Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81520
Authors: 
Andrén, Niclas
Jankensgård, Håkan
Oxelheim, Lars
Year of Publication: 
2010
Series/Report no.: 
IFN Working Paper 843
Abstract: 
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.
Subjects: 
Cash-flow-at risk
Value at risk
Risk management
Value creation
Total risk
JEL: 
E32
G32
G33
G34
M16
M21
Document Type: 
Working Paper

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