. E firstname.lastname@example.org nexus online you can dedicate a few
Pdfs of the current and previous issues hours per month then
of nexus are available to download. do volunteer to take
urce Alumn have w www.wbs.ac.uk/alumni/nexus/ an active role in our
Business So to say that we now i via
W e are pleased usiness Source Alumn mentoring scheme.
online ac cess to B Business e email@example.com
website. Th ed specifica
the alumni d is design LinkedIn
Source P remier an Join the dedicated WBS group within LinkedIn,
for alumni. ess-source
umni/busin the online professional networking service.
w www.w bs.ac.uk/al
UK events review
WBS-Detica City series
reviewed by Fiona Williams
A session on ‘How to win in the
job market’ was far too good
to miss. So on 21 May, I joined
a group of WBS alumni and
current students to find out
more from those in the know –
alumnus Chris Mason (FTMBA
1993–94) and Don Barratt, from
Connaught Executive. From the start, Chris engaged the audience and
soon dispelled the traditional ways of job hunting. The keys to success:
know yourself, go after what you want – don’t shoehorn yourself into
other people’s job specs and focus on the informal job market. Having
been challenged and stimulated, there was a chance for all to mingle
6th annual dinner over drinks and a light buffet.
Thanks to Simon Finnie (EXMBA 1999–2003), Principal Consultant at
Warwick Business School’s 6th Annual Dinner took place in April at Detica, for hosting the successful fifth seminar in the series.
the House of Commons. Both the Churchill Dining Room and the
Terrace Pavilion, with its magnificent views across the river, were
booked for this memorable event. Guests were invited because of
their continued support of the Business School and included key
volunteers, board members and donors. Professor John McGee,
Associate Dean of WBS, made the opening address and mentioned
WBS’ significant achievements and changes.
The event was kindly hosted by Jeremy Wright, MP for Rugby and
Kenilworth, who spoke about the many opportunities Warwick
University provides for lifelong leaning, available to everyone locally,
nationally and internationally. Yvonne Carter, Pro-Vice-Chancellor of
the University of Warwick, updated everyone on the progress of the
University strategy since its launch last July – first on a University wide
scale and then turning to Warwick Business School’s own strategy.
A hundred guests enjoyed the special venue, lovely food and the
opportunity to mingle with staff and academic faculty of the School.
According to one guest, ‘The whole event was a triumph. The
atmosphere was wonderful, as were the food, setting, venue and
speakers. There was a real sense of being part of something significant
and it had a real buzz.’
Reviewed by Trevor Charlton (DLMBA 1989–94), Managing Director, enterprise agenda? If so, how?’ was another excellent presentation.
Strategy & Solutions Ltd, Cardiff These occasions are a fantastic opportunity to meet like-minded
people, catch up with fellow students from the past and many you
The superb seminar on ‘Strategy development and improvement’ have not met before. It is also an occasion to again immerse yourself
took place in March. David Taylor kicked off with ‘Our Future – Your for a short period into more academic business thinking. I pondered
Choice, and Loizos Heracleous followed with ‘How to win in hyper- how to apply new ideas within my business and to re-invigorate the
competitive markets’. From my perspective, a reason for attending is more structured form of thinking that tends to be pushed into the
to have access to new thoughts, analytical structures and ideas and background whilst dealing with the immediate demands. I met many
Loizos provided this. interesting people and was reluctant to leave.
The after lunch session was in the safe hands of Nigel Slack, presenting So, thank you for continuing to provide these opportunities – the next
on ‘Service and manufacturing – are they really different?’ I understand one being on 19 July 2008.
Roger Mumby-Croft’s presentation on ‘Can Universities address the w www.wbs.ac.uk/alumni/news/2008/05/05/Academic/update/review
UK events review
WBS fora Steve Martin (EXMBA 1996)
hosted a get-together for
Midlands alumni in Leamington
During the spring term, WBS
on 7 May, one of the hottest
hosted two lectures inviting
days of the year. The networking
students and alumni to hear
evening was enhanced by the
world class speakers on campus.
wide cross-section of attendees
– alumni from the class of 1990,
The first lecture was a Panel on
very recent graduates, current
Risk Management entitled ‘Risk
MBA students and Professor Bob
Management, Trick or Treat?’
