What is news? More precisely, when is news? Lately, the division has become starker between news that reports the details of past events, and "news" that is a forecast, a best guess, of the outcome of past events, or even of future events.

For some time, I have found fiction of increasingly little interest why should I care about made-up people, when real people have far more interesting lives and are, to boot, real? Much of what passes for "news" I find similarly uncompelling, because it is mere speculation. Worse by far, though, is the "news" that is speculation about speculation.

An example: A hurricane threatens--let's call it Cassandra. The TV news anchor, who has flown into the town most likely to be destroyed cuts to a guy in a sports coat with a computer screen. He is an "expert" on such matters, who confirms that when the storm hits in a couple of days, an apocalypse will ensue, with insured losses that will cause the collapse of insurance and reinsurance companies and disrupt shipping for generations.

When Cassandra takes a slight turn and misses the populated areas altogether, there's nary a change in anyone's routine.

HURRICANE KATRINA

As Hurricane Katrina approached New Orleans late in August, the catastrophe modeling agencies fell over each other to forecast the estimated cost of insured losses from a storm that had not yet hit anything. On Friday, Aug. 26, three days before Katrina made its second landfall, RMS forecast insured losses at $1 to $2 billion. AIR Worldwide's estimate that day was a maximum of $600 million. Guess who made the evening "news"?

On Sunday afternoon, RMS upped the ante: "greater than" and possibly "far more devastating than" $9 billion. Monday morning, as the storm hit, EQECAT forecast losses for U.S. insurers from Hurricane Katrina of $30 billion.

By Monday evening, Aug. 29, after the worst of things, estimates were "between $10 billion and $25 billion." The hurricane, in other words, followed a more or less predictable line, while the financial forecasts were all over the map.

What public service was fulfilled by these estimates? And why were they so wildly inaccurate? The only answer to the latter question is a losing proposition: hurricanes are erratic, and impossible to forecast with any accuracy, right up to and after the event. That being the ease, why issue speculative reports containing more hot air than the hurricane itself?

The agencies' forecasts were picked up by news organizations and parlayed into dire predictions of the washing-away of the city of New Orleans by a 28-foot tidal wave. RM8 provided a statistic: New Orleans had $40 billion of insured values, and the surrounding parishes some $110 billion.

The modeling agencies shouted "Fire!" in a crowded media room. The agencies have been very kind to me in terms of access in the past, but really, they must desist from this sort of behavior. The fact is that we really won't know the true losses for weeks, maybe months.

To all the instant experts, prognosticators, seers, pundits and other purveyors of opinion who masquerade as news analysts by forecasting, I would paraphrase Bambi's mother: "If you don't have anything factual to say, don't say anything at all."

BLOWN AWAY: On September 11,1992, the small Hawaiian island of Kauai trembled under the vicious winds of Hurricane Iniki. As a result of the storm, Kauanui lost both her home and the movie production company she co-owned, and was forced to flee to Los Angeles with her three sons. A loan and a job as a modeling scout put her back on her feet. But when Kauanui attended a fashion show and caught a glimpse of the fate that awaited the models she recruited, she knew something had to change. "I saw the girls backstage--they were so emaciated, they were like skeletons," she says. "I said, 'This is so wrong. I am sending girls out there to get skinny and have eating disorders.'"

A NATURAL GLOW: This stark realization was just what Kauanui needed to start Jet Set Management and promote a whole new type of surfer model. She hit the water in search of girls who loved to surf and had a natural, healthy and beautiful look. The response was favorable--Jet Set models were instantly booked for Abercrombie & Fitch as well as Ralph Lauren. They even became the first models for trendy junior-clothing line Roxy.

Although we agree with several of the cautions made in the Autumn 2004 Parameters article by George Reed, Craig Bullis, Ruth Collins, and Christopher Paparone, "Mapping the Route of Leadership Education: Caution Ahead," a moratorium on competency modeling seems unwarranted. Core competencies can help align parts of an organization to a central purpose. In contemporary operations, organizational core competencies can help leaders prioritize decisions and focus on enduring goals.

The five military services all use competency models. Within the US Army, competencies are an established part of doctrine. The Army operates with two core competencies, as outlined in its 2004 Posture Statement. Field Manuals (FM) 7-0 and 7-1 require competency-based leader development. Competency models have been developed by various agencies, including the Army War College, and recent work by the US Army Research Institute has led to a new set being considered for an update to FM 22-100.

