I would like to express my gratitude to our faculty, Professor R.C. Agarwal for giving us an opportunity to work on this research project and greatly enhance our knowledge. I would also like to thank Mr. Raju Gupta ( DGM, State Bank of Patiala), for his valuable inputs in this project. Without their guidance, this work would not have been possible. This project has helped me immensely in understanding various concepts related to banking and the risk management practices which must be followed by them to ensure stability.
The global financial crisis, which the world is still recovering from has been called by leading economists and various experts as the worst financial crisis since the Great Depression of the 1930's. This global meltdown took the world by storm and led to negative economic growth rates (recession) in various countries like USA, UK, Ireland, Canada, Italy, Japan, France etc and significant slowdown in countries like India and China. One of the major reasons for this crisis was the sub-prime lending practices carried out by the financial institutions in USA, which led to their demise when the real estate prices plummeted and they were not able to recover their loans, despite having the collaterals. While the financial institutions namely Lehman Brothers, Freddie Mac and Fannie Mae, Wachovia and Bear Stearns filed bankruptcy, Goldman Sachs, JP Morgan, Morgan Stanley, Santander, CitiGroup, Bank of America had to be bailed out by other organizations.
Saying it in simpler words, this all happened as these financial institutions failed to accurately price the risk involved with mortgage-related financial products and kept on giving loans without proper risk management practices in place. This would never have happened had there been adequate precautions taken while extending credit. This is where the need arises for an international standard that can help protect the international financial system from such crisis and collapse. And this is where the Basel II Accord Recommendations (recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision) assume significant importance. Basel II is the second of the Basel Accords, with the purpose of setting up rigorous and extensive risk and capital management requirements to ensure that a bank holds capital reserves appropriate to the risk it exposes itself too through its lending and investments.
This paper tries to highlight the importance of risk assessment and management in banks, with an emphasis on the recommendations given by the Basel II Accord Since this global financial crisis was primarily brought about due to the risks associated with extending credit, this paper will restrict itself and concentrate more on credit risk management in banks and various practices which are necessary to be followed in order to prevent a similar crisis in future.
Due to the strict RBI guidelines and sincere efforts by the banks themselves, the Indian banks have been much wiser and stricter in their lending practices. This paper will also highlight the various RBI guidelines and efforts in implementing the recommendations of Basel II Accord.
The paper will discuss the various types of credit risks faced by the banks and the ways in which to handle these risks properly, the various credit rating agencies, their role and also various ways of monitoring, assessing and controlling these risks.
WHAT IS RISK?
- Risk is the probability that the realized return would be different from the anticipated/expected return on investment.
- Risk is a measure of likelihood of a bad financial outcome.
- All other things being equal risk will be avoided.
- All other things are however not equal and that a reduction in risk is accompanied by a reduction in expected return.
- Risk means an uncertainty, i.e. the deviation from an expected outcome and what one achieves from what one has planned. The unpredictability of future is due to uncertainties associated with the steps that one undertakes in the process or various external factors that influence the processes that are necessary to achieve planned objective
- The word risk is derived from an Italian word 'Risicare' which means to dare.
The term risk is usually used synonymously with the specific uncertainty because statistics allow us to quantify this specific uncertainty by using so called measures of dispersion, the variability around the average values usually measured by calculating the variance ( square root) or standard deviation which is also called the volatility in a Finance context because we can usually observe positive and negative deviation from the mean. In a business context risk usually expresses negative deviation from expected or aimed at values and is associated with potential for loss whereas positive deviations are considered to represent opportunities.
Risk Management System in Banks:
Banks in the process of financial intermediation are confronted with various kinds of financial and non-financial risks viz., credit, interest rate, foreign exchange rate, liquidity, equity price, commodity price, legal, regulatory, reputational, operational, etc. These risks are highly interdependent and events that affect one area of risk can have adverse consequences for a range of other risk categories. Therefore, the top management of banks should give considerable importance to improve the ability to identify, measure, monitor and control the overall level of risks undertaken by the bank.
The broad parameters of risk management function encompass:
- Organizational structure.
- Comprehensive risk measurement approach.