Johnston who dropped by to join
The speakers were Kiki Maurey
in. In June the group went to the races (see photo) and also enjoyed
Kiki Maurey (FTMBA 1990–91) , Management
champagne and Shakespeare at Warwick Castle.
Consultant, KMCS; Mike
Robertson (DLMBA 1994–2001) , Managing Partner, Risk Solutions;
Chris Enstone (DLMBA 2000–03), Management Consultant, FDS. your region – your ideas – your association
The second lecture saw Paul Williams, a senior HR Director, talking Why not join the informal support group for your region and you can
on: ‘Strategy and Reward; why does Business plan for the future but help to shape the alumni activity in your area?
reward for the past?’
As a volunteer we know your time is precious and your involvement
Details of the 2008/09 Forum series beginning in October will be would be on the ‘creative’ side. Administration will still be
posted online soon. coordinated by the WBS alumni relations team. Currently regional
activity centres on the social aspect but we need your input if you
want to change or supplement this to create a more targeted approach
regional round-up to networking. Events can reflect your specific interests and hobbies,
‘what’s on’ or be more business focused.
At the South West regional dinner in Bath in February, our small but
perfectly formed party for the evening was clearly on a fact-finding With a small team of 3–4 people representing each region, just giving
mission. At the suggestion of Alumni Board member Paul Nicholson a couple of hours two or three times a year can make a huge difference.
(MSc Management & Business Studies 1971–72), the group imparted To register interest or for further information please contact
some fascinating potted life histories. It was interesting that 90 e firstname.lastname@example.org
percent of the group were heavily involved within the SME sector. We
also had stories ranging from ambassadorial visits to helicopter pilot
training to Antarctic expeditions.
Lifelong Learning – are you motivated to mentor?
At the March gathering of First
Friday, our ‘capital’ alumni were
joined by some current students
Would you like to volunteer to take an active role in
in a bid to root out the best our mentoring scheme?
Old vs New World wines. Vivat
Bacchus’s co-owner and resident The re-launch, with a new impetus and focus, led by
wine expert South African Gerrie
Knoetze ensured that the evening
Prince’s Trust advisor and alumnus Peter Summerfield
was a runaway success being both (MSc Management & Business Studies 1975–76), will
fun and informative. We even take place on Saturday 27 September at WBS as part
learnt a particularly novel way to re-set your ‘sense of smell’ palette. of the ‘Volunteers Day’.
Hosted by Ben Couzens, (FTMBA
1992–4), the London Street If you feel you can dedicate a few hours per month
brasserie overlooking the river and have the necessary life skills to help fellow alumni
proved a stimulating setting and students alike please register your interest to
for an excellent Thames Valley
group social event. The evening’s
Tracy Lynch, Development and Alumni Relations
talk centred on the delights of Officer (Student & Regional Affairs)
parachute jumping. Two of our via E email@example.com
number even chose the same
stretch of Australian beach to land
on and despite a previous mid-air collision and a stretch in hospital
one of our party is still participating in these hair-raising endeavours.
special interest groups
Our special interest groups (SIGs) have grown enormously over the last year and we are pleased to report we have SIGs in
the following subject areas:
Entrepreneurship Public & Voluntary Services
In February, E-SIG established a formal The Public & Voluntary Services group started enthusiastically and
structure, consisting of WBS senior in 2007 a number of successful public lectures were held involving
management, teaching faculty, students students and alumni. Challenging and thought provoking sessions led
and alumni (including of course – by Michael Frater, Former Chief Exec of Nottingham City and David
entrepreneurs). During this meeting, Walker, Editor of the Guardian’s Public Magazine took place in June.
a vision was agreed: ‘To be the World
Leader in Entrepreneurship.’ To deliver The Institute of Governance & Public Management (IGPM) is
this, E-SIG will have many facets, organising a major Forum on the Future of the Public Sphere from
including incubating, networking, offering assistance with business 24–26 September, marking 20 years of work at Warwick on governance
plans and research, integration into Business School studies, running and management of the public and voluntary sectors, and beginning
events, eg guest speakers, ‘Dragon’s Den’ type, networking and lifelong to map and shape the new directions for the next 5 to 10 years. They
learning. plan to bring together a high level group of policymakers, managers
and academics from several countries.
