Country and their Capital

Management and Globalization Global Management Why companies go global How companies for global Global Business environments Global Business Types of global business Pros and cons of global businesses Ethnic Challenges for global business Culture and Global Diversity Cultural intelligence Silent language of culture Tight and loose cultures Values and national cultures Global Management Learning Are management theories universal? Intercultural competencies Global learning goals Key concepts of the challenges of globalisation: Global economy Resources, markets and competition are worldwide in scope Internationalisation The process of increasing involvement in international operations Globalization/Deglobalization Glob- the growing interdependence among elements in the global economy The worldwide interdependence of resource flows, product markets and business competition World 3.0 Different views: World flat vs. round Distance is a metaphor that represents the degree of dissimilarities between countries Balancing cooperation in the global Global Management Global management - managing things in different countries Managing business and organizations with interests in more than one country What do we expect from global Managers Knowing how to adapt Knowing the language Global Manager Is culturally aware and informed on international affairs International Business Conducting for-profit transactions of goods and services across national boundaries International Motive Why do firms internatioalize their activities Cheaper labour Labour tax Natural resources Enrolments to do business Clientele Exclusive materials Personal benefits: Taxes Reasons why businesses go global Customers Suppluers Capital During (1993) - 4 motive 1. Market seeking 2. Efficiency Seeking 3. Resource seeking 4. Strategic Asset Seeking Cuervo Cazurra, Narula and un (2015) - 4 motive s Internationalization Motives A company may also explore the opportunities in different markets in order to take advantage and in some cases extend the product life cycle What is a Market Entry Strategy Involves the sale of goods or services to foreign markets but do not require expensive investments Franchising Exporting and importing Involve the sale of goods or services to foreign markets but do Types of market entry strategies Global sourcing Exporting Importing Licensing agreement Franchising Types of Foreign Direct Investment (FDI) strategies: Joint venture Strategic alliance Owned Subsidiary (sometimes called WOS) How to go abroad What conditions will affect the decisions of firms on how to internationalize their activities? During (1978)- Eclectic paradigm OLI model OLI- Ownership, Location and Internalization Advantages Ownership advantages Resources owned by the organization that can be transferred across locations include trademarks, production techniques and processes, managerial skills and other resources not available to the competitors Location Advantages Represent the implications of choosing to produce or to perform activities in a specific location (country or region) Internalization Advantages: The ability to internalize or to incorporate activities that add value to its business Evolution of Concepts- New Elements Although economic factors are certainly important to explain the formation, growth and expansion of firms within and across national borders, they are not sufficient to explain the additional complexity when a firm decides to expand its activities across national borders Economic factors Investigate the economic elements that affect the internationalization of firms Behavioural Elements Explaining the additional challenges (and perhaps opportunities) a firm faces in foreign host countries when compared to indigenous (local) firms Behavioural theories Johanson and Wiedersheim-Paul (1975) and Johanson and Vahlne (1977) Included the psychic Distance concept (beckerman,1956) to explain the internationalization behaviour of firms The Uppsala internationalization model Psychic distance is: the sum of factors preventing the flow of infomatio from and to the market Psychic Distance is a broad concept that includes several elements such as: language, culture, political systems, level of education, level of industrial development Firms behave in a “Risk Averse” manner It means that when the perceived risk goes down, the firm increase its commitment to the foreign market \ The Haier Group Data Strategy Big DATA and Small DATA The use of small data to satisfy individual customers’ needs, however, the book mentions a huge cultural shock at the plant in Camden, south caroline Ex: top down, hard hat colors and hierarchy Culutral Differnces can have a huge impact on the internationalization of firms Kogut and Singh (1988)- Cultural Distance Index First statsical study on the implication of ciltiral distance to the selection of entry mode When investigating in culturally distant countries, foreign firms can choose to partner with foreign firms in order to gain local knowledge and share the risk associated to the investment (higher commitment = higher risk) How Companies Go Global Global sourcing The process of purchasing materials or services around teh world for local use Exporting Selling locally made products in foreign markets Importing Buying foreign made products and selling them domestically Exports correspond to what percentage of Candain GDP What countries are the major trending partners of Canada Management and Globalization How Companies Go Global Licensing Agreement One firm pays a fee for rights to make or sell another company’s products What are the potential risks associated to licesning The case of new balance in China Franchising A fee is paid for the rights to use another firms name, branding and methods Insourcing Insourcing: refers to local job creation that results from foreign direct investment Types of insourcing Joint ventures: operate in a foreign country through co-ownership by foreign and local partners Strategic alliances: A partnership in which foreign and domestic firms share resources and knowledge for mutual gains Foreign subsidiaries: local operation completely owned by a foreign firm Criteria for choosing a joint venture partner: Familiarity with your firm’s major business String local workforce Values its customers Future expansion possibilities Strong local market for partner’s own products Good Profit potential Sound financial standing Global business environments Legal and poliical systems Trade agreements and trade barriers Regional economic alliances Legal and political systems Differing laws and practices regards Business ownership Negotiation and implementation of contracts Foreign currency exchange Protection of intellectual property rights Counterfeit merchandise Political risk Potential loss in value of foreign investment due to instability and political changes in the host country Political risk analysis (expertise/experience) Forecast political disruptions that threaten the value of a foreign investment Changes in the rules of the game Brexit US Trade Wars-mexico-China Other examples Bolivia, Venezuela, China De-globalization The process of weakening interdependence among nations Trade Agreements and trade Barriers World trade organization Most favourd nation status Tariffs Nontariss barriers (quotes, restrictions, etc.) Protectionism Regional Economic Alliances USMCA (replacment for the NAFTA-North American Free trade Agreement) EU- European Union APEC- Aisa Pacific Economic Copperation ASEAN - Association of Southeast Asian Nationas SADC - Southern Africa Development Community MERCOSUR- Chapter 5- Global Management and Cultural Diversity (part 2) Review Types of global business Global corporation MNE (multinational enterprise) or MNC (multinational corporation) with extensive business operations in more than one foreign country Transnational corporation A global corporation that operates worldwide on borderless basis Some host country complaints about MNCs Host Country companits about MNCs: Excessive profits Interference with local government Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customers Examples - War in Ukraine Disruption in global -value chains and increased pressure and interference of MNCs with local government Fertilizer imports in Brazil (one of the major producers of agricultural commodities) We must consider the triple bottom line and the impact in society, the environment and the economy $2.5 billion invest in potash mine in Brazill What about Globalization gap Large multinationals adn industrilizednaitons gaining disporoportinonally form globalization Globalization gap: Large multinational