- The Risk management policies approved by the Board and which should also be consistent with the broader business strategies, capital strength, management expertise and the willingness to assume risk.
- Guidelines and other parameters which are used to govern risk taking including a detailed structure of prudential limits.
- Strong MIS for reporting, monitoring and controlling risks;
- Well laid out procedures, effective control and comprehensive risk reporting framework;
- Separate risk management framework independent of operational Departments and with clear delineation of levels of responsibility for management of risk
- Periodical review and evaluation.
Basis of risk management : Basel II accord:
Pillars of Basel-II:
Pillar 1: Minimum Capital Requirements
It prescribes a risk-sensitive calculation of capital requirements that, for the first time, explicitly includes operational risk in addition to market and credit risk.
Pillar 2: Supervisory Review Process (SRP)
It foresees and anticipates the establishment of suitable risk management systems in the banks and their review by the supervisory authority.
Pillar 3: Market Discipline
It seeks to achieve increased transparency through expanded and more comprehensive disclosure requirements for banks.
Need of Calculating Minimum Capital Requirement for Credit Risk:
- Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms.
- The goal of credit risk management in a bank is to maximize a bank's risk adjusted rate of return by maintaining the credit risk exposure within the tolerable and acceptable parameters.
- Banks need to manage credit risk inherent in the entire portfolio as well as the risk in individual transactions.
CREDIT RISK APPROACHES IN BASEL-II:
The Accord encourages advanced risk management capabilities by stipulating three levels of increasing sophistication with a reduction in capital charge. The approaches use different methods to calculate Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).
- In the Standardized approach proposed by Basel II Accord, credit risk is measured on the basis of the risk ratings assigned by external credit assessment institutions, primarily international credit rating agencies like Moody's Investors (or domestic CRISIL, ICRA, Fitch, CARE etc.)
- This approach is different from the one under Basel I in the sense that the earlier norms had a "one size fits all" approach, i.e. 100% risk weight for all corporate exposures.
- Basel II gives a free hand to national regulators (in India's case, the RBI) to specify different risk weights for different type of exposures
- Banks should use only solicited rating from the eligible credit rating agencies for risk weight calculation as per the Standardized Approach (RBI).
Minimum capital requirement for credit risk:
Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligation is impaired resulting in economic loss to the bank.
- In a bank portfolio , losses stem from outright default due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending ,trading ,settlement & other financial transactions alternatively losses may result from reduction in portfolio value due to actual or perceived deterioration in credit quality credit risk emanates from a bank's dealing with individuals corporate financial institutions or a sovereign for most banks loans are the largest and most obvious source of credit risk ,however; credit risk could stem on activities both on & off balance sheet.
- In addition to direct accounting loss 'credit risk should be viewed in the context of economic exposures .this encompasses opportunity costs, transaction costs & expenses associated with a non-performing asset over & above the accounting loss.
- Credit risk can be further sub-categorized on the basis of reasons of default .for instance the default could be due to country in which there is exposure or problems in settlement of a transaction.
- Credit risk not necessarily occurs in isolation. The same source that endangers credit risk for the institution may also expose it to other risks. For instance a bad portfolio may attract liquidity problem.
Effects of risk due to Inadequate Capital:
- Default in repayment in case of direct lending.
- Crystallization of non-fund based liabilities i.e. Letters of Credit /Guarantees.
- Default in payment by counterparty in case of treasury products i.e. securities/bonds.
- Restriction in free transfer of currency, in case of cross-border exposure.
CONSTITUTION OF CREDIT RISKS:
Lending involves a number of risks. In addition to the risks related to creditworthiness of the counterparty, the banks are also exposed to various other risks such as interest rate risk, forex risk and country risks. Credit risk or default risk means the inability or unwillingness of a customer or counterparty to meet their commitments in relation to lending, trading, hedging, settlement and other types of financial transactions. The Credit Risk is generally composed of transaction risk or the default risk and portfolio risk. The portfolio risk, in turn consists of intrinsic and concentration risk. The credit risk of a bank's portfolio not only depends on internal factors, but also on both external factors. The external factors can be the state of the economy, wide swings in commodity/equity prices, foreign exchange rates and interest rates, various trade restrictions, economic sanctions, the Government policies and so on. The internal factors are deficiencies in loan policies/administration, absence of prudential credit concentration limits, inadequately defined lending limits for Loan appraisal of borrowers' financial position, excessive dependence on collaterals and inadequate risk pricing, absence of loan review mechanism and post sanction surveillance, etc. Another variation of credit risk is the counterparty risk. The counterparty risk arises from nonperformance of the trading partners.