With Business School competition ‘hotting up’ in entrepreneurship,
E-SIG is looking for funding and support to provide administration,
project management, web site development, and business planning. Telecoms
In June WBS Faculty member, Martin Cave, Director, Centre for
Do you own your own business? Management under Regulation presented on: Separation of Telecoms
Networks. Regulators in many EU countries and elsewhere are circling
Please email e firstname.lastname@example.org with information to incumbent fixed operators with a view to imposing some kind of
enable us to update your details separation on them. The European Commission has specifically
proposed a functional separation remedy from 2010. At least one
European operator is contemplating separating itself. The aim of the
Finance teleconference was to identify the roots of these separatist movements
We are pleased to report the success of a recent Employers’ Evening and to project the likely consequences.
which facilitated an information exchange between employers in the
Financial Sector and students completing our prestigious one-year Looking ahead, Sandeep Heer, Senior European Strategy Manager
MSc in Financial Mathematics at the University of Warwick. Further Orange/ France Telecom Group will be presenting on Developments
initiatives are planned for the autumn. and Trends in the European Mobile Telecoms Landscape during a
teleconference on 19 September.
Information Systems Management
Three more networking events are currently planned, with
For further information on being actively involved in running a SIG,
presentations from Professor Steve Sawyer, Pennsylvania State
becoming a member or setting up a new SIG, please contact Faith
University; Professor Lucy Suchman, Lancaster University, and
Plevin e email@example.com
Professor Kuldeep Kumar, Erasmus University. The topics will be
advertised shortly. Presentations will be followed by drinks to allow for
further discussion and networking.
Business Angels Women of Warwick
Over 40 people attended the first WBS Business Angels event in Women of Warwick was founded in 2006 by Dustie Houchin;
February. Introduced by Roger Mumby-Croft, WBS Professor of then a full-time MBA student. Having been through the trials and
Enterprise, the programme included presentations by business angels tribulations of the course, and watched others do the same, she
and entrepreneurs, in collaboration with the Minerva Business Angel decided a support mechanism amongst ladies of WBS would be a
Network. welcome addition and so ‘WoW’ was born.
‘This was a well organised event that provided real-life, not purely Today, WoW has moved on considerably and is now made up of 70
theoretical, information about the investment process in small members, with a nine strong Board; all working to make life as a
businesses. Presentations from the major players in the process – the WBS student/alumna and developing career woman more enjoyable.
investor, the lawyer and the accountant – provided valuable insight Through support structures and informal communications they hope
for any business owner looking for equity investment and for investors to provide the support and friendship required to make your career a
looking to invest. Two well delivered pitches from entrepreneurs also kept success.
any investors attentive.’
John Ryder, (DLMBA 1999–2007), Mirada Partnership Ltd. w www2.warwick.ac.uk/fac/soc/wbs/wow or
Over 30 people were signed up for the second event on 28 June as
we went to press. e firstname.lastname@example.org subject ‘Business Angels’ to
register your interest in receiving details of future events.
WBS has many active and India
Carol Rue, Director of Personal and Careers
committed volunteers overseas and
Development at WBS, visited India in April
is building its international alumni and met with WBS alumni. Carol’s visit
network. forms part of our plan to build and develop
our alumni networks in India, particularly in
The Alumni Board is undertaking Delhi, Mumbai and Bangalore.
a large-scale project to ensure that We hope to enhance this activity with an
it is connected and engaged with inaugural alumni conference in Delhi in
our overseas alumni volunteers, Spring 2009. More news to follow on this.
to see what kinds of activities they
will be keen to work on in future Nigeria Malaysia
and to look at ways to support their We are pleased to say that, on 22 February,
work. This will be supported by the the first Nigerian WBS alumni event was
Volunteer day on 27 September held at the Lagoon Hotel in Lagos. The event The Kuala Lumpur Business Network was
was hosted by WBS Associate Professor of launched on 5 June, facilitated by Ben
to which overseas volunteers are Plummer, Director of Development and
Marketing Temi Abimbola. Although the
invited. This will be an opportunity group was relatively small, it was a good start Alumni Relations. At this meeting alumni
for alumni to get together, share to what we hope will be the beginning of a discussed how they would like to drive ahead
ideas and resources and learn about WBS Alumni Chapter in Nigeria. alumni activity within the region and have
the work of other volunteers. Those decided to have business-focused events once
A further event will be held later in the year every other month.