Some studies report that up to 80 percent of businesses use competency modeling (see Schippmann et al., 2000, for a review of competency modeling practices). The federal government uses competencies, and in just one application the Office of Personnel Management has claimed a savings of $10 million over traditional approaches to personnel management and development (Rodriguez et al., 2002).

Putting aside for a moment the notion of competency, the expectations of Army leaders must somehow be identified--no matter what label is used for the requirements. Every Army educational institution has some mechanism in place to specify learning objectives and course content. The top complaints from soldiers and leaders have been the duplication in lessons across Army courses and schools, and the material coming later than it was needed to prepare them for their jobs (US Army Combined Arms Center, 2001, 2002a, 2002b, 2003). Having a coordinated set of requirements seems central to improving Army education.

The authors indicated that a detailed competency model could result in education that is contrary to what is needed, but competency models attempt to avoid overspecification. A primary advantage of competency modeling over traditional job analysis is that competency models state requirements in terms of the person rather than the job. Thus, the focus is placed squarely on developing people, which is important for an organization in which all senior leaders are promoted from within. Competencies should not constrain education, but help to clarify desired educational outcomes and other means of development.

The examples (e.g., adaptability, creativity, public speaking) noted in Reed et al. are commonly construed elsewhere to be competencies. Reed et al. stated that these activities need not be identified in a competencies list because the set should be subject to continual change. However, competency models can and should be verified and revised through actual use, regular assessment, and refinements applied to leader development. Even if requirements like adaptability, creativity, and communication are not listed in a competency framework, there still would be some source for instructional content. Additionally, the authors' proposed model of curriculum development is not all that different from competency modeling.

As Reed et al. noted, a good teacher can overcome a poor curriculum. Thus, good teachers will not be constrained by competency lists. For instructors who are less experienced, however, scientifically validated competency models can help provide structure, guidance, and tools for teaching. Starting from a common competency model can elevate instructional quality by helping teachers to develop a consistent approach. Incorporating validated concepts and evidence into instruction should help convey a complete picture of what is required of Army leaders. Instructors operating in good faith can be expected to use educational requirements to improve teaching, not restrict it. In addition to educational benefits, competencies have a wide variety of other uses, such as coordinating leader development across ranks. Competencies also offer benefits for leader assessment, assignment management, and organizational communication.

As scientists we understand that there are valid perspectives other than competencies that can contribute to the identification of leadership requirements. However, one advantage of a scientific approach is that methods and results are documented and can be verified or disconfirmed. It is not clear what alternative method Reed et al. have in mind for identifying leadership requirements. Without some form of a competency list or some type of specification of the performance domain, it is unclear how the authors are suggesting that leadership will be observed in operational circumstances and developed.

Global attempts to limit greenhouse gas (GHG) emissions may impact on agricultural trade and producer returns, particularly in countries such as New Zealand, where a relatively large proportion of GHG emissions originate from the agricultural sector. This study uses an extended partial equilibrium agricultural trade model to analyze the effects of trade policy liberalization on agricultural production and trade, as well as on GHG emissions. Further analysis combines trade liberalization with GHG mitigation policy in the New Zealand and European dairy sectors, and the effects on producer returns and GHG emissions are predicted. As expected, full trade liberalization in the OECD (Organization for Economic Cooperation and Development) countries enhances producer returns in New Zealand's dairy sector, but reduces returns in the European Union's dairy sector.

Key Words: partial equilibrium trade model, agricultural production system, greenhouse gas emissions

The link between trade and the environment has aroused considerable interest, both in terms of the impact of trade liberalization on the environment, and also the impact of environmental policy on production and trade. This interest is expressed at the global level, especially in the World Trade Organization (WTO) round of negotiations, but also at the micro level, where local governments and agencies are concerned about the impacts of policies on production and trade, as well as on the local environment. This paper analyzes the effects of trade liberalization on greenhouse gas (GHG) emissions from agriculture, as climate change is an increasingly important environmental concern. An extension of this analysis will simulate the combined impact of trade liberalization and a GIIG mitigation policy. This second part of the analysis will focus particularly on the impact on New Zealand, a country highly reliant on agricultural trade and which has a high percentage of its total GHG emissions originating in the agricultural sector.