Risk is judged by total exposure. Exposure shall include credit exposure(funded and non- funded credit limits) and investment exposure (including underwriting& similar commitments). The sanctioned limits or outstanding, whichever are higher, shall be reckoned for arriving at the exposure limit. However, in the case of fully drawn term loans where there is no scope for re-drawl of any portion of the sanctioned limit, banks may reckon the outstanding as the exposure.
The Credit Risk is generally made up of:
- Transactional risk
- Portfolio risk
CREDIT RISK AT TRANSACTION LEVEL:
Control/Credit risk mitigation at the transactional level:
The banks use a number of techniques to mitigate credit risk by obtaining:
- Financial collaterals
- Non-financial collaterals like receivables, real estates, moveable assets etc.
- On-balance sheet netting agreements
- Guarantees from various types of protection providers, like Central Government, State Government, ECGC, corporates, individuals etc.
Depending upon the type of collaterals and taking into account the volatility in value of the credit risk mitigants as well as the time required for liquidating the collaterals, the banks use an appropriate valuation methodology i.e. nominal or notional value, market value, appraisal value, book value and distress sale value. Collaterals need to be valued at prescribed intervals. The frequency of such valuation depends upon the type of the exposure and collateral.
Credit risk mitigation techniques : Collateralized transactions
A collateralized transaction is one in which:
- Banks have a credit exposure and that credit exposure is hedged in whole or in part by collateral posted by a counterparty or by a third party on behalf of the counterparty. Here, "counterparty" is being used to denote a party to whom the bank has an on- or off-balance sheet credit exposure.
- Banks have a specific lien on the collateral and the requirements of legal certainty A capital requirement will be applied to a bank on either side of the collateralised transaction: for example, both repos and reverse repos will be subject to capital requirements. Likewise, both sides of securities lending and borrowing transactions will be subject to explicit capital charges, and also the posting of securities in connection with a derivative exposure or other borrowing will be subject to similar charges.
The Comprehensive Approach:
In the comprehensive approach, when taking collateral, banks will need to calculate their adjusted exposure to a counterparty for capital adequacy purposes in order to take account of the effects of that collateral. Banks are required to adjust both the amount of the exposure to the counterparty and also the value of any collateral received in support of that counterparty to take account of any possible future fluctuations in the value of either, caused by market movements. These adjustments are called as 'haircuts'. The application of the haircuts will produce volatility adjusted amounts for both exposure and the collateral. The volatility adjusted amount for the exposure will be higher than the exposure and the volatility adjusted amount for the collateral will be lower than the collateral, unless any of the 2 sides of the transaction is cash. To put it in simple words, the 'haircut' for the exposure will be a premium factor and the 'haircut' for the collateral will be a discount factor. It has to be noted that the purpose underlying the application of haircut is to capture the market-related volatility which is inherent in the value of exposures as well as of the eligible financial collaterals. The value of credit exposures acquired by the banks during the course of their banking operations, would not be subject to market volatility, (since the loan disbursal / investment would be a "cash" transaction) but the value of eligible financial collateral would be. On the other hand, exposures of banks, arising out of repo-style transactions would require upward adjustment for the volatility, since the value of security sold or lent in the repo transaction, would be subject to market volatility. Hence, such exposures will attract haircut.
Also, where the exposure and the collateral are held in different currencies, then an additional downwards adjustment has to be made to the volatility adjusted collateral amount to take into account the possible future fluctuations in the exchange rates.
Where the volatility-adjusted exposure amount is greater than the volatility-adjusted collateral amount (including any further adjustment for foreign exchange risk), banks should calculate their risk-weighted assets as the difference between the two and multiplying it by the risk weight of the counterparty.
