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Managing Risk Management

57 Pages Posted: 18 Mar 2011 Last revised: 20 Dec 2013

Gordon M. Bodnar

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS)

Erasmo Giambona

Syracuse University - Whitman School of Management - Finance Department; James D. Kuhn Center for Real Estate

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Richard C. Marston

University of Pennsylvania - Finance Department; National Bureau of Economic Research (NBER)

Date Written: March 15, 2011

Abstract

We survey and analyze risk management goals, policies, and perceptions of risk managers in businesses and organizations around the world. With more than 1,100 responses and a global scope, we ask specific questions about risk management behavior in six risk areas: interest rate, foreign exchange, commodity, energy, credit, and geopolitical risk. We question risk managers about their firm's exposures to these risks areas as well as their financial and operational methods used to in risk management. In addition, we pose specific questions about the interaction between risk management and the firm's investing and financing policies as well as the impact of recent and possible changes to derivatives market regulation on the firm's derivative usage. As some questions in the survey are drawn directly from earlier surveys we are also able to assess changes in policy and practice over time. Finally, we link the personal characteristics of risk managers to their practices. For example, we are able to determine whether a manager's personal risk aversion is linked to the risk management policy that manager oversees. Overall the results suggest that in the post global financial crisis world, risk management is an important part of corporate activities and that best practice in risk management policy and behavior has become global.

Keywords: Corporate risk management, Global survey

JEL Classification: G32

Suggested Citation

Bodnar, Gordon M. and Giambona, Erasmo and Graham, John R. and Harvey, Campbell R. and Marston, Richard C., Managing Risk Management (March 15, 2011). AFA 2012 Chicago Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1787144 or http://dx.doi.org/10.2139/ssrn.1787144

Gordon M. Bodnar

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-663-7731 (Phone)
202-663-7718 (Fax)

Erasmo Giambona (Contact Author)

Syracuse University - Whitman School of Management - Finance Department; James D. Kuhn Center for Real Estate ( email )

721 University Avenue
RM 120-D
Syracuse, NY 13244-2450
United States
315 443-4885 (Phone)

John Robert Graham

Duke University ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7857 (Phone)
919-660-8030 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Campbell R. Harvey

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)
919-660-8030 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Richard C. Marston

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-7626 (Phone)
215-573-2242 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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