and industrialized nations gaining disproportionally from Globalization Some MNC complaints about host countries MNC Complaints about host countries: Profiit limitations Laws and regulations Overpirce resources Exploitative rules Foreign exchange restriction Failure to uphold contracts Mutual benefits for host countries and multinational companies Mutual benefits for host country and global corporation of MNC: Shared growth opportunities Shared income opportunities Shared learning opportunities Share development opportunities Develop projects together What are some of the ethical challenges for global business Ethincal challenges for global business Child labour Employmnet of children for worl otherwise done by adults Sweatshops Employment of workers at very low wages for long hours in poor working conditions Ex: Nike bad labour prices Unsafe working conditions Corruption Illegal practices that further one’s business interests Corrupiotn of froeign public officials Act makes it illegal for Candain firms and their representatives to engage in corrupt practices overseas Bribes to foreign officials Excessive commissions Non-monetary gifts Sweatshops Conflict materials What is culture Culture : The shared set of beliefs, values, and patterns of behvaiourr common to a group of people Food preferences Values and traditions Language and beliefs Religion Art music Life style Hofstede defines culture as: “The collectiv programing of teh mind distinguishing the members of one group or category of people from others” What is culture shock Culture Shock: Confusion and discoumfert a person experiences in an unfaamiliar culture Stages to adjusting to a new culture Confusion Small vitorires The honeymoon Irritation and anger Reality Cultural Intelligence The ability to adapt and adjust to new cultures What is Ethnocentrism Tendency to consider one’s own culture as superior others Slinet languages of culture Contect Low context High context Space Proxemics Ex: personal space Time Monochronic Polychronic High and low contexts cultures Edward T.Hall (1959) Def: Part of a discourse that surround a word or passage and can throw on its meaning Low context cultures Emphizes communication via spoken or written words Countries like United States, Canada and Germany High context cultures Rely on nonverbal and situational cues as well as on spoken or written works Thailand Malaysia Time Monochronic cultures People tend to do one thing at a time Canda Polychronic cultures Time is used to accomplish many different things at once Egypt Space Proxemics Study of how people use space to communicate In North American people value “personal space’ Many Latin and Asian cultures expect much less personal space Tight and Loose Cultures Cultural tightness-looseness Tight = Strength of norms that govern social behvaviour Japan, Korea, Malaysia Loose = tolerance for any deviation from norms Australia, Brazil, Hungary Values and national cultures (Hofstede) Power distance Uncertainty avoidance Individalism-collectivism Masculinity-femininty Time Orientation Indulgence vs. Restraint Comparative management How management pratices systematically differ among countries and /or cultures Intercultural competencies Skills and personal characteristics that help us be successful in cross cultural situations Global Managers (know how to adapt) Need to successfully apply management functions across interantional boundaries Global Learning goals Not universal Engage critical thinking Look everywhere for new management ideas Always consider culture

John Adams the first Vice President and second President of the United States James Armistead black slave who served in the colonial army as a spy General Edward Braddock commander of all British forces in North America during the French and Indian War Nathan Hale "I only regret that I have but one life to lose for my country." Patrick Henry Virginian who said, "Give me liberty, or give me death!" New York City our nation's first capital Battle of Bunker Hill the first major battle in the War for Independence judicial the branch of government that interprets the law executive the branch of government that enforces the law legislative the branch of government that makes the law Articles of Confederation the first plan of government that the United States had agreed upon Bill of Rights lists the rights or freedoms the Constitution gives to Americans; written in the form of ten amendments Constitution of the U.S. plan of government our country still follows today Declaration of Independence document written by Jefferson declaring the independence of the colonies from England First Amendment gives Americans the following freedoms: religion, speech, press, and assembly Treaty of Paris document signed by England giving up the American colonies and making them officially free and independent Inauguration Day The day the President takes his oath of office Valley Forge Washington's army spent the harsh winter of 1777-1778 Second Continental Congress The decision to organize the Continental Army was made at the ??? in 1775. constitutional republic The form of government in which the people and their elected representatives are limited by a constitution patriots Those who wanted America to be free from Britain's control

She went by the name of Belisa Crepusculario, not because she had been baptized with that name or given it by her mother, but because she herself had searched until she found the poetry of "beauty" and "twilight" and cloaked herself in it. She made her living selling words. She journeyed through the country from the high cold mountains to the burning coasts, stopping at fairs and in markets where she set up four poles covered by a canvas awning under which she took refuge from the sun and rain to minister to her customers. She did not have to peddle her merchandise because from having wandered far and near, everyone knew who she was. Some people waited for her from one year to the next, and when she appeared in the village with her bundle beneath her arm, they would form a line in front of her stall. Her prices were fair. For five centavos she delivered verses from memory, for seven she improved the quality of dreams, for nine she wrote love letters, for twelve she invented insults for irreconcilable enemies. She also sold stories, not fantasies but long, true stories she recited at one telling, never skipping a word. This is how she carried news from one town to another. People paid her to add a line or two: our son was born, so-and-so died, our children got married, the crops burned in the field. Wherever she went a small crowd gathered around to listen as she began to speak, and that was how they learned about each others' doings, about distant relatives, about what was going on in the civil war. To anyone who paid her fifty centavos in trade, she gave the gift of a secret word to drive away melancholy. It was not the same word for everyone, naturally, because that would have been collective dece it. Each person received his or her own word, with the assurance that no one else would use it that way in this universe or the Beyond. Belisa Crepusculario had been born into a family so poor they did not even have names to give their children. She came into the world and grew up in an inhospitable land where some years the rains became avalanches of water that bore everything away before them and others when not a drop fell from the sky and the sun swelled to fill the horizon and the world became a desert. Until she was twelve, Belisa had no occupation or virtue other than having withstood hunger and the exhaustion of centuries. During one interminable drought, it fell to her to bury four younger brothers and sisters, when she realized that her turn was next, she decided to set out across the 2 plains in the direction of the sea, in hopes that she might trick death along the way. The land was eroded, split with deep cracks, strewn with rocks, fossils of trees and thorny bushes, and skeletons of animals bleached by the sun. From time to time she ran into families who, like her, were heading south, following the mirage of water. Some had begun the march carrying their belongings on their back or in small carts, but they could barely move their own bones, and after a while they had to abandon their possessions. They dragged themselves along painfully, their skin turned to lizard hide and their eyes burned by the reverberating glare. Belisa greeted them with a wave as she passed, but she did not stop, because she had no strength to waste in acts of compassion. Many people fell by the wayside, but she was so stubborn that she survived to cross through