Off-balance sheet items
The total risk weighted off-balance sheet credit exposure is calculated as the sum of the risk weighted amount of the market related and non-market related off-balance sheet items. The risk-weighted amount of an off-balance sheet item that gives rise to credit exposure is generally calculated by means of a two-step process:
- The notional amount of the transaction is converted into a credit equivalent amount, by multiplying the amount by the specified credit conversion factor or by applying the current exposure method
- The resulting credit equivalent amount is multiplied by the risk weight applicable to the counterparty or to the purpose for which the bank has extended finance or the type of asset.
CREDIT RISK AT THE PORTFOLIO LEVEL:
There are 3 types of portfolio:
- Loan Portfolio
- Retail Portfolio
- Investment Portfolio
The objective of measuring risk at the portfolio level is to maintain the quality of the portfolio. The considerations to maintain quality of portfolio are as follows:
- Stipulate quantitative ceiling on aggregate exposure in specified rating categories, i.e. certain percentage of total advances should be in the rating category of 1 to 2 or 1 to 3, 2 to 4 or 4 to 5
- Evaluate the rating-wise distribution of borrowers in various industry, business segments,
- Exposure to one industry/sector should be evaluated on the basis of overall rating distribution of borrowers in the sector/group.
- Target rating-wise volume of loans, the probable defaults and various provisioning requirements as a part of the prudent planning exercise.
- Undertake rapid portfolio reviews, stress tests and scenario analysis when there are rapid changes in environment (e.g. volatility in the forex market, the economic sanctions, changes in the fiscal/monetary policies, general slowdown of the economy, extreme liquidity conditions and so on.). The stress tests will help to reveal undetected areas of potential credit risk exposure and linkages between different categories of risk. The output of such portfolio-wide stress tests should be reviewed by the Board and needed changes shall be made in prudential risk limits for protecting the quality.
- Also, introduce the discriminatory time schedules for the renewal of borrower limits. Lower rated borrowers whose financials show signs of problems should be subjected to renewal control twice or even thrice in a year.
Types of Portfolio Risk:
The credit risk of a bank's portfolio depends on external as well as internal factors. The external factors can be the state of the economy, wide swings in commodity/equity prices, foreign exchange rates and interest rates, trade restrictions, economic sanctions, Government policies and so on. The internal factors are the deficiencies in loan policies/administration, absence of prudential credit concentration limits, inadequately defined lending limits for Loan appraisal of borrowers' financial position, excessive dependence on collaterals and inadequate risk pricing, absence of loan review mechanism and post sanction surveillance, etc.
The portfolio risk comprises of:
- Intrinsic risk
- Concentration risk
Measurements at the Intrinsic Level:
- Percentage of advances distributions in different rating grades
- SectoralExposure Limits (including exposureto Sensitive Sectors)
- Unsecured Exposure
- Risks Relating to Off-Balance Sheet Exposures
- NPA Management
- Industrial Rehabilitation
MEASUREMENT/ASSESSMENT OF CREDIT RISK:
It is done with the help of credit appraisal system
- On Balance Sheet Exposures (Advances)
- Off-Balance Sheet Exposures (LCs, BGs)
Bank has elaborate guidelines for credit appraisal system covering appraisal methodology for working capital and term loan proposals. Benchmark financial ratios/indicators, scrutiny at pre-sanction stage and norms for coverage by collateral security have also been prescribed in the Loan Policy.
The extant credit appraisal system in the Bank is an integrated process, wherein separate limits are fixed for funded and non-funded lines. In case of performance guarantees, technical ability of the counterparty to execute the contracts is critically looked into.
Measurement for Percentage of Advances Distributions in different Rating Grades : Rating /scoring for finding the grades:
- Assigning a numeric formula to arrive at a summary number which aggregates all the risks of default related to a particular borrower.
- The final score is a relative indicator of a particular outcome (most often, creditworthiness or default probability of a borrower).
Importance of ratings
- To ascertain financial health of individual obligor, facilities and portfolios and thereby assist in lending decisions.
- Ratings allow to measure credit risk, and to manage consistently a bank's credit portfolio, i.e., to alter the bank's exposure with respect to type of risk.
- Ratings are useful for pricing of a bond or a loan with respect to type of risk.