not able to attend will be able to in conjunction with Warwick alumni in
join us via skype, teleconference Nigeria. Please contact Ann Jackson if you The next event will be on 6 August at The
and webcast. would like to be involved. Tasting Room, (65–1, 1st Floor [above Wine
Cellar], Jalan Bangkung, Bukit Banglobal)
If there is anyone outside of the UK E email@example.com with George Tee speaking on property
markets – an overview of trends and strategies
who would like to start or help to for investing in the sector. 7pm start.
run an alumni group they should
contact Alison Bond W www.wbs.ac.uk/alumni/forthcoming.cfm
The University has recently appointed SI-UK
as its new representative in Japan. They have
offices in Tokyo, and Osaka. Vicki Smith,
Senior Partner, visited the Business School
recently and is very keen to hear from WBS
Singapore alumni based in Japan who would be willing
to meet potential students at their offices to
talk to them about studying at Warwick. If
On 26 February, Bob Johnston, Professor you can spare a few minutes and would like to
of Operations Management at WBS, hosted get involved please contact Vicki on
a dinner for Singapore alumni. Professor e firstname.lastname@example.org
China Johnston was also joined by Andrew
Hardwick, Senior Teaching Fellow on
Executive Programmes at WBS and Ben
On 30 March, the first workshop of the Our grateful thanks go to our alumni who
Plummer, Director of Development and
Marketing, Innovation and Chinese Economy assisted at the recent MBA World Fairs in
(MICE) Network took place at the School London, Lisbon, Paris and Toronto, and the
of Economics, Tsinghua University, Beijing. Specialist Masters Fairs in Greece and Turkey.
On 9 June Ben Plummer and Mavis Ow,
The theme of the workshop was ‘Looking the University of Warwick’s Senior Liaison
backward and forward on Innovation in Manager in Singapore, hosted a business
China after 30 years of reform (1978–2008)’ event with Nicholas Mak, Director,
and was run in conjunction with the Consultancy & Research Dept, Knight Frank
Academy of Innovation and Entrepreneurship Pte Ltd speaking on property trends in
(AIE) annual conference. See P8 for more Singapore. A great evening was had by all.
details on the MICE network.
The next alumni event in Singapore is
w www2.warwick.ac.uk/fac/soc/wbs/research/ planned for October.
a mountain research published
conquered Mehdi Boussebaa (MAOS 2002–3)
emailed: ‘I am currently finishing
Mark Procter (FTMBA 1989–90) has off my PhD thesis at Warwick. For
just climbed Mount Everest – at over my MA dissertation, I conducted
8,800 metres, the highest mountain research into an Anglo-French
in the world. An experienced and multinational. Specifically, I
dedicated climber, Everest was the fifth investigated how differences between
of the seven highest summits on each British and French conceptions
continent for Mark. He travelled out to of management influenced the
Nepal in March to join his expedition multinational’s attempt to develop
leader and seven fellow climbers, a cross-national talent management
plus a support team of the legendary framework. The research was
Sherpas. Climbing by the South Coll published in the journal Critical
route, he successfully ‘summited’ Perspectives on International
at 6am local time on Friday 23 May, Business. My MA supervisor Glenn
returning to the UK in early June. Morgan is co-author.’
Although not a difficult mountain technically, this was without
doubt Mark’s toughest physical challenge to date. He confirms: ‘The new start
combination of extremely thin air at altitude, lack of sleep, extreme
cold and need to go up and down the mountain several times to Aihui Ong (DLMBA 2003–06)
alternately acclimatise and rest were exhausting. I teach personal emailed: ‘After completing my
effectiveness on several WBS programmes and was looking to test my MBA, I took a leap of faith to
theories with the ultimate team development experience. I now plan to make a career change and launch
write a paper combining the theory with the incredible experience of my own business. I am now
the expedition.’ the CEO of EdgiLabs.com – a
web consulting company that
advocates the use of technology
update from Cyprus to help businesses engage
and better serve their target
Stelios Saphiris (FTMBA 2002–03) customers, innovate and simplify
emailed: ‘After my MBA I worked at the their internal operations by
Royal Bank of Scotland in London for adopting a mix of custom built/
a year before deciding to come back open source solutions.’