that hell and at long last reach the first trickles of water, fine, almost invisible threads that fed spindly vegetation and farther down widened into small streams and marshes. Belisa Crepusculario saved her life and in the process accidentally discovered writing. In a village near the coast, the wind blew a page of newspaper at her feet. She picked up the brittle yellow paper and stood a long while looking at it, unable to determine its purpose, until curiosity overcame her shyness. She walked over to a man who was washing his horse in the muddy pool where she had quenched her thirst. "What is this?" she asked. "The sports page of the newspaper," the man replied, concealing his surprise at her ignorance. The answer astounded the girl, but she did not want to seem rude, so she merely inquired about the significance of the fly tracks scattered across the page. "Those are words, child. Here it says that Fulgencio Barba knocked out El Negro Tiznao in the third round." That was the day Belisa Crepusculario found out that words make their way in the world without a master, and that anyone with a little cleverness can appropriate them and do business with them. She made a quick assessment of her situation and concluded that aside from becoming a prostitute or working as a servant in the kitchens of the rich there were few occupations she was qualified for. It seemed to her that selling words would be an honorable alternative. From that moment on, she worked at that profession, and was never tempted by any other. At the beginning, she offered her merchandise unaware that words could be written outside of newspapers. When she learned otherwise, she calculated the infinite possibilities of her trade and with her savings paid a priest twenty pesos to teach her to read and write, with her three 3 remaining coins she bought a dictionary. She poured over it from A to Z and then threw it into the sea, because it was not her intention to defraud her customers with packaged words. One August morning several years later, Belisa Crepusculario was sitting in her tent in the middle of a plaza, surrounded by the uproar of market day, selling legal arguments to an old man who had been trying for sixteen years to get his pension. Suddenly she heard yelling and thudding hoofbeats. She looked up from her writing and saw, first, a cloud of dust, and then a band of horsemen come galloping into the plaza. They were the Colonel's men, sent under orders of El Mulato, a giant known throughout the land for the speed of his knife and his loyalty to his chief. Both the Colonel and El Mulato had spent their lives fighting in the civil war, and their names were ineradicably linked to devastation and calamity. The rebels swept into town like a stampeding herd, wrapped in noise, bathed in sweat, and leaving a hurricane of fear in their trail. Chickens took wing, dogs ran for their lives, women and children scurried out of sight, until the only living soul left in the market was Belisa Crepusculario. She had never seen El Mulato and was surprised to see him walking toward her. "I'm looking for you," he shouted, pointing his coiled whip at her, even before the words were out, two men rushed her -- knocking over her canopy and shattering her inkwell -- bound her hand and foot, and threw her like a sea bag across the rump of El Mulato's mount. Then they thundered off toward the hills. Hours later, just as Belisa Crepusculario was near death, her heart ground to sand by the pounding of the horse, they stopped, and four strong hands set her down. She tried to stand on her feet and hold her head high, but her strength failed her and she slumped to the ground, sinking into a confused dream. She awakened several hours later to the murmur of night in the camp, but before she had time to sort out the sounds, she opened her eyes and found herself staring into the impatient glare of El Mulato, kneeling beside her. "Well, woman, at last you've come to," he said. To speed her to her senses, he tipped his canteen and offered her a sip of liquor laced with gunpowder. She demanded to know the reason for such rough treatment, and El Mulato explained that the Colonel needed her services. He allowed her to splash water on her face, and then led her to the far end of the camp where the most feared man in all the land was lazing in a hammock strung between two trees. She could not see his face, because he lay in the deceptive shadow of the leaves and the indelible shadow of all his years as a bandit, but she imagined from the way his 4 gigantic aide addressed him with such humility that he must have a very menacing expression. She was surprised by the Colonel's voice, as soft and well-modulated as a professor's. "Are you the woman who sells words?" he asked. "At your service," she stammered, peering into the dark and trying to see him better. The Colonel stood up, and turned straight toward her. She saw dark skin and the eyes of a ferocious puma, and she knew immediately that she was standing before the loneliest man in the world. "I want to be President," he announced. The Colonel was weary of riding across that godforsaken land, waging useless wars and suffering defeats that no subterfuge could transform into victories. For years he had been sleeping in the open air, bitten by mosquitoes, eating iguanas and snake soup, but those minor inconveniences were not why he wanted to change his destiny. What truly troubled him was the terror he saw in people's eyes. He longed to ride into a town beneath a triumphal arch with bright flags and flowers everywhere, he wanted to be cheered, and be given newly laid eggs and freshly baked bread. Men fled at the sight of him, children trembled, and women miscarried from fright, he had had enough, and so he had decided to become President. El Mulato had suggested that they ride to the capital, gallop up to the Palace, and take over the government, the way they had taken so many other things without anyone's permission. The Colonel, however, did not want to be just another tyrant, there had been enough of those before him and, besides, if he did that, he would never win people's hearts. It was his aspiration to win the popular vote in the December elections. "To do that, I have to talk like a candidate. Can you sell me the words for a speech?" the Colonel asked Belisa Crepusculario. She had accepted many assignments, but none like this. She did not dare refuse, fearing that El Mulato would shoot her between the eyes, or worse still, that the Colonel would burst into tears. There was more to it than that, however, she felt the urge to help him because she felt a throbbing warmth beneath her skin, a powerful desire to touch that man, to fondle him, to clasp him in her arms. All night and a good part of the following day, Belisa Crepusculario searched her repertory for words adequate for a presidential speech, closely watched by El Mulato, who could not take his eyes from her firm wanderer's legs and virginal breasts. She discarded harsh, cold words, words 5 that were too flowery, words worn from abuse, words that offered improbable promises, untruthful and confusing words, until all she had left were words sure to touch the minds of men and women's intuition. Calling upon the knowledge she had purchased from the priest for twenty pesos, she wrote the speech on a sheet of paper and then signaled El Mulato to untie the rope that bound her ankles to a tree. He led her once more to the Colonel, and again she felt the throbbing anxiety that had seized her when she first saw him. She handed him the paper and waited while he looked at it, holding it gingerly between thumbs and fingertips. "What the shit does this say," he asked finally. "Don't you know how to read?" "War's what I know," he replied. She read the speech aloud. She read it three times, so her client could engrave it on his memory. When she finished, she saw the emotion in the faces of the soldiers who had gathered round to listen, and saw that the Colonel's eyes glittered with enthusiasm, convinced that with those words the presidential chair would be his. "If after they've heard it three times, the boys are still standing there with their mouths hanging open, it must mean the thing's damn good, Colonel" was El Mulato's approval. "All right, woman. How much do I owe you?" the leader asked. "One peso, Colonel." "That's not much," he said, opening the pouch he wore at his belt, heavy with proceeds from the last foray. "The peso entitles you to a bonus. I'm going to give you two secret words," said Belisa Crepusculario. "What for?" She explained that for every fifty centavos a client paid, she gave him the gift of a word