Advertisement

A Practical Perspective on Corporate Risk Management

  • Nicos A. ScordisEmail author
  • Annette Hofmann
Chapter

Abstract

The essay draws on ideas from across knowledge silos in order to provide a pragmatic examination of the risk management concept in a corporate setting. The essay explores: the need to allow into our thinking the notion that risk and uncertainty are distinct; the practical challenges of implementing the idea that the price of any single risk facing the corporate risk manager also depends on how it associates with all the other risks facing the firm; a tractable strategy for the risk manager given that there is not a consensus on why corporations manage risk. A possible way forward is a management strategy that conceptualizes risk as tactical and as strategic.

References

  1. Aretz, K., and S. Bartram. 2010. Corporate Hedging and Shareholder Value. Journal of Financial Research 33 (4): 317–371.CrossRefGoogle Scholar
  2. Artzner, P., F. Delbaen, J.-M. Eber, and D. Heath. 1999. Coherent Measures of Risk. Mathematical Finance 9 (3): 203–228.CrossRefGoogle Scholar
  3. Csoka, P., J.-J. Herings, and L. Koczy. 2007. Coherent Measures of Risk from a General Equilibrium Perspective. Journal of Banking and Finance 31 (8): 2517–2534.CrossRefGoogle Scholar
  4. Douglas, M., and A. Wildavsky. 1982. Risk and Culture. Berkeley: University of California Press.Google Scholar
  5. Eeckhoudt, L., and C. Gollier. 2005. The Impact of Prudence on Optimal Prevention. Economic Theory 26 (4): 989–994.CrossRefGoogle Scholar
  6. Elahi, S. 2011. Here be Dragons … Exploring the ‘Unknown Unknowns’. Futures 43 (2): 196–201.CrossRefGoogle Scholar
  7. Ericson, R., and A. Doyle, eds. 2003. Risk and Morality. Toronto: University of Toronto Press.Google Scholar
  8. Franke, G., H. Schlesinger, and R. Stapleton. 2011. Risk Taking with Additive and Multiplicative Background Risk. Journal of Economic Theory 146 (4): 1547–1568.CrossRefGoogle Scholar
  9. Jensen, M., and W. Meckling. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3 (4): 305–360.CrossRefGoogle Scholar
  10. Kahneman, D., and A. Tversky. 1979. Prospect Theory: An Analysis of Decision under Risk. Econometrica 47 (2): 263–291.CrossRefGoogle Scholar
  11. Klein, G. 1998. Sources of Power: How People Make Decisions. Cambridge, MA: MIT Press.Google Scholar
  12. Merton, R. 1973. An Intertemporal Capital Asset pricing Model. Econometrica 41 (5): 867–887.CrossRefGoogle Scholar
  13. Power, M. 2009. The Risk Management of Nothing. Accounting, Organizations and Society 34 (6/7): 849–855.CrossRefGoogle Scholar
  14. Samson, S., J. Reneke, and M. Wiecek. 2009. A Review of Different Perspectives on Uncertainty and Risk and an Alternative Modeling Paradigm. Reliability Engineering and System Safety 94 (2): 558–567.CrossRefGoogle Scholar
  15. Schrand, C., and H. Unal. 1998. Hedging and Coordinated Risk Management: Evidence from Thrift Conversions. Journal of Finance 53 (3): 979–1013.CrossRefGoogle Scholar
  16. Scordis, N., J. Barrese, and P. Wang. 2008. The Impact of Cash Flow Volatility on Systematic Risk. Journal of Insurance Issues 31 (1): 43–71.Google Scholar
  17. Slote, M. 2001. Morals from Motives. Oxford: Oxford University Press.CrossRefGoogle Scholar
  18. Spicker, P. 2010. Generalisation and Phronesis: Rethinking the Methodology of Social Policy. Journal of Social Policy 40 (1): 1–19.CrossRefGoogle Scholar
  19. Todd, P., and G. Gigerenzer. 2012. Ecological Rationality: Intelligence in the World. Oxford: Oxford University Press.CrossRefGoogle Scholar
  20. Wong, K.P. 2014. Hedging and the Competitive Firm Under Correlated Price and Background Risk. Decisions in Economics and Finance 37 (2): 329–340.CrossRefGoogle Scholar
  21. Zingales, L. 2000. In Search of New Foundations. Journal of Finance 55 (4): 1623–1653.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2017

Authors and Affiliations

  1. 1.St. John’s UniversityNew YorkUSA

Personalised recommendations