to Cyprus. I then started a company w www.edgilabs.com
called KPSA with two friends that
provides audit, tax and consulting
services to Cyprus and international
companies which use Cyprus entities WBS entrepreneurs
to take advantage of the low tax rate.’
w www.kpsa.com.cy Andrew Davies (BSc Management
2003–06) and Edward Barrow
(BSc Management 2004–07)
new role for Anna met at WBS and teamed up to
found their own company –
Ofcom recently announced the idiomag. As Edward explains:
appointment of Anna Bradley ‘We met at a talk organised
(DLMBA 1990–94) as Chairman by the Entrepreneurs Society
of its independent Consumer (AddVenture) in May 2006.
Panel. The Panel advises Ofcom Andrew began working full-time
on the consumer interest in for idiomag as Co-Founder,
telecommunications, broadcasting Marketing and Business
and spectrum markets. Development Director when he
graduated. I worked part-time while I completed my final year and now
Anna was Consumer Affairs Director work full-time as Founder, Technical Director.
of the Financial Services Authority
(2002–5) having been Chief Executive ‘Andrew and I are the two full-time employees for Idio Ltd, however,
of the National Consumer Council the WBS triad is completed by my father David Barrow (BSc ManSci
(1999–2002). She is currently Non-Executive Chairman of the Soil 1975–78) who is idiomag’s Chairman and original Angel Investor.
Association’s Organic Standards Board, a member of the board of David was speaking at the Entrepreneurs Society event when we
Addaction, Britain’s largest drug and alcohol treatment agency and first met Andrew. It is nice to note that idio Ltd is effectively a two-
a consultant to Aegon UK, part of one of the world’s largest life generation WBS company!’
insurance and pension companies. w www.idiomag.com
royal presentation taking the chair
In the spring 2006 edition of Congratulations to Michail Zekkos (MSc
nexus, Otto C Frommelt (FTMBA Economics & Finance 1998–99) on
1993–94) Managing Director of being elected Chairman of the Hellenic
Volvo Austria GmbH and General Bankers Association – UK. Michail is
Manager of Volvo Trucks Austria, Investment Executive at Permira Advisers
stated: ‘One of my challenges is to LLP, based in London. His main area
improve the image in a transport of focus is investment opportunities in
sector renowned for its alpine the telecommunications, media and
beauty.’ Otto’s aim to do something technology (TMT) sector.
for society and the environment
generated the idea to present seven
alternatives of renewable energy to be used by Volvo Trucks, to His
Majesty Carl XVI Gustaf, King of Sweden, during his recent state visit
greetings from NY
to Austria. Okezie Aruoma (EMBA 1992–95)
recently relocated to New York to
‘Climate protection is one of the greatest challenges of the present. take up the position of Professor
CO2 neutral trucks are powered by fuels produced from renewable and Chair of one of the academic
raw materials, such as biomass. Since these materials do not add departments (Pharmaceutical and
carbon dioxide to the ecosystem, they have no impact on our climate,’ Biomedical Sciences) at the Touro
explained Otto, during the King’s presentation on Heldenplatz. College of Pharmacy, based in
Congratulations to Manny
Coulon (FTMBA 1998–99) whose
company came third in the Best
Kids Website category of the BT energetic COO
Online Excellence Awards. The
BBC’s CBeebies and Disney came Ian Peters (FTMBA 1988–90) was recently
first and second respectively. appointed Chief Operating Officer of
w www.ideasforthekids.co.uk British Gas Energy to oversee the product
development, pricing, metering, billing,
operations, debt, sales and IS functions.
sweet success He joined Centrica, the British Gas
parent Company, in March 2002 from
James McMaster (BSc ManSci Marsh Inc where he had been European
2001–04) is Head of Operations at Marketing Director. Prior to that he spent
Gü Puds. He tells us, ‘I am lucky many years at NatWest. Since joining
enough to work for indulgent dessert Centrica he led the turnaround and sale
brand Gü Puds, winner of ‘The 3i of Goldfish Bank, drove the acquisition of
Growth Strategy of the Year Award’ at Dyno-Rod and was Managing Director of
the 2007 National Business Awards British Gas Business in 2005–6.