for his exclusive use. The Colonel shrugged. He had no interest at all in her offer, but he did not want to be impolite to someone who had served him so well. She walked slowly to the leather stool where he was sitting, and bent down to give him her gift. The man smelled the scent of a mountain cat issuing from the woman, a fiery heat radiating from her hips, he heard the terrible whisper of her hair, and a breath of sweetmint murmured into his ear the two secret words that were his alone. "They are yours, Colonel," she said as she stepped back. "You may use them as much as you 6 please." El Mulato accompanied Belisa to the roadside, his eyes as entreating as a stray dog's, but when he reached out to touch her, he was stopped by an avalanche of words he had never heard before; believing them to be an irrevocable curse, the flame of his desire was extinguished. During the months of September, October, and November the Colonel delivered his speech so many times that had it not been crafted from glowing and durable words it would have turned to ash as he spoke. He travelled up and down and across the country, riding into cities with a triumphal air, stopping in even the most forgotten villages where only the dump heap betrayed a human presence, to convince his fellow citizens to vote for him. While he spoke from a platform erected in the middle of the plaza, El Mulato and his men handed out sweets and painted his name on all the walls in gold frost. No one paid the least attention to those advertising ploys; they were dazzled by the clarity of the Colonel's proposals and the poetic lucidity of his arguments, infected by his powerful wish to right the wrongs of history, happy for the first time in their lives. When the Candidate had finished his speech, his soldiers would fire their pistols into the air and set off firecrackers, and when finally they rode off, they left behind a wake of hope that lingered for days on the air, like the splendid memory of a comet's tail. Soon the Colonel was the favorite. No one had ever witnessed such a phenomenon: a man who surfaced from the civil war, covered with scars and speaking like a professor, a man whose fame spread to every corner of the land and captured the nation's heart. The press focused their attention on him. Newspapermen came from far away to interview him and repeat his phrases, and the number of his followers and enemies continued to grow. "We're doing great, Colonel," said El Mulato, after twelve successful weeks of campaigning. But the Candidate did not hear. He was repeating his secret words, as he did more and more obsessively. He said them when he was mellow with nostalgia; he murmured them in his sleep; he carried them with him on horseback; he thought them before delivering his famous speech; and he caught himself savoring them in his leisure time. And every time he thought of those two words, he thought of Belisa Crepusculario, and his senses were inflamed with the memory of her feral scent, her fiery heat, the whisper of her hair, and her sweetmint breath in his ear, until he began to go around like a sleepwalker, and his men realized that he might die before he ever sat in the presidential chair. "What's got hold of you, Colonel," El Mulato asked so often that finally one day his chief broke 7 down and told him the source of his befuddlement: those two words that were buried like two daggers in his gut. "Tell me what they are and maybe they'll lose their magic," his faithful aide suggested. "I can't tell them, they're for me alone," the Colonel replied. Saddened by watching his chief decline like a man with a death sentence on his head, El Mulato slung his rifle over his shoulder and set out to find Belisa Crepusculario. He followed her trail through all that vast country, until he found her in a village in the far south, sitting under her tent reciting her rosary of news. He planted himself, spraddle-legged, before her, weapon in hand. "You! You're coming with me," he ordered. She had been waiting. She picked up her inkwell, folded the canvas of her small stall, arranged her shawl around her shoulders, and without a word took her place behind El Mulato's saddle. They did not exchange so much as a word in all the trip; El Mulato's desire for her had turned into rage, and only his fear of her tongue prevented his cutting her to shreds with his whip. Nor was he inclined to tell her that the Colonel was in a fog, and that a spell whispered into his ear had done what years of battle had not been able to do. Three days later they arrived at the encampment, and immediately, in view of all the troops, El Mulato led his prisoner before the Candidate. "I brought this witch here so you can give her back her words, Colonel," El Mulato said, pointing the barrel of his rifle at the woman's head. "And then she can give you back your manhood." The Colonel and Belisa Crepusculario stared at each other, measuring one another from a distance. The men knew then that their leader would never undo the witchcraft of those accursed words, because the whole world could see the voracious-puma eyes soften as the woman walked to him and took his hand in hers. Copyright © 1989 by Isabel Allende From The Stories of Eva Luna, Translated by Margaret Sayers Peden

Introduction to Hedging Instruments: Forwards, Futures, Options, and Swaps Hedging instruments are financial tools used by businesses and investors to mitigate risk. These instruments help protect against adverse price movements in assets such as commodities, currencies, interest rates, or securities. The four main hedging instruments are forwards, futures, options, and swaps. 1. Forwards A forward contract is a customised agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. Key Characteristics: Over-the-counter (OTC): Traded directly between parties, not on an exchange. Customisation: Can be tailored to suit the needs of the parties involved. Settlement: Occurs at the end of the contract, which may involve physical delivery or cash settlement. Risk: Forwards carry counter-party risk, as there is a possibility one party may default. Example: A company that needs to import raw materials in six months may enter into a forward contract to lock in the current price, avoiding the risk of price increases. 2. Futures A futures contract is similar to a forward, but it is standardised and traded on an exchange. This standardisation eliminates counter-party risk. Key Characteristics: Standardised: Contract size, expiration, and other terms are fixed by the exchange. Mark-to-market: Gains and losses are settled daily. Liquidity: Futures are highly liquid because they are traded on exchanges. Regulation: As they are traded on formal exchanges, they are more regulated than forwards. Example: A wheat farmer may sell futures contracts to hedge against a possible decline in wheat prices before harvest. 3. Options Options provide the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date. There are two types of options: call options and put options. Call Option: Gives the holder the right to buy an asset at a predetermined price. Put Option: Gives the holder the right to sell an asset at a predetermined price. Key Characteristics: Premium: The buyer pays a premium upfront to obtain the option. Limited Risk: The maximum loss is limited to the premium paid. Flexibility: Options can be used for speculative or hedging purposes. Example: An investor holding stocks may buy a put option to protect against potential declines in the stock's price. 