The analysis in this paper simulates the removal of all European and OECD (Organization for Economic Cooperation and Development) export subsidies, import tariffs, and internal dairy quotas, focusing specifically on the impact of this on the dairy sector. Trade policy reform, such as liberalization, will significantly reduce the system of support for livestock production. Studies that analyze trade policy such as the Uruguay Round Agricultural Agreement or the CAP (Common Agricultural Policy) reform generally show that production in countries whose support is removed decreases, while other countries' production may increase (Cox et al. 1999, Shaw and Love 2001, Rae and Strutt 2001). International trade offers an important vehicle for adapting to climate change. By permitting the geographic relocation of world food supplies according to changing comparative advantage, spatial diversification of the climatic risk associated with global warming may be achieved (Randhir and Hertel 2000). By facilitating the transfer of output from regions with possible environmentally harmful production to regions where production may be less environmentally damaging, international trade can play a valuable role in mitigating the global cost of climate change. However, the potential for trade to play this buffering role is often hampered by restrictive trade policies. Furthermore, as stated by the Intergovernmental Panel on Climate Change (IPCC) (2001), there is a need to identify the extent to which the impacts of climate change mitigation policies create or exacerbate inequities across nations and regions. Changes to trade policies of trading partners and/or competitors, in particular the European Union (ELJ) and the United States, are likely to have significant effects on the GHG emissions from New Zealand agriculture. Following possible and likely liberalization of international agricultural trade policies, New Zealand producers are likely to respond by increasing production to target the newly liberalized markets, further increasing emissions from New Zealand.

Periodically, the commissioner of the Rehabilitation Services Administration (RSA) disseminates memoranda to the RSA Senior Management Team to provide information and guidance on the implementation of priority initiatives or strategies. Last fall, Joanne Wilson, RSA commissioner, distributed the following Commissioner's Memorandum (CM 04-01) regarding the importance of consumer organizations as valuable resources for vocational rehabilitation (VR) agencies. The memorandum clearly articulates the potential role of consumers in empowering persons with disabilities and the agencies that serve them.

Consumer organizations, whose membership and officers are comprised of a majority of individuals with disabilities, are an invaluable resource for State vocational rehabilitation (VR) agencies. These organizations provide a network of individuals whose knowledge and experiences can significantly supplement the efforts of a VR agency in meeting its mission and in empowering persons with disabilities to achieve their employment and independent living goals. Consumer organizations can provide experience-based information, technical assistance, access to role models and mentors, disability-specific training, job matching, advocacy on behalf of persons with disabilities and the needs of the public VR program, and a variety of other services that VR agencies would find useful in working with persons with disabilities. Whether representing individuals with mental illness, cognitive disabilities, physical disabilities, or individuals from a combination of these groups, consumer organizations specialize in empowering individuals with disabilities to achieve independence and self-sufficiency.

The Rehabilitation Services Administration (RSA) is committed to leveraging the contributions of community organizations comprised of individuals with disabilities. To this end, RSA is developing initiatives to draw upon the contributions of consumer organizations by making their services a more integral resource to the VR program. These initiatives are designed to enhance the effectiveness of the VR system with the practical expertise and knowledge of persons with disabilities who have successfully overcome barriers in achieving their goals. For example, RSA is funding a mentoring initiative in which students with disabilities will be connected with mentors with disabilities, who possess the practical knowledge and personal experiences requisite to help the students effectively transition to adulthood. These mentors can offer transition-age youth information, support, and hope derived from first-hand and personal experiences that enable them to serve as real-life examples of what people with disabilities can achieve.

This Commissioner's Memorandum (CM) more fully describes both this mentoring initiative and other available opportunities for State VR agencies to utilize the unique contributions that consumer organizations can make throughout the VR process ranging from direct interaction with VR participants to meaningful impact upon systemic issues, such as statewide planning and policy development. RSA considers the development of strong working relationships between State VR agencies and grass-roots consumer organizations to be pivotal in ensuring that agency efforts are effective in meeting the needs of the various disability populations the agencies are serving and the realization of successful outcomes.

MENTORING

The expectations and beliefs that individuals with disabilities have about their own abilities, potential, and competence inevitably influence their choices throughout the VR process. All too frequently, individuals create self-imposed limits based on poor role modeling, lack of disability-specific information, and negative misconceptions about their disability. Ultimately, these self-imposed limits negatively affect their employment outcomes and quality of life. Connecting individuals being served by the VR program with mentors who have disabilities, who possess practical knowledge and firsthand experience, and who have achieved high-quality employment and independence through their participation in the VR process will help guide VR participants to make positive choices regarding their programs and their lives.

