In 2021, the footwear startup Allbirds was extending its product range into apparel and expanding beyond its online store to open more retail stores around the world. It was also freely sharing its know-how and material innovations with its competitors to try to scale its efforts to decarbonize fashion, by substituting natural materials for conventional petroleum-based materials and leather. But the company also had to find ways to remain differentiated, based on design and comfort. Professor Mike Toffel and Allbirds co-founder and CEO Joey Zwillinger discuss the growing environmental impact of the fashion industry and how the company managed the tension between advancing its environmental mission and staying ahead of competitors in the case, Allbirds: Decarbonizing Fashion.
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HR is reinventing itself on the fly and under increasing pressure. HR expert Josh Bersin explains how the field is adapting to play a more varied and strategic role amid economic, technological, demographic, and cultural change.
How did the process of securitization transform trillions of dollars of risky assets into securities that many considered to be a safe bet? HBS professors Joshua D. Coval and Erik Stafford, with Princeton colleague Jakub Jurek, authors of a new paper, have ideas. Key concepts include: Over the past decade, risks have been repackaged to create triple-A-rated securities. Even modest imprecision in estimating underlying risks is magnified disproportionately when securities are pooled and tranched, as shown in a modeling exercise. Ratings of structured finance products, which make no distinction between the different sources of default risk, are particularly useless for determining prices and fair rates of compensation for these risks. Going forward, it would be best to eliminate any sanction of ratings as a guide to investment policy and capital requirements. It is important to focus on measuring and judging the system's aggregate amount of leverage and to understand the exposures that financial institutions actually have.
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Risky Business with Structured Finance
How did the process of securitization transform trillions of dollars of risky assets into securities that many considered to be a safe bet? HBS professors Joshua D. Coval and Erik Stafford, with Princeton colleague Jakub Jurek, authors of a new paper, have ideas. Key concepts include: Over the past decade, risks have been repackaged to create triple-A-rated securities. Even modest imprecision in estimating underlying risks is magnified disproportionately when securities are pooled and tranched, as shown in a modeling exercise. Ratings of structured finance products, which make no distinction between the different sources of default risk, are particularly useless for determining prices and fair rates of compensation for these risks. Going forward, it would be best to eliminate any sanction of ratings as a guide to investment policy and capital requirements. It is important to focus on measuring and judging the system's aggregate amount of leverage and to understand the exposures that financial institutions actually have. Closed for comment; 0 Comments.