4. Swaps A swap is a contract in which two parties agree to exchange cash flows or liabilities over a specific period. The most common types are interest rate swaps and currency swaps. Key Characteristics: Customizable: Like forwards, swaps are often tailored to meet the needs of the parties involved. Counterparty Risk: Swaps are typically OTC instruments, exposing parties to default risk. Common Uses: Used to manage interest rate risk or currency risk. Example: A company with a variablerate loan may enter into an interest rate swap to exchange its variable payments for fixedrate payments, thus locking in stable costs. Hedging instruments are essential for managing financial risk in volatile markets. Each instrument serves different purposes, with varying levels of complexity, risk, and customization. Whether through forwards, futures, options, or swaps, businesses can better plan for the future by reducing exposure to uncertain price fluctuations. Hedging Strategies for Market Risk, Credit Risk, and Currency Risk 1. Hedging Strategies for Market Risk Market risk (also known as systematic risk) arises from fluctuations in asset prices, such as stocks, bonds, commodities, and interest rates, due to economic factors or market volatility. Key Hedging Instruments for Market Risk: Derivatives (Options, Futures, and Forwards): These instruments allow investors to hedge against unfavorable price movements in stocks, commodities, or interest rates. Example: An investor holding a large stock portfolio might buy a put option to protect against a potential market downturn. If the market declines, the put option increases in value, offsetting losses in the portfolio. Short Selling: Investors can sell borrowed assets with the expectation of buying them back at a lower price, profiting from the decline. Example: A fund manager expecting a market decline may short sell stocks to hedge a portfolio against losses. Common Hedging Strategies: Portfolio Diversification: Reducing market risk by spreading investments across various asset classes (stocks, bonds, commodities) and sectors. Using Index Futures: Large portfolios can be hedged using index futures that track the performance of the overall market. If the market declines, profits from the short position in the futures contract will offset losses in the portfolio. Risk Parity: Allocating assets based on the level of risk rather than the dollar amount invested, balancing risk exposure across asset classes. 2. Hedging Strategies for Credit Risk Credit risk refers to the possibility that a borrower will default on a debt obligation. This is especially important for banks, lenders, and institutions dealing with bonds and loans. Key Hedging Instruments for Credit Risk: Credit Default Swaps (CDS): A financial derivative where the buyer of a CDS pays a premium to the seller in exchange for protection against a default on a loan or bond. Example: A bank holding corporate bonds can buy a CDS to ensure they are compensated if the issuing company defaults. Collateralised Debt Obligations (CDOs): These instruments pool together various debt instruments and allow risk to be distributed among multiple investors. Credit Insurance: Companies may use insurance to protect against the risk of a customer defaulting on payments. Common Hedging Strategies: Diversification of Loan Portfolio: Spreading out credit exposures across various industries, geographies, and borrower profiles reduces the overall risk of default. Tightening Lending Standards: Limiting exposure to highrisk borrowers by implementing stringent credit assessments. AssetBacked Securities: Banks can sell loans or bonds packaged as assetbacked securities to reduce their exposure to credit risk. 3. Hedging Strategies for Currency Risk Currency risk (or exchange rate risk) arises from fluctuations in foreign exchange rates, which can affect companies involved in international trade or with investments in foreign countries. Key Hedging Instruments for Currency Risk: Forward Contracts: A firm agrees to exchange a specified amount of currency at a predetermined exchange rate on a future date. Example: A U.S. exporter expecting payment in euros might enter into a forward contract to sell euros and lock in a favorable exchange rate. Currency Options: These give the right, but not the obligation, to buy or sell currency at a specific price. Example: A U.S.based company buying goods from Japan might buy a call option on the yen to hedge against the risk of yen appreciation. Currency Swaps: Two parties exchange interest payments and principal in different currencies to hedge against exchange rate fluctuations. Common Hedging Strategies: Natural Hedging: Companies can offset currency risk by balancing foreign revenue with costs in the same currency. For example, if a company generates revenue in euros, it can also incur expenses in euros, reducing exposure to exchange rate fluctuations. Multi-Currency Invoicing: Firms can invoice in their home currency, shifting the currency risk to the buyer. Currency Diversification: Holding a diversified basket of currencies can reduce exposure to large fluctuations in any one currency. Effective hedging strategies are crucial for managing various types of risks in financial markets. Market risk can be managed using instruments like futures and options, while credit risk can be mitigated through diversification and credit derivatives. Currency risk, often faced by multinational firms, can be hedged using forward contracts, options, or swaps. Each strategy helps firms and investors protect their portfolios, ensure financial stability, and reduce the impact of adverse movements in the financial markets. Portfolio Risk Management Techniques: Diversification, Asset Allocation, and Risk Budgeting Managing risk is a fundamental aspect of portfolio management. Investors use various techniques to control and reduce the risks inherent in investing. Three key techniques used in portfolio risk management are diversification, asset allocation, and risk budgeting. Each of these techniques helps in mitigating potential losses while aiming to achieve the desired return. 1. Diversification Diversification is a risk management strategy that involves spreading investments across different assets, sectors, or geographic regions to reduce exposure to any single risk. The idea is that different assets perform differently under various market conditions, so losses in one investment can be offset by gains in others. Key Benefits of Diversification: Reduction of Unsystematic Risk: Unsystematic risk, which is unique to a specific company or industry, can be reduced by holding a variety of investments that respond differently to market conditions. Improved Stability: A diversified portfolio is less volatile, as the negative performance of one asset can be balanced by the positive performance of others. Methods of Diversification: Across Asset Classes: Investing in a mix of asset classes such as stocks, bonds, commodities, and real estate. Example: A portfolio with 60% equities, 30% bonds, and 10% commodities is more diversified than one solely consisting of stocks. Within Asset Classes: Diversifying within a single asset class (e.g., holding stocks from different sectors like technology, healthcare, and energy). Geographic Diversification: Investing in assets across various countries or regions to mitigate country-specific risks. Example: Holding U.S. stocks along with emerging market equities can reduce risks related to a downturn in one country's economy. 2. Asset Allocation Asset allocation refers to the process of dividing investments among different asset classes (such as stocks, bonds, and cash) to align with an investor's risk tolerance, time horizon, and financial goals. Asset allocation plays a crucial role in portfolio risk management by determining the overall risk-return profile of the portfolio. Key Elements of Asset Allocation: Strategic Asset Allocation: A longterm approach that involves setting target allocations for different asset classes based on financial goals and risk tolerance. Example: A young investor with a longterm horizon might allocate 70% to stocks, 20% to bonds, and 10% to cash. Tactical Asset Allocation: A more active approach that involves adjusting the asset mix in response to short-term market conditions. Example: If the investor expects an economic downturn, they might temporarily reduce exposure to equities and increase exposure to bonds. Types of Asset Allocation Models: Conservative: Focuses on preserving capital with a larger allocation to bonds and cash (e.g., 20% stocks, 80% bonds). Balanced: A moderate risk approach with an equal focus on growth and income (e.g., 50% stocks, 50% bonds). Aggressive: Targets higher returns by investing predominantly in equities, accepting higher risk (e.g., 80% stocks, 20% bonds). Example of Asset Allocation: A 40 year old investor with moderate risk tolerance may allocate their portfolio as follows: 50% equities, 40% bonds, and 10% in alternative investments such as real estate or commodities. The equities provide growth potential, while the bonds and alternative assets offer stability and income. 