Congratulations to the 2021 finalists
The first prize for the 2021 Risk Prize was awarded to Sheryn Gillen at the Cambridge Risk Summit on 23 June 2021.
First place finalist
Sheryn Gillin, MSt in Construction Engineering candidate, University of Cambridge
Cybersecurity Risk to Healthcare from Building Services
Focussing on the theft of electronic health records and vulnerability of clinical devices overlooks the risks from the building services that maintain the environment within a healthcare facility.
Operating theatres, laboratories, pharmacies, sterile stores and imaging equipment have stringent humidity requirements to minimise the risk to patients. To achieve these optimal conditions, chilled water must function within set tolerances. Any divergence will significantly impact a hospital due to cancelled surgeries or diagnostic procedures, an MRI quench or disposal of sterile products.
To minimise the disruption a cyber-attack targeting the chilled water systems could cause, several recommendations, regarding contracts, procurement, design, assurance and documentation are proposed. Addressing these areas at the earliest opportunity is crucial because it is cheaper to design in, rather than bolt on a cybersecure architecture.
Honourable mentions
Om Kanabar, MPhil Finance candidate, University of Cambridge
Risk Management for Private Equity Investors – a VaR Approach
Value at Risk in private equity funds can be estimated using stochastic cash flow models, as first done by Buchner (2014). This paper uses additional model parameters to account for fees and return skews, following a stochastic model. Fees are given a similar structure to call options and are allowed to vary with portfolio performance. Return skews are generated through a Poisson jump parameter, which provides a nonstandard representation of fund dynamics. It shows that VaR approximately doubles when fees are introduced and dynamics change significantly when accounting for skews in private equity returns. This result was robust at all VaR confidence levels. In the latter sections, the paper presents additional calibration methods and potential improvements to the model.
Tate Lavitt, MBA Candidate, Judge Business School, University of Cambridge
Green Project Bonds for the developing world, reducing risk with Carbon Credits
We are at risk of not meeting our multi-lateral governance goals, eg The Paris Agreement, to abate climate change. While this question will require a multi-faceted response, the widespread adoption of a simple financial instrument may prove useful. It is clear that infrastructure needs to be improved. The standard avenue for funding these types of projects would include governments issuing debt in the form of treasury bonds. While green finance is a growing area with billions more being invested each year, Tate believes this idea is incomplete. At present, investors are often incentivised with tax credits to invest in green projects. Unless there is a mass creation of green bonds, we will not be able to meet our Sustainable Development Goals. Tate proposes a structured bond linked specifically to initiative targets, issued and backed by governments. They will lower risk to the investor and the country issuing them. These benefits to investors could galvanise the carbon credit market. They would also prove an easy to adopt tool for the governments of the world to achieve their SDGs.