and included in The Times Fast 100
2007. I joined Gü a year ago from
LEK Strategy Consultants. Food and
drink is a great industry to be in. A
green design down under
wonderful mix of selling, marketing, Linda Pearce (FTMBA 1998–99) emailed: ‘After completing the full-
operations, analysis and generally time MBA, I then completed an architecture degree at the University
dealing with economic ups and of Adelaide, Australia (my home town). I recently won a travelling
downs – a great learning curve.’ scholarship from the University of Adelaide architecture department.
My proposal is to go to Europe and talk to people about matching
buildings to educational and workplace needs for the next 20 years. If
any alumni would like to commence a dialogue about sustainability/
sustainable architecture/ buildings as brands/workplaces/ educational
facilities, I would be interested in hearing from them.’
a good month
April 2008 was a good month for Professor Bob McGee (PhD appointments
1982–86) Director of the Center for Accounting, Auditing and
Tax Studies at Florida International University, USA. He won two
Chris Bowers (FTMBA 1990–1991)
research awards, published three articles and five conference joined Applied Materials as Chief of
papers and had three articles and one book chapter accepted Staff, based in California.
for publication. He was also appointed to two editorial review
boards and collected and sent a ton of books to Rwanda. His 51st Malcolm Duff (DLMBA 1988–94)
book, Taxation and Public Finance in Transition and Developing appointed General Manager,
Economies, was published in May (see P27). Southern, of the New Zealand
Historic Places Trust, based in
Joe Gomez (DLMBA 1997–2000)
Gerry Baker (EXMBA 2003–06) is skipper of a crew of WBS alumni
appointed Director of Efficiency
taking part in the Business Schools Annual Regatta (BSAR) in
Technologies Australia Pty Ltd
September this year. The event attracts crews from business schools
in the UK and Europe, and racing takes place on the Solent, using
a chartered fleet of 37ft yachts. If you are interested in taking part
email Gerry at E email@example.com WBS advisory board member Russ
Houlden (BSc ManSci 1977–80)
takes over as CFO of Telecom New
making the news Zealand, based in Auckland.
Teck Koon Lim (DLMBA 1999–2007) was interviewed on Taiwan Jonathan Hollands (DLMBA
news channels – GTV and TTV, in December 2007. Teck Koon is 2001–07) joins the University
a business unit director at Merck Sharp and Dohme, Taiwan – a of Nottingham as Director
branch of US pharmaceutical company, Merck & Co. Inc. He is a of Operations and Business
Singaporean working in Taiwan. The interview was part of the media Administration in the School of
coverage on a corporate social responsibility project he led, involving Biomedicine.
donating doses of cervical cancer vaccine and collaborating with
medical professionals to vaccinate girls under the care of the Garden John Hynes (EMBA 1994–97)
of Hope Foundation – a non-government, non-profit organisation
became Chief Operating Officer for
established to help disadvantaged girls and young women in Taiwan.
Europe at Symmetry Medical Inc
first lady Lee McCabe (DLMBA 2003–07)
appointed Director of Market
A Financial Times article entitled First lady at Queen’s bank, profiled Management for the Oceania region
Sarah Deaves (FTMBA 1991–93) the first female chief executive of Expedia Inc, based in Sydney.
of 300 year old Coutts. Described as a power player who has been
quietly reinventing the Queen’s bank, she has been behind efforts Scott McLeod (DLMBA 1989–99)
to modernise the bank while maintaining its core brand values. appointed Director of Sales, Caplin
Sarah was keynote speaker at the recent Women of the Future Systems
summit, where she spoke about costs for companies offering
flexibility and family friendliness and noted the greater number of Michelle Paganoti Sartorio (FTMBA
women in leadership roles at start-ups. 1999–2000) is now Marketing,
Communications and Investor
Relations Manager for Brascan
Sharon’s sacrifice Brazil, based in Rio de Janeiro.