3. Risk Budgeting Risk budgeting is a method of allocating risk across different components of a portfolio, rather than focusing solely on returns. The goal is to optimise the portfolio’s risk-return profile by distributing risk in a way that aligns with the investor’s objectives and risk tolerance. Key Concepts of Risk Budgeting: Risk Contribution: Each asset class or investment in the portfolio contributes a certain amount of risk (measured by metrics such as volatility or Value at Risk). Risk budgeting ensures that no single asset class dominates the overall risk of the portfolio. Example: A portfolio may contain 60% stocks and 40% bonds, but if the stocks are highly volatile, they may contribute 90% of the portfolio's risk. Target Risk: Investors set a maximum acceptable level of risk (e.g., a portfolio volatility of 10%) and allocate investments so that the total risk remains within this target. Techniques in Risk Budgeting: Risk Parity: Allocates risk evenly across asset classes, rather than allocating capital based solely on return expectations. Example: In a risk-parity portfolio, both bonds and stocks might be balanced in such a way that they contribute equally to the overall portfolio risk, even though the dollar investment in bonds may be larger due to their lower volatility. Value at Risk (VaR): This technique measures the potential loss in a portfolio over a specific time period, under normal market conditions, at a given confidence level. The risk budget ensures that the potential loss stays within acceptable limits. Example of Risk Budgeting: An investor targets an overall portfolio risk of 8% volatility. After analyzing the risk contribution of each asset class, they determine that equities, which currently make up 60% of the portfolio, contribute 70% of the risk. To adhere to the risk budget, the investor may reduce their equity exposure and increase their allocation to bonds or other less volatile assets. Diversification, asset allocation, and risk budgeting are complementary techniques used in portfolio risk management. Diversification reduces unsystematic risk by spreading investments across various assets. Asset allocation ensures that investments align with an investor's goals and risk tolerance. Risk budgeting focuses on managing the contribution of risk from each asset class to create a balanced and efficient portfolio. Together, these strategies help investors achieve a balance between risk and return, ensuring longterm portfolio stability. Risk Mitigation Through Insurance, Securitisation, and Other Financial Engineering Techniques Risk mitigation is a core objective in financial management, and various strategies can be employed to reduce or manage risks. Three major approaches are insurance, securitisation, and financial engineering techniques. Each of these methods helps firms and individuals transfer, reduce, or eliminate certain financial risks. 1. Insurance as a Risk Mitigation Tool Insurance is a traditional risk transfer method that protects against financial losses by shifting the risk to an insurance company in exchange for premium payments. It is widely used to mitigate various forms of risk, such as operational, liability, and property risks. Key Aspects of Insurance for Risk Mitigation: Risk Transfer: The insurer takes on the risk in exchange for a premium, thus protecting the insured party from unexpected financial losses. Indemnity: In the event of a loss, the insurance policy compensates the insured based on the terms of the contract. Customisable Coverage: Insurance policies can be tailored to address specific risks, such as property damage, business interruption, liability, or cyber risks. Types of Insurance for Businesses: Property and Casualty Insurance: Covers physical assets like buildings, machinery, and inventory from risks like fire, theft, or natural disasters. Liability Insurance: Protects businesses against legal liabilities arising from accidents, negligence, or professional errors. Business Interruption Insurance: Compensates for lost income if a business has to halt operations due to unforeseen events. Credit Insurance: Shields companies from losses due to the nonpayment of trade receivables. 2. Securitisation as a Risk Mitigation Technique Securitisation is a financial engineering process that involves pooling various financial assets (such as loans, mortgages, or receivables) and converting them into marketable securities. This process allows firms to transfer risk to investors, thereby reducing their exposure. Key Elements of Securitisation: Risk Transfer: By securitising assets, companies can transfer the risk of default or nonpayment to investors who purchase the securities. Liquidity Creation: Securitisation converts illiquid assets (like mortgages or loans) into liquid, tradeable securities, improving cash flow for the originating firm. Diversification of Risk: Pooling assets with different risk profiles reduces the impact of individual defaults, spreading the risk across multiple investors. Common Forms of Securitisation: MortgageBacked Securities (MBS): Pools of mortgages are bundled and sold as securities to investors, transferring the risk of mortgage defaults. Example: A bank that issues home loans can bundle those loans into MBS and sell them to investors, transferring the credit risk of potential defaults. Asset-Backed Securities (ABS): Similar to MBS, but backed by other types of assets like credit card receivables, auto loans, or student loans. Collateralised Debt Obligations (CDOs): Structured financial products that pool different types of debt, such as loans and bonds, and sell them as securities with varying risk levels. Example: A bank may issue a portfolio of auto loans and then pool these loans into an assetbacked security (ABS). The ABS is sold to investors, who take on the risk of loan defaults. By securitising the loans, the bank reduces its exposure to credit risk and generates immediate cash flow. 3. Financial Engineering Techniques for Risk Mitigation Financial engineering involves the use of complex financial instruments, derivatives, and structured products to manage or mitigate financial risks. These techniques allow firms to hedge against specific risks, optimize capital structure, and improve financial stability. Common Financial Engineering Techniques: Derivatives: Financial instruments like futures, forwards, options, and swaps are used to hedge against price fluctuations, interest rate changes, or currency movements. Example: A company with significant foreign exchange exposure may use currency forwards or options to hedge against exchange rate fluctuations, ensuring predictable cash flows. Options and Futures: Options: Provides the right (but not the obligation) to buy or sell an asset at a predetermined price, allowing firms to hedge against unfavorable price movements. Example: An airline company can buy options on jet fuel to hedge against rising fuel prices. Futures: Standardized contracts to buy or sell an asset at a set price on a future date, commonly used to hedge commodities or financial assets. Example: A wheat producer may use futures contracts to lock in a favorable price for its crop, hedging against a potential price drop. Swaps: These involve the exchange of cash flows between two parties, often used to manage interest rate risk or currency risk. Interest Rate Swaps: Firms can exchange floatingrate interest payments for fixedrate payments to hedge against rising interest rates. Currency Swaps: Used to hedge exchange rate risk in crossborder transactions by exchanging principal and interest payments in different currencies. Example: A company with a variablerate loan may enter into an interest rate swap to exchange its variable payments for fixedrate payments, locking in stable costs. Structured Products: These are customised financial instruments designed to achieve specific riskreturn objectives. They often combine derivatives with other securities to create tailored risk exposures. Example: A structured note that combines a bond with an embedded option, offering downside protection while allowing for potential upside linked to the performance of an equity index. Credit Derivatives: Tools like credit default swaps (CDS) allow investors to transfer credit risk to other parties. Example: A bondholder worried about a company’s potential default may purchase a CDS, which pays out in case of a default event. Example: A company may issue a bond with an embedded call option, allowing it to repurchase the bond if interest rates decline. This financial engineering tool enables the company to mitigate the risk of rising interest rates, reducing future borrowing costs. Risk mitigation through insurance, securitisation, and financial engineering offers businesses a variety of tools to manage and transfer risks. Insurance allows for the direct transfer of risk to an insurer, while securitisation helps companies offload risk by packaging and selling assets as securities. Financial engineering techniques, including derivatives, swaps, and structured products, provide sophisticated ways to hedge market, interest rate, and currency risks. Each approach helps organizations improve financial stability, enhance liquidity, and manage potential losses in a volatile market environment.

