A comparison of models for strategic planning,risk analysis and risk management

Summary Risks, uncertainties in firms and their environment are increasingly dealt with strategic planning, risk analysis and risk management. The present state of strategic planning enables us to consider the greatest part of internal and environmental risks mainly qualitatively - due to the fact that the majority of planning models used are of a deterministic type.The application of CAPM in strategic planning could take risks into account explicitly and maximize the expected value of the firms' common stock. Linked to a corporate simulation model or a DSS it could generate a series of values for the expected rate of return, its standard deviations as well as other output variables important for the management. The difficulties of the use of CAPM are numerous but an attempt to optimize the value of the firm would be a big step in developing new powerful instruments for evaluating the economic consequences of alternative strategies. The problems of CAPM lead to the considerations of the application of stochastic programming in strategic planning. For special cases solution methods can be developed and applied. The implementation of the Decision Support System in strategic planning could help to find the best decision in an interactive way - as suggested in this paper for the case of strategic marketing planning. DSS renders the consideration of other factors relevant to strategic decisions possible; businesses need not be reduced to portfolio terms. The limitations of CAPM, stochastic programming and the difficulties of the implementations of DSS for strategic planning could be partially avoided through the concept of Risk Management. On this concept strategic planning represents only one instrument of Risk Management and is a powerful tool of risk identification. In this paper the other instruments have been shortly demonstrated for the cases of product reliability and risks in relation with foreign countries. The development of new instruments for special cases (e.g., siting problems, specific strategic decisions, etc.), the considerations of risk behavior in individual, group and inter-organizational or even international decision making are now the main topics in the urgent task of research in risk management.     

The Road Not Taken? Changes in Welfare Entry During the 1990s*

Objective. This article examines how welfare entry rates changed during the 1990s, and also assesses whether changes in entry rates are accompanied by improvements in the circumstances of families that choose not to receive welfare. Methods. This analysis uses data from the 1990 and 1996 panels of the Survey of Income and Program Participation to identify three cohorts of low‐income single mothers who are potentially eligible for welfare but are not receiving benefits. Multivariate (competing risk) regression models and decomposition techniques are used to identify the factors responsible for changes in welfare entry patterns over the 1990s. Results. We find that welfare entry rates declined during the 1990s with the largest declines coming toward the end of the decade. Neither changes in the characteristics of low‐income single mothers nor improvements in the economy directly account for this shift. Rather, the introduction of new policies like time limits, full‐family sanctions, and family caps under welfare reform, along with unmeasured factors such as changes in attitudes toward work and welfare, account for the drop in welfare entry rates. The analysis also shows that declining entry rates are not accompanied by substantial improvements in the circumstances of low‐income single mothers who are not on welfare. Conclusions. Welfare reform policies adopted during the 1990s reduced entry into welfare, but single mothers who stayed off welfare remained in precarious economic circumstances.     

Can We Promote Child Well‐Being by Promoting Marriage?

This article uses data from the National Longitudinal Survey of Youth 1979 Cohort Mother‐Child files to explore the idea that child well‐being can be improved by encouraging and enhancing parental marriage. I consider how children’s living arrangements, the stability of parental marriages, and changes in living arrangements are related to children’s behavior and cognitive test scores. Although there is some evidence that children living with their married parents, even parents in unstable marriages, have better outcomes than children living in certain nonmarital arrangements, the findings vary across domains and specifications, and the effect sizes are generally small. Thus, any benefits of policies aimed improving child well‐being by encouraging and enhancing parental marriage are likely to be modest at best.