Sharon Bolton (FTMBA 1990–91) has published her first
work of fiction, Sacrifice, a modern-day thriller inspired by Matt Selbie (FTMBA 1988–89) joins
Shetland folklore (see P27). Tulsa-based online multifactor
picture: John Coutts, Lerwick
authentication provider, Vidoop, as
After graduating from WBS, Sharon worked in marketing Vice President of Marketing.
for a number of years in the City of London and believes
the business skills she gained at Warwick have been Remi Thomas (FTMBA 1990–91)
instrumental in the book’s success. ‘Writing a novel is like joins Alcatel-Lucent as Vice
launching any new business,’ she says. ‘You need to tailor President, Investor Relations.
your product to the expectations of your future customers,
keep aware of changing trends and be the first to see a gap in
the market.’ Sharon is now working on her second book.
hot off the press
Taxation and Public Sacrifice is Sharon Three decades of
Finance in Transition Bolton’s (MBA Enterprise Culture:
and Developing 1991–92) first novel, Entrepreneurship,
Economies is Professor published by Bantam Regeneration and Public
Robert W McGee’s Press. Set on the Policy by Dr Francis
(PhD 1982–86) 51st remote Shetland Greene, Dr Kevin
book, published by Islands, this modern- Mole & Professor
Springer. The third day thriller inspired by David Storey, CSME.
in a series, it includes Shetland folklore has Published by Palgrave
general studies on a sinister plot, a race Macmillan, this book
various aspects of against time and plenty uses research data
tax compliance, of forensic detail. from interviews with
corruption, budget efficiency and fiscal W www.sjbolton.com more than 900 new entrepreneurs.
policy. W tinyurl.com/53eoxz
The Advanced Service Operations
Marketing Strategy Dictionary of Marketing: Management, 3rd
and Competitive Putting Theory to Use edition, co-authored
Positioning, 4th by Dr Scott Dacko, by Professor Bob
edition, co-authored MSM, published by Johnston, OM,
by Professor Nigel Oxford University published by Pearson.
Piercy, MSM, published Press. Includes all Includes international
by FT Prentice Hall. major and emerging examples from
Chapters on strategic marketing approaches, different types of
customer management; from cause-related and organisations, such as
alignment with key experiential, to mega- the internet, public and
customer groups marketing and word-of- voluntary sectors, mass transport services,
and corporate social responsibility as mouth; with concepts professional services, retailers, internet
a component of strategy development. such as adverse selection and telescoping. services, tourism and hospitality.
W tinyurl.com/3e9ody W tinyurl.com/5ddtgk W tinyurl.com/6xad9q
Strategy and Human Knowledge Processes in Outsourcing Global
Resource Management, Globally Distributed Services: Knowledge,
2nd edition, co- Contexts co-authored Innovation and Social
authored by Professor by Dr Julia Kotlarsky, Capital co-authored
John Purcell, IRRU, ISM, published by by Dr Julia Kotlarsky,
published by Palgrave. Palgrave Macmillan. ISM, published by
This book expands the This book seeks to Palgrave Macmillan.
discussion of goals in address one particular In-depth insights into
HRM, builds a new challenge, namely, practices that lead to
typology of HR systems the management of success in outsourcing
and examines HRM in knowledge processes global services.
services and the public of global knowledge Best practices on IT
sector. workers. outsourcing, business process outsourcing
W tinyurl.com/47obhy W tinyurl.com/42ssmc and netsourcing.
Marketing Planning: A Align IT: Business
Workbook for Marketing impact through IT, by Operations Strategy,
Managers co-authored Richard Wyatt-Haines 2nd edition, co-
by Dr Lyndon Simkin, (DLMBA 1995–98) authored by Professor
MSM, published published by John Nigel Slack, OM,
by South-Western, Wiley & Sons. Aims to published by Pearson.
London. The marketing bring IT’s relationship This edition builds
planning process: from with business to on concepts from
the core analyses, into life, enabling you to Strategic Management,
the development of implement strategy Operations
strategies, and finally rather than develop it. Management,
to the marketing programmes required to W tinyurl.com/5hd6f8 Marketing and HRM to
implement these strategies. give students a comprehensive understanding
W www.cengage.co.uk/dibb of Operations Strategy.