Make a multiple choice quiz for my year 8 science students based on the science in this transcript from a video: 3°C 0:04 It can be the difference between snow and sleet 0:08 Wearing a jacket or not 0:11 In your day-to-day life, it may not seem significant 0:15 But 3°C of global warming would be catastrophic 0:20 Heatwaves, droughts, extreme precipitation, even fire 0:25 3°C of warming is really disastrous 0:28 The scary thing is, the world is well on its way there 0:32 Since the industrial revolution, the Earth has warmed between 1.1°C and 1.3°C 0:40 This is a problem that babies you pass in the street will have to live with 0:46 Children born today... 0:47 ...are up to seven times more likely to face extreme weather than their grandparents 0:52 If global temperatures do rise by 3°C... 0:55 ...what would their world look like? Climate change is already having devastating effects 1:03 Rising sea levels 1:05 Desertification 1:07 Hollywood has always enjoyed imagining the end of the world 1:11 While blockbusters like this are clearly fiction... 1:14 ...this film will show the scenario we all face... 1:17 ...unless more drastic measures are taken to stop burning fossil fuels 1:30 In some parts of the world the effects of inaction are already clear 1:35 The slums of Bangladesh’s capital are filling up with climate migrants 1:41 Minara comes from Bhola District, an area in southern Bangladesh 1:46 There, like many other parts of the country... 1:49 ...rivers swollen by heavier rain and melting Himalayan glaciers... 1:53 ...are washing away people’s homes 1:56 Many, like her, have lost everything 2:00 Our home in Bhola had endless amounts of land 2:03 There was lots of space for farming, we had a spacious house 2:08 There were different types of fruits, vegetation and trees growing at home 2:12 We used to eat the fruit from our own trees 2:18 I can’t eat them now because they don't exist anymore 2:21 Since the river flooded for the third time, I had to flee to Dhaka 2:26 Life was much better back home 2:29 It was unbearable to live through, truly intolerable 2:33 We didn’t have the time to save anything at all 2:38 1.1°C to 1.3°C of global warming has already transformed Minara’s life 2:45 It’s one of the reasons why so many migrants like her... 2:47 ...are moving to the city each year... 2:50 ...nearly 400,000 according to the last estimate 2:53 And climate models show there could be much worse to come How climate modelling works 3:02 Climate scientist Joeri Rogelj... 3:04 ...has spent the last ten years modelling future climate scenarios... 3:08 ...for the United Nations 3:10 The models we use to carry out this exercise... 3:13 ...really represent the state of the art... 3:15 ...of our current knowledge of climate change and where we are heading 3:19 Joeri’s projections use data collected by hundreds of scientists around the world 3:26 Here this is the 3°C level... 3:28 ...and so there is at least a one-in-four chance that under current policies... 3:32 ...we would hit 3°C by the end of the century 3:36 This is just one of the scenarios Joeri looks at 3:40 Another one imagines that all policy promises are kept 3:44 The most optimistic assumes that all promises have been kept... 3:47 ...and net-zero targets are met 3:50 Where our best estimate ends up around 2°C at the end of the century... 3:54 ...there is still a one-in-20 chance that we end up with 3°C instead 3:59 One would not be entering a plane if there is a one-in-20 chance... 4:03 ...that the plane will crash Nowhere is safe from global warming 4:07 A rise of 3°C would affect everyone 4:10 Even wealthy cities in rich countries wouldn’t be immune to the consequences 4:15 European capitals like Paris and Berlin... 4:18 ...would bake under more extreme heatwaves 4:22 Frequent storm-surges in New York could turn parts of the city desolate 4:27 In many ways, cities magnify, intensify climate events 4:33 Cities are hotter than the places around them... 4:36 ...they tend to be more vulnerable to flooding 4:39 And you can get a really bad event in a city in a way that you can’t in the countryside 4:46 And because of their denser populations... 4:49 ...disasters in a city affect far more people 4:52 Some cities might be badly prepared for the changes coming 4:56 But they have the means to adapt 4:59 Cities tend to be wealthier than surrounding places 5:03 They have a lot of amenities 5:05 A city that has taken seriously the risks of a 3°C world... 5:08 …wouldn’t necessarily be a worse place to be in a 3°C world 5:12 But a city that hasn’t prepared for these sort of eventualities... 5:16 ...that might be a really nasty place The impact of prolonged droughts 5:20 So far, many developed cities have got off lightly... 5:24 ...but some rural parts of the world are suffering disproportionately 5:29 Smallholders—small-scale farmers—are particularly vulnerable to climate change 5:35 And there are over 600 million around the world 5:38 Smallholders with farms under two hectares... 5:40 ...produce around a third of the global food supply 5:46 Central America’s “Dry Corridor”... 5:48 ...supports a mix of smallholdings and medium-sized farms 5:53 Sandwiched between the Pacific Ocean and the Caribbean Sea... 5:56 ...the area is prone to droughts 6:08 Israel Ramírez Rivera is a smallholder in Guatemala 6:12 Here, climate change is making the dry seasons longer, and more severe 6:18 This is the biggest ear of maize that this plot could deliver 6:23 He depends on his crops of corn and beans 6:26 But they’re getting harder to grow 6:30 The surrounding mountains... 6:32 ...used to provide us with native food... 6:38 ...and now that isn’t an option anymore... 6:41 ...due to climate change and its effects 6:46 Nearly two-thirds of the smallholders in the Dry Corridor now live in poverty 6:52 The impact of all of this for us... 6:59 ...malnutrition among children 7:03 We’ve lost a few 7:07 For my crops especially, the midsummer heat is harder than before 7:16 The plant dries up and can’t provide us... 7:19 ...with the necessary food provision 7:24 Severe droughts in Central America... 7:26 ...are now four times more likely than they were last century 7:30 Many families from here have gone to the States 7:37 The economic despair and debts... 7:44 ...have pushed many people from this community to do this journey 7:53 Migration from Guatemala to the United States has quadrupled since 1990 7:59 Not all of this has been due to climate change 8:02 But longer droughts would force even more to move 8:05 In a 3°C world, annual rainfall in this region... 8:09 ...could drop by up to 14% 8:12 At 3°C, over a quarter of the world’s population... 8:16 ...could endure extreme droughts for at least a month of the year 8:19 Northern Africa could see droughts that last for years at a time Rising sea levels, storm surges and flooding 8:24 But for some, too much water will be the problem 8:29 10% of the world’s population lives on a coastline... 8:32 ...that’s less than 10 metres above sea level 8:35 For these coastal inhabitants, a 3°C world would spell disaster 8:40 By 2100, global sea levels could have climbed by half a metre from 2005 levels 8:46 Low-lying cities like Lagos would be especially vulnerable... 8:49 ...with up to up to a third of the population displaced 8:54 And in Fiji, rising waters are already upending lives 9:04 You can see the graveyard there, it’s all under water now... 9:08 ...due to this rising sea level and climate change 9:15 The village of Togoru in Fiji is being swallowed by the sea 9:19 Barney Dunn, the village headman, has seen over half the village disappear 9:24 Relatives’ houses have been abandoned, and family graves are now under water 9:29 We have been asked by the government to relocate... 9:32 ...but no one wants to relocate... 9:34 ...because we have our great-great-grandparents down there in the sea 9:39 This is the place we’ve been brought up in 9:41 ...it’s not easy to leave 9:44 Past attempts to build a seawall haven’t worked 9:48 But Barney sees building a new one as the village’s only hope 9:52 If they do that, maybe we can save whatever is left 9:56 But if we don’t have the seawall, then it will be keep eroding and time will come... 10:01 ...maybe in ten,15 years, Togoru will be all eroded 10:05 Rising seas also mean storms cause more floods 10:11 And many more countries could suffer 10:14 The Philippines and Myanmar are just two countries... 10:17 ...that will also see an increase in storm surges in a 3°C world 10:21 To escape, many will move… 10:24 …often, to urban areas Extreme heat and wet-bulb temperatures 10:27 Half the world’s population already lives in cities... 10:31 ...almost a third in slums 10:36 For them, a 3°C world could be deadly 10:40 Minara has moved to Dhaka to escape the impact of climate change 10:44 But life could get even worse for her 10:47 I’m struggling a lot nowadays 10:49 The heat during the day is unbearable 10:52 Even late at night it doesn’t cool down 10:57 The heat is getting more intense every day 10:59 I mean, it’s going to get much worse 11:03 I can barely survive it now, how will I live through it in the future? 