Page 488 - Solid Waste Analysis and Minimization a Systems Approach

466 COMMERCIAL, RETAIL, FINANCIAL, AND GOVERNMENT OFFICE APPLICATIONS

reserves; invest those reserves; and make contractual payments. Fees are based on
the expected incidence of the insured risk and the expected return on investment.
3 Providing specialized services facilitating or supporting financial intermediation,
insurance, and employee benefit programs. In addition, monetary authorities
charged with monetary control are included in this sector.

The subsectors, industry groups, and industries within the NAICS finance and
insurance sector are defined on the basis of their unique production processes. As with
all industries, the production processes are distinguished by their use of specialized
human resources and specialized physical capital. In addition, the way in which these
establishments acquire and allocate financial capital, their source of funds, and the use
of those funds provides a third basis for distinguishing characteristics of the produc-
tion process. For instance, the production process in raising funds through deposit-
taking is different from the process of raising funds in bond or money markets. The
process of making loans to individuals also requires different production processes
than does the creation of investment pools or the underwriting of securities.
Most of the finance and insurance subsectors contain one or more industry groups
of (1) intermediaries with similar patterns of raising and using funds and (2) estab-
lishments engaged in activities that facilitate, or are otherwise related to that type of
financial or insurance intermediation. Industries within this sector are defined in terms
of activities for which a production process can be specified, and many of these activ-
ities are not exclusive to a particular type of financial institution. To deal with the varied
activities taking place within existing financial institutions, the approach is to split
these institutions into components performing specialized services. This requires
defining the units engaged in providing those services and developing procedures that
allow for their delineation. These units are the equivalents for finance and insurance
of the establishments defined for other industries.
The output of many financial services, as well as the inputs and the processes by
which they are combined, cannot be observed at a single location and can only be
defined at a higher level of the organizational structure of the enterprise. Additionally,
a number of independent activities that represent separate and distinct production
processes may take place at a single location belonging to a multilocation financial
firm. Activities are more likely to be homogeneous with respect to production charac-
teristics than are locations, at least in financial services. The classification defines
activities broadly enough that it can be used both by those classifying by location and
by those employing a more top-down approach to the delineation of the establishment.
Establishments engaged in activities that facilitate, or are otherwise related to, the
various types of intermediation have been included in individual subsectors, rather
than in a separate subsector dedicated to services alone because these services are per-
formed by intermediaries, as well as by specialist establishments, and the extent to
which the activity of the intermediaries can be separately identified is not clear.
The finance and insurance sector has been defined to encompass establishments pri-
marily engaged in financial transactions; that is, transactions involving the creation,
liquidation, or change in ownership of financial assets or in facilitating financial trans-
actions. Financial industries are extensive users of electronic means for facilitating the