The browser you are using is not supported by this website. All versions of Internet Explorer are no longer supported, either by us or Microsoft (read more here: https://www.microsoft.com/en-us/microsoft-365/windows/end-of-ie-support).

Please use a modern browser to fully experience our website, such as the newest versions of Edge, Chrome, Firefox or Safari etc.

Exposure-Based Cash-Flow-at Risk for Value Creating Risk Management under Macroeconomic Uncertainty

På svenska

Author

Editor

  • Ulrich Hommel
  • Michael Fabich
  • Ervin Schellenberg

Summary, in English

A strategically minded CFO will realize that strategic corporate risk management is about finding the right balance between risk prevention and proactive value generation. Efficient risk and performance management requires adequate assessment of risk and risk exposures on the one hand and performance on the other. Properly designed, a risk measure should provide information on to what extend the firm's performance is at risk, what is causing that risk, the relative importance of non-value-adding and value-adding risk, and the possibilities to use risk management to reduce total risk. In this chapter, we present an approach - exposure-based cash-flow-at-risk - to calculating a firm's downside risk conditional on the firm's exposure to non-value-adding macroeconomic and market risk and to analyzing corporate performance adjusted for the impact of non-value-adding risk.

Publishing year

2012

Language

English

Publication/Series

The Strategic CFO - Creating Value in a Dynamic Market Environment

Document type

Book chapter

Publisher

Springer

Topic

  • Business Administration

Keywords

  • cash flow at risk
  • risk assessment
  • macroeconomic risk
  • market risk

Status

Published

Research group

  • Knut Wicksell Centre for Financial Studies