Furthermore, while all students encounter difficulties during their school years, many of the challenges encountered by students with disabilities are wholly unique. Students with disabilities often are unable to find summer and part-time employment, struggle with social acceptance and negative stereotypes about their disabilities, are not encouraged or fail to participate in extracurricular activities, and are not always taught the disability-specific skills and techniques they need to succeed at school and life. As a result, dropout rates among students with disabilities are significantly higher than those of the non-disabled population, and their college enrollment is approximately five times less than the general public's. The lack of opportunity to gain the experience and confidence through job training and summer employment combined with low expectations and minimal social skills or disability-specific techniques leave them ill-prepared to enter the workforce.

Reliable loss prediction requires both robust estimation methods and accurate data. This article presents a way to leverage ratings agency data that can provide greater flexibility and stability of results in simulation-based estimates of future portfolio losses.

Based on a simple behavioral model that quantifies the structural relationships in historical default frequencies and transition rates for different ratings, (1) this technique leads analysts to hypothetical transition matrices for portfolio loss simulations that preserve the basic relationships observed in the historical transition and default rates reported by the ratings agencies, allowing for unlimited sampling. The matrices can also be linked to macroeconomic factors to mimic the dynamics of credit cycles and economic shocks, allowing for richer descriptions of plausible future scenarios and what-if scenario analysis that goes beyond the limitations of historical data.

The Basel II capital adequacy framework provides strong incentive for financial institutions to use internal risk management systems to measure risk and determine sufficient regulatory and economic risk capital. While commercial risk measurement tools can be used as part of an overall solution, institutions must tailor them to their own portfolio specifications. Further, some of the development and implementation of the new systems will fall to their own risk management teams.

In many cases, whether they use commercial models or internal methodologies, analysts continue to rely on data from the major ratings agencies for default rates, ratings migration rates, and other key statistics. Despite recurring and somewhat troubling issues regarding the meaning and consistency of ratings, regulators tend to be more accepting of methodologies based on agency data because of the agencies' long and well-documented ratings histories. This data may indeed be deeper and may conform better to an accepted standard than banks' own internal ratings histories, yet the depth of agency data generally falls short of what's needed for the Monte Carlo-based economic risk capital estimation techniques in widespread use today.

The Shortcomings

The simplest portfolio loss model assumes that ratings transition probabilities are stable across obligor types and across the business cycle, and that a single set of average historical ratings transition and default rates is all that's needed to characterize potential future losses. However, there is ample evidence that credit migration and the ratings process depend on a number of factors, such as the state of the economy-for example, the probability of downgrades and defaults is greater in a downturn than in an upturn. Moreover, historical data is volatile; thus, the average-rate approach will understate potential tail loss--the very thing we want to measure with precision. A slightly more sophisticated alternative is to use observed annual historical-rating transition rates as a sample from which to draw plausible future credit migration scenarios to simulate the forward loss distribution. The main drawback of this method is the small number of historical-rating scenarios on which to draw. Accurate Monte Carlo simulations for large portfolios usually require tens--or even up to hundreds of thousands--of random draws. However, because historical scenarios number only in the tens, the simulated loss distribution will tend to be lumpy as tail losses bunch up around the worst year from the historical period. Clearly, this problem cannot be overcome by increasing the number of Monte Carlo simulations.

A Behavioral Model of Risk Perception

A different approach is to directly model the relationship between transition probabilities and macroeconomic factors and then simulate plausible ratings migration patterns over time by generating various macroeconomic conditions. To do this, we need a behavioral model of how risk ratings are assigned. Let's begin with the observation that ratings are opinions of credit quality, representing different degrees of belief in the credit quality of the firm. Agency statistics, such as default and transition frequencies, are merely by-products of this rating assignment process, rather than properties inherent to the ratings themselves2 Analysts' judgments, meanwhile, are based on a combination of qualitative and quantitative comparisons of the credit risk they perceive. Even if specifically attempting to arrive at a default-probability calculation, the analyst cannot be sure of the precise relationship between the risk factors affecting the obligor and his or her own mental model of risk perception, which may lead to errors in risk assessment. Thus, even with complete and perfect information on the obligor's risk exposure, the analyst would still face "model risk" because of judgment. Any qualitative comparison between two risk exposures is clearly probabilistic in nature since it relates to uncertain events. Unfortunately, analysts' perceptions of the probability of default, expected losses, and future ratings revisions are not publicly available and therefore cannot be tested. However, we can construct a behavioral model for the average perceived risk that can be calibrated with historical default and transition rates associated with a given risk perception (rating at a given point in time) assuming that the ratings are unbiased estimates of the average (ex-ante) analyst's perception of the risk criterion.

