Chapter on Risk Management

37 Pages Posted: 20 Mar 2023

See all articles by Kristine Watson Hankins

Kristine Watson Hankins

University of Kentucky

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Date Written: March 8, 2023

Abstract

Informed risk management can reduce firm risk to tolerable levels, allowing companies to thrive. The consequences are new jobs, new products, and long-lasting benefits to society. However, the academic evidence on the importance of risk management is frequently described as ‘mixed’ (MacKay and Moeller, 2007; Bodnar et al., 2019). This article will explore both important successes in the literature and where disconnects remain between theory and empirical work. We begin by building a broad taxonomy for categorizing the key corporate risks before delving into the motivations to manage risk through the lens of various stakeholders. The chapter also surveys the many financial and operational hedging tools documented in the literature. We conclude with a discussion of possibilities for additional novel research.

Keywords: risk management, financial hedging, operational hedging, risk exposure

JEL Classification: G32. G33. G35, L20

Suggested Citation

Hankins, Kristine Watson and Hoberg, Gerard, Chapter on Risk Management (March 8, 2023). Available at SSRN: https://ssrn.com/abstract=4388870 or http://dx.doi.org/10.2139/ssrn.4388870

Kristine Watson Hankins (Contact Author)

University of Kentucky ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://faculty.marshall.usc.edu/Gerard-Hoberg/

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