11:08 Dhaka is getting hotter 11:11 In the last 20 years the average daytime temperature... 11:13 ...has crept up by nearly half a degree 11:17 Days that approach 40°C are now being reported 11:20 And high so-called wet-bulb temperatures are on the rise 11:26 A wet-bulb temperature is a measure of heat and humidity 11:30 Humans cool themselves by sweating… 11:32 But in these conditions, when relative humidity is near 100%... 11:36 ...sweat doesn’t evaporate well 11:38 So people can’t cool down… 11:41 ...even if given unlimited shade and water 11:45 At a high wet-bulb temperature, the body can’t lose heat... 11:49 ...and so it gets hotter and hotter... 11:51 ...and the body is designed to work at a given temperature 11:53 And if it gets too hot inside, you will die 11:58 The human limit for wet-bulb temperatures is 35°C... 12:02 ...around skin temperature 12:04 Dhaka will have a much higher chance... 12:05 ...of reaching dangerous wet-bulb temperatures... 12:07 ...if global warming reaches 3°C 12:12 You can’t really adapt to that 12:14 You have to get out. If the temperature is so high that you can’t work... 12:20 ...can’t do hard manual labour outside for significant parts of the year... 12:25 ...then many places will become functionally no longer part of the economy 12:33 Jacobabad in Pakistan, and Ras al Khaimah, in the United Arab Emirates... 12:37 ...have already recorded deadly wet-bulb temperatures 12:40 More of the tropics and the Persian Gulf... 12:43 ...as well as parts of Mexico and the south-eastern United States... 12:47 ...could all get to this threshold by the end of the century 12:50 Climate modelling might show us the weather Increased migration and conflict 12:52 But it doesn’t show us its other effects on society 12:56 Established migration patterns could change 12:59 Climate disasters may exacerbate reasons people cross borders 13:03 Within countries, more people will move to cities 13:07 In a 3°C world, tens of millions of people a year... 13:10 ...could be displaced by disasters made worse by climate change 13:15 When people are displaced by climate... 13:18 …they may well go to cities... 13:19 ...because cities are the places that attract people from the countryside already 13:25 A lot of people who can get to the developed world... 13:28 ...not least because the developed world tends to be less hot, will give that a go 13:35 As migration around the world increases... 13:38 ...there could be more competition for fewer resources 13:42 Water—already a highly contested resource—will be a focal point 13:47 Turkey’s new Ilisu dam has reduced the flow of water into Iraq 13:53 China lays claim to rivers vital to India and Pakistan 13:57 The prospect of a water-conflict makes people very uneasy 14:03 How national tensions would exacerbate those sorts of reactions... 14:08 ...in a 3°C world... 14:09 ...is the sort of thing that no one should really want to find out 14:14 I think you’d have to be incredibly sanguine... 14:16 ...not to think that the sort of climate extremes that we talk about... 14:19 ...in a 3°C world wouldn’t lead some places... 14:22 ...to the brink of societal collapse 14:25 Those lucky enough to escape unrest... Adaptation and mitigation are crucial 14:28 ...would still have to adapt to a radically different world 14:32 People can adapt to climate change in all sorts of ways, one of the most obvious ones... 14:37 ...is air conditioning 14:39 But other ways to adapt at a local or regional level... 14:42 ...I mean, one of the most obvious is diversifying agriculture 14:47 There are physical things you can do, like seawalls 14:52 The fact that people can adapt and that adaptation will reduce suffering... 14:57 ...doesn’t mean that it will eliminate suffering 15:00 Suffering is built into this whole process of heating up the planet 15:06 Adaptation will only get the world so far 15:09 The best way to deal with a 3°C world... 15:12 ...is not to go to a 3°C world 15:14 And that’s why increasing efforts on mitigation are important 15:17 It’s why working towards negative emissions... 15:20 ...that could bring down the temperature after it peaks are important 15:25 Once you get to a 3°C world, you are in real bad global trouble 15:33 The scale of change needed... 15:35 ...and the slow progress of governments so far... 15:38 ...means 3°C of warming is uncomfortably likely unless more is done 15:44 Despite existing pledges, greenhouse-gas emissions... 15:48 ...are still set to rise by 16% from 2010 levels by 2030 15:54 The need to act has never been clearer 15:57 There’s still time to reduce emissions, so that a 3°C world remains fiction... 16:02 ...rather than becoming fact

Where Is It? Russia is a very big country. It is the largest country in the world almost twice as big as the United States. Russia is part of both Europe and Asia. Moscow is the capital of Russia. It is a big city in the European part of the country. More than twelve million people live there. The Russian president lives in a famous group of buildings in Moscow. People. Most people in Russia live and work in cities. The main language is Russian. In the country, jobs have to do with the land and the sea. For example, many people fish, mine oil and coal, and cut trees for wood. Sports such as soccer and ice hockey are popular in Russia. Russia is famous for music and a kind of dance show called ballet. Swan Lake is a famous Russian ballet. Land. The land in Russia is mainly low flatlands, high flatlands, and mountains. The deepest lake in the world, Lake Baikal, is in Russia. Russia has frozen flatlands in the north and wide grassy lands in the south. In between are huge forests. Russia is a cold country, and it is home to the coldest village in the world. But many places in Russia also have beautiful summers. History. In the past, czars, or emperors, ruled Russia. During that time, the peasants in Russia were unhappy. They didn't like the way the czars ruled the people. They fought in 1917 to change their country's ways. After the fight, Russia took control of a group of other nearby countries. Together they formed the Union of Soviet Socialist Republics (USSR). The USSR had many problems, so it broke up in 1991. Today, Russia has a president. Celebrations. Many people celebrate Christmas and Easter in Russia. On Easter, they eat cakes and paint hard-boiled eggs. Russian Easter egg Russians also have a holiday to celebrate the end of winter. For this holiday, people eat pancakes with butter. They also have fun with sleigh rides and snowball fights. Food. A popular soup in Russia is famous around the world. People make the soup from beets and other vegetables. Beets are red, so the soup also has a red color. Many Russians like a homemade drink. The drink has a sour flavor. Conclusion Russia is home to both crowded cities and wild forests. Russia has a long, rich history and many interesting things to do. The Russian people value the traditions of their beautiful homeland.

India Where Is It? India is a country in Asia. Much of it is surrounded by water. To the south and west is the Arabian Sea. To the south and east is the Bay of Bengal. The capital of India is New Delhi (DEL-ee). It is part of the much larger city of Delhi. More than twenty million people live in Delhi and New Delhi. People. More than one billion people live in India. Only China has more people than India. Most Indian people live in the countryside. The cities do not have as many people. They are very crowded, though. Around half of the people in India make their living from growing food. They grow crops or raise sheep, goats, and chickens for meat. They do not raise cows for meat. Most Indians are Hindu. Hurting a cow is against the Hindu religion. Land. India has many mountains and different kinds of flat land. The mountains are in the north. They are the highest in the world. Rich land covers the north of India. It was formed long ago as rivers flooded over and over. In the west is the dry desert. In the south is raised, flat land. This land takes up more than half of India. In May or June every year, winds bring a large amount of rain. This is called the monsoon season. Most of India's rain falls during this season. Celebrations People in India celebrate many special days. Diwali (dih-WAH-lee) lasts for five days. During this festival, people light small candles. They shoot firecrackers and give sweets to family and friends. Holi (HOH-lee) is a spring Hindu festival. During Holi, people celebrate the end of winter. They throw colored water and powder on each other. Animals. Many kinds of animals live in India. It is the only country in the world with both lions and tigers. Elephants live in the flat lands and forests. The mountains are home to bears, foxes, sheep, and wild goats. India is also home to the world's largest mangrove forest. Here, tigers swim with sea turtles, sharks, and crocodiles. Conclusion. India is a country of many people. People farm its rich soil to feed the nation. Its mountains and forests are home to many animals. Which part of India would you like to see?

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