- Allocate reserve (covered by EL) and capital (covered by UL)
External rating vs Internal ratings:
- External ratings are generated by rating agencies (ECAIs).
- ECAIs specialize in the production of rating information about corporate or sovereign borrowers, they do not engage in the underwriting of these risks. The rating information is made public, while the rating process itself remains non-disclosed.
- Internal ratings, in contrast, are produced by Banks to evaluate the risks they take into their own books. It is not made public because of having competitive advantage.
- External ratings are better than internal rating because they use through the cycle (TTC) approach in comparison to point in time (PIT) approach.
Qualitative Parameter of ECRA
RBI has clarified that "Cash Credit Exposures tend to be generally rolled over and also tend to be drawn on an average for a major portion of the sanctioned limits. Hence even though a cash credit exposure may be sanctioned for a period of one year or less, these exposures should be reckoned as Long Term Exposures and accordingly, the Long Term Ratings accorded by the chosen Credit Rating Agencies will be relevant."
Risk Aggregation and Capital Allocation:
Most of the internally active banks have developed their internal processes and techniques to assess and evaluate their own capital needs in the face of their risk profiles and business plans. Such banks take into account both types of factors (quantitative and qualitative) to assess their economic capital. The Basel Committee now recognizes that the capital adequacy in relation to economic risk is a necessary condition for the long-term stability of banks. Therefore, in addition to complying with the established minimum regulatory capital requirements, banks should also critically assess their internal capital adequacy and the future capital needs on the basis of risks assumed by individual lines of business, product etc. The bank should also be able to identify and evaluate its risks across all its activities to determine whether its capital levels are appropriate, as a part of the process for evaluating internal capital adequacy
Importance of Loan Pricing:
- Loan pricing is a critically important function in a financial institution's operations.
- Loan-pricing decisions directly affect the safety and soundness of financial institutions because of their impact on the earnings, credit risk, and, eventually, capital adequacy.
- The institutions must price loans in a way which is sufficient to cover costs, provide the capitalization needed to ensure the institution's financial viability, protect the institution against losses, provide for borrower needs, and allow for growth. The institutions must have proper policy direction, controls, monitoring and reporting mechanisms to ensure that there is appropriate loan pricing.
Importance of Risk Pricing:
- Risks inherent in lending are a cost to the bank
- Risk based pricing is a tool to determine proactive provisioning as opposed to regulatory provisioning and optimal allocation of capital
- Risk based economic capital allocation
- How to earn adequate return on capital?
- Aligns the incentives of the business executives with the riskiness of the business
Credit risks that need to be priced:
- Losses due to
- Credit Quality downgrade
- Loss Given Default
- Variability of Expected Losses
- Prepayment due to Credit Quality upgrade - prepayment premium
MONITORING THE RISK:
Supervisory Review Process
Four principles for supervisory review process agreed by the Basel committee :
- Principle 1: Internal Process
- Principle 2: Evaluation of Internal Process
- Principle 3: Capital in Excess of Minimum
- Principle 4: Early Intervention
Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels.
Supervisors should review and evaluate banks' internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. Supervisors must be alert enough to take appropriate supervisory action if they feel unsatisfied with the result of this process.
Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum.
Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored.
Internal Capital Adequacy Assessment Process (ICAAP)
Principle 1 of Pillar II envisages that banks should establish adequate risk assessment processes specific to each individual bank and develop and implement a process for assessing its capital adequacy in relation to its risk profiles as well as a strategy for maintaining such capital levels, known as 'Internal Capital Adequacy Assessment Process (ICAAP)'. ICAAP is expected to capture, apart from Credit, Market and Operational Risks, other risks like Interest Rate Risk in Banking Book, Liquidity Risk, Credit Concentration Risk etc. These risks are not covered by Pillar-I.
Principle II puts obligation on the supervisory authorities, whichshould regularly review the process by which a bank assesses its capital adequacy, risk position, resulting capital levels, and quality of capital held. The objective of the review should be on the quality of the bank's risk management and controls. The periodic review can involve acombination of:
- On-site examinations or inspections;
- Off-site review;
- Discussions with bank management;
- Review of work done by external auditors (provided it is adequately focused on the necessary capital issues); and
- Periodic reporting.
