essay plan

Question 1

intro

Answer 1

good strat risk mgment = value add. need capital @ time for +NPV investments (F,S&S,94). protect share prices, supply chains and ensure compliance. strategic tools help w tailoring

Question 2

positive 1

Answer 2

strat analysis tools optimise mgment and show unconsidered areas. avoid gaps/exposure, e.g. pol risks. history of PR. B&P intertwined, stable mkts can quickly change e.g. US/CAN steel and ali. risk to production, can assess exposure and consider diversifying customer base. risk transfers too. 54% of 1161 fin execs say PR increasing in last few yrs (G,G&H, 2017)

Question 3

positive 2

Answer 3

PR move in diff cycles. keep on boardroom agenda, again strat frameworks can help ensure feedback cycles. diff to measure, data and modelling, communicate and understand. diff perceptions, potential controversy

Question 4

positive 3

Answer 4

systemic accelerators like climate change. K+M(2008) hurricane intensity, 2005 = alt RTM at unprecedented levels. ILS, Goldman Sachs, explain. +: low credit risk cedant, low BH correlation, -: cendant’s basis and MH risks. EXPAND. value in hedging, beware of consequences

Question 5

positive 4

Answer 5

reg change - CAN be bad, can be good. minimum levels of acceptable beh. CG 90s/2000s, history lesson. need: good supervision, effective mgment, clear lines of accountability, solid framework, ethical and effective strategies, protect invs. Z(14): large scale bus w complex org forms = inc opaque, info asymmetry, agency probs. EXPAND. practices diff between cultures, US/UK love SH value, FEA love families, Scandinavia love diversity. important to consider for MNEs

Question 6

positive 5

Answer 6

boardroom div important, EXPAND. CG risk failures autocratic leadership, exacerbated by lack of div., trad views in western cultures, FTSE 100 40% women board members UK (2nd), only 20% worldwide (deloitte, 22). A et al (23) - div reduces firm risk, value add!

Question 7

negative 1

Answer 7

-ves can be monetary or non-fin. economic good, perform c-b. ILS e.g., MH and basis in exchange for cred risk. MH lowered by defining on index, D(97), but needs mitigating to not destroy value. monitor and update, if not effective divest/don’t renew, effective = expand/inc activity.

Question 8

negative 2

Answer 8

some risk = reward. minimise downs, max ups, don’t eliminate but optimise. hedging can be costly, natural hedges>transfers. insurance can = good beh, ensuring premiums met, overhedging = risk taking, inc competition (J,A&B, 2011). MNEs - could have huge impact

Question 9

conclusion

Answer 9

central bus need not backroom, tools can help put AND KEEP on boardroom agenda, assess effectiveness of implementation. accelerators can provide hurdles, regulation can mitigate. CG shows req of RM at firm level to enhance value as whole. encourage diversity in board members. view RM holistically, CB for fin and nonfin elements. some risk = potential for rewards, overhedging can be destructive. given global bus, could lower value of entire industries. important to remember losses not RM failures, not about elimination but optimisation.

Question 10

F, S & S; 1994

Answer 10

froot, scharfstein and stein (1994)

Question 11

G, G & H; 2017

Answer 11

Giambona, Graham & Harvey, (2017)

Question 12

K&M, 2008

Answer 12

Kerjan and Morlaye, 2008

Question 13

Z(2014)

Answer 13

Zalewska, 2014

Question 14

D, 22

Answer 14

Deloitte, 2022

Question 15

D, 1997

Answer 15

Doherty, 1997

Question 16

A et al, 2023

Answer 16

Ali et al, 2023

Question 17

J, A and B; 2011

Answer 17

Jia, Adams and Buckle, 2011

Question 18

CG streams of reports and focuses

Answer 18

main reports in 1990s - structural
cadbury report - 92
greenbury report - 95
hampel report - 98

in 2000s - accountable
turnbull report - 99
smith report - 2000
higgs report - 2003

combined codes - best behaviour practices