Title: Financial Risk Management Part One: Considering Risk through the Eye of the Beholder
Abstract:This chapter provides a general introduction to risk and risk management. It also provides a basic understanding of why organizations hedge and what is involved in establishing a risk management frame...This chapter provides a general introduction to risk and risk management. It also provides a basic understanding of why organizations hedge and what is involved in establishing a risk management framework. There are simple methods to visualize risk, including a historical time series, as well as the impact of risk on cash flows. Tools such as stress tests or scenario analysis, as well as more sophisticated simulation-based models such as cash flow at risk (CFAR) and value at risk (VAR), can provide additional objectivity to aid in decisions regarding risk management, but these tools are not without their own risks and limitations. In the end, nothing takes the place of careful and thoughtful analysis. An effective risk management process cannot be carried out without the support and buy-in of the board and executive management, for they serve as the proxy for communicating the stakeholders' risk appetite.Read More
Publication Year: 2012
Publication Date: 2012-01-02
Language: en
Type: other
Indexed In: ['crossref']
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