The Nation's roadways have become so overloaded with traffic that they can have an adverse affect on the quality of life for many Americans. According to the Texas Transportation Institute's 2004 Urban Mobility Report, the annual delay per rush hour traveler has grown from 16 hours to 46 hours since 1982, and the annual financial cost of traffic congestion has ballooned to more than $63 billion (expressed in 2002 dollars). Congestion on urban freeways and arterials continues to increase at an alarming rate, the report says, increasing the potential for crashes and long delays, releasing harmful air pollutant emissions, and increasing operating costs.

In past decades, numerous models were developed to simulate traffic flow, evaluate operations and road safety, and optimize control systems. "The tools have become much more useable through better software development in the last 5 years," says John Hourdakis, a research fellow at the University of Minnesota, "and we now have data being collected and archived in new intelligent transportation system applications for analysis."

Despite the widespread use of traffic simulation software, however, opinions on how and which simulation procedures should be used vary among practitioners, making it difficult to replicate and share results. In December 2001, FHWA organized a team of engineers to evaluate many of these new software programs and provide guidance on how to use them effectively. The fruits of their labors culminated in a multivolume Traffic Analysis Toolbox. With the first three volumes already available online, and the remaining volumes due in early 2005, FHWA is providing the leadership and training to help traffic managers use these tools and concepts to improve the Nation's highway system.

THE 15 largest talent agencies employ more than 850 agents in L.A. County, up 10 percent from the previous year.

Consolidation continued in the industry as the largest talent agencies positioned themselves for growth in order to survive in the similarly consolidating entertainment industry.

No. 3 International Creative Management Inc. acquired the Broder Webb Chervin Silbermann Agency, No. 10 last year, in July. BWCS was a literary agency that represented many actors and producers on primetime serial television shows including "Grey's Anatomy" and "My Name is Earl." With roots tracing back to 1978, BWCS had 27 agents who all joined ICM.

In addition to organic growth, agencies have looked to expand by signing non-traditional clients, including corporations, athletes and new media companies such as Web sites.

The city of Beverly Hills, longtime home to many of the largest talent agencies, will see two firms depart for Century City in 2007. CAA plans to move into an 180,000-square-foot office in the 2000 Avenue of the Stars building, while ICM is moving into a 125,000-square-foot facility in the MGM building.

Decision Support for Strategic Planning of Corporate Real Estate

WHAT WOULD HAPPEN IF A CORPORATE REAL ESTATE department could investigate the impact of regional location, facility ownership and workplace utilization using a single analytical tool?

What would happen if a Corporate Real Estate department could predict the capital budget of a manufacturing company based just on the concept of a new product slated for production 3-4 years from now?

Who would listen to their findings? The Director of Corporate Real Estate? The CFO? The Heads of Manufacturing or R&D? The CEO?

These questions are among those being contemplated as a new generation of computerized models are being developed for the purpose of strategic planning of corporate real estate. The benefits of such models extend far beyond real estate analysis. In fact, the utility of such models may provide a new central role for corporate real estate departments and, as a by-product, yet another justification for centralized control of real estate in large multi-divisional corporations.

As analysts have become more skilled in the use of relational database and spreadsheet programs, and as computer capacity and speed constraints have diminished, new approaches to real estate analysis are being adopted to provide timely support for an ever wider spectrum of corporate executives. In contrast to traditional applications of financial modeling in corporate real estate, these emerging approaches purposely emphasize business needs (or the demand side) of corporate real estate, not just the financial feasibility of alternative supply-side solutions. Rather than simply assuming corporate demand as a given, these models attempt to derive facility demand as a function of primary business strategies.

This article presents a case study that was developed as an instructional case for teaching systems analysis and database design. Students are required to utilize their data modeling skills to design an appropriate data structure for the Writers Guild of America, East (WGAE). The core application in the case is an accounts receivable system, but with several unique features that necessitate creative thought by the student analysts. The case has been used successfully as both group and individual projects. Student feedback indicates that the WGAE Case is realistic, engaging and challenging without being excessively complex. Teaching notes and a suggested solution consisting of an entity-relationship diagram (ERD) and the associated list of entities and attributes are available through the JISE web site.