The Supervisory Review Process, therefore, comprises a set of relationships between supervisors and institutions that hinge on two main elements. The first is the Internal Capital Adequacy Assessment Process (ICAAP) which places certain obligations on the institution itself. The second is the Supervisory Review and Evaluation Process (SREP) which places certain obligations on the supervisory authority to subject all banks to an evaluation process and to impose any necessary supervisory measures on this basis.
While expressed as two separate processes, the SREP and ICAAP are in practice closely intertwined and it is intended that there will be a close interaction between them, especially so for the larger, more complex and systemically important institutions. This interaction will generate an important and necessary dialogue, and feedback mechanism, through which supervisors can:
- Gain deeper insights into the institution's overall control and risk management frameworks;
- Establish a closer understanding of how individual institutions approach the measurement of risks and the amount of internal capital allocated to them; and
- Assess the extent to which the ICAAP may be relied upon as an input into thesupervisor's evaluation of the adequacy of capital held against all risks.
CONTROLLING THE RISK:
Loan Review Mechanism (LRM):
LRM is an effective tool for constantly evaluating the quality of loan book and to bring about qualitative improvements in credit administration. Banks should, therefore, put in place proper Loan Review Mechanism for large value accounts with responsibilities assigned in various are as such as, evaluating the effectiveness of loan administration, maintaining the integrity of credit grading process, assessing the loan loss provision, portfolio quality, etc. Independent review of Credit Risk Management is done by internal auditors under Risk Based Internal Audit. A system of loan review through 'Credit Audit' which covers audit of credit sanction decisions at various levels has been implemented. Presently, all accounts with total indebtedness of Rs.2 crore and above are subjected to such audit. The credit audit system serves as an effective control on the system of sanction of loans in the bank through appropriately delegated powers.
The main objectives of LRM could be:
- To identify promptly loans which develop credit weaknesses and initiate timely corrective action;
- To evaluate portfolio quality and isolate potential problem areas;
- To provide information for determining adequacy of loan loss provision;
- To assess the adequacy of and adherence to, loan policies and procedures, and to
- monitor compliance with relevant laws and regulations; and
- To provide top management with information on credit administration, including credit sanction process, risk evaluation and post-sanction follow-up.
The timely and accurate credit grading is one of the basic components of an effective Loan Review Mechanism. The Credit grading includes assessment of credit quality, identification of problem loans, and assignment of risk ratings. A proper Credit Grading System must support evaluating the portfolio quality and establishing various provisions for loan loss. The credit ratings awarded by Credit Administration Department should be subjected to review by Loan Review Officers who are independent of loan administration, due to the importance and subjective nature of credit rating.
Risk Management is a key issue for the banks, especially in the current context when the world is still recovering from the financial crisis brought about by inadequate risk management practices. Basel II Accord is a significant international standard which gives important guidelines to the banks regarding risk and capital management requirements and how to safeguard the solvency and the overall economic stability.
In the paper, we studied the 3 pillars on which the Basel II is based and analyzed them primarily concentrating on the credit risk approaches given by the Basel II Recommendations. The most important pillar was the Minimum Capital Requirement for the Credit Risk which was analyzed in detail. Then, we studied the 2 types of credit risks i.e the Transactional Risk and Portfolio Risk and the various risk measurement and mitigation techniques for the same.
Then, we also studied the Measurement and Assessment of Credit Risk, where we saw the importance of ratings, both internal and external, the various guidelines given by RBI for the eligibility of any External Credit Rating Agencies (ECRA's) and the ECRA's chosen by the RBI.
Finally, we saw the importance of loan pricing, risk pricing under risk aggregation and capital allocation followed by the ways to monitor the risk (the 4 principles given by Basel II Committee) and also control the risk (Loan Review Mechanism).
This paper concentrated on the Credit Risk and its Management which is the need of the hour for all the banks today. A proper and comprehensive credit risk management framework and procedure in place can go a long way in making the banks stable and avoiding any sort of financial crisis in the future. To ensure this, Basel II Accord recommendations need to be sincerely followed and implemented by all the banks worldwide.