Financial framework for risk management

1995 ◽  
Vol 1 (2) ◽  
pp. 337-356
Author(s):  
Zoran Ivanović
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Share Price ◽  
Management Decision ◽  
Financing Decisions ◽  
Value Maximization ◽  
Financial Framework ◽  
Decision Structure ◽  
Fund Investment ◽  
Clear Statement

The derivation of a decision framework from which to derive and appraise risk management strategy requires a clear statement of corporate objectives. This article follows the mainstream of financial management in assuming that a firm wishes to maximize the value of the existing owners’ equity, which means the maximization of share price. This objective is referred to, somewhat loosely, as value maximization. From the value-maximization objective, a risk management decision structure was derived. The three processes in a risk management decision relate to the identification of risk management exposures, the measurement of their impact on the firm, and the actual decision. Once risk exposures are identified, their potential for destroying share value must be measured. The decision process may be divided into those decisions concerning the use of fund, investment decisions and those concerning the source of funds, financing decisions.

scholarly journals Towards enhanced risk management: planning, decision making and monitoring of US wildfire response

2017 ◽  
Vol 26 (7) ◽  
pp. 551 ◽  
Author(s):  
Christopher J. Dunn ◽  
David E. Calkin ◽  
Matthew P. Thompson
Keyword(s):  
Decision Making ◽  
Risk Management ◽  
Fire Management ◽  
The United States ◽  
Management Decision ◽  
Current Response ◽  
Ongoing Research ◽  
Response Strategies ◽  
Management Decision Making ◽  
Response Decisions

Wildfire’s economic, ecological and social impacts are on the rise, fostering the realisation that business-as-usual fire management in the United States is not sustainable. Current response strategies may be inefficient and contributing to unnecessary responder exposure to hazardous conditions, but significant knowledge gaps constrain clear and comprehensive descriptions of how changes in response strategies and tactics may improve outcomes. As such, we convened a special session at an international wildfire conference to synthesise ongoing research focused on obtaining a better understanding of wildfire response decisions and actions. This special issue provides a collection of research that builds on those discussions. Four papers focus on strategic planning and decision making, three papers on use and effectiveness of suppression resources and two papers on allocation and movement of suppression resources. Here we summarise some of the key findings from these papers in the context of risk-informed decision making. This collection illustrates the value of a risk management framework for improving wildfire response safety and effectiveness, for enhancing fire management decision making and for ushering in a new fire management paradigm.

scholarly journals Mechanisms of Protection from Interest Rate Risk with Reference to the Life Insurance Market in Montenegro

2018 ◽  
Vol 7 (1) ◽  
pp. 17-42
Author(s):  
Milijana Novović Burić ◽  
Vladimir Kašćelan ◽  
Milivoje Radović ◽  
Ana Lalević Filipović
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Life Insurance ◽  
Financial Management ◽  
Financial Stability ◽  
Interest Rate Risk ◽  
Economic Security ◽  
Insurance Market ◽  
Insurance Companies ◽  
Rate Risk

Abstract Insurance companies are facing major challenges that point to the need for control process and risk management. Risk management in insurance has a direct impact on solvency, economic security, and overall financial stability of insurance companies. It is very important for insurance companies to adequately calculate risks to which they are exposed. Asset liability management (ALM), as an integrated approach to financial management, requires simultaneous decision-making about categories and values of assets and liabilities in order to establish the optimum volume and the ratio of assets and liabilities, with the understanding of complexity of the financial market in which financial institutions operate. ALM focuses on a significant number of risks, whereby the emphasis in this paper will be on interest rate risk which indicates potential losses that may reflect in a lower interest margin, a lower value of assets or both, in terms of changes in interest rates. In the above context, the aim of this paper is to show how to protect from interest rate changes and how these changes influence the insurance market in Montenegro, both from the theoretical and the practical point of view. The authors consider this to be an interesting and very important topic, especially because the life insurance market in Montenegro is underdeveloped and subject to fluctuations. Also, taking into account the fact that Montenegro is a country that has been making serious efforts to join the EU, it is expected that insurance companies in Montenegro will strengthen their financial position in the market even using the ALM traditional techniques, which is shown in this paper.

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