The CFO’s Information Challenge in Managing Macroeconomic Risk
AbstractIn this chapter we examine the role of the CFO in setting risk management strategy with respect to macroeconomic risk, in particular, and we consider the information requirements for setting a strategy that is consistent with corporate objectives. We argue that macroeconomic risk management requires a broad approach encompassing financial, operational and strategic considerations. Furthermore, several interdependent sources of risk in the macroeconomic environment must be taken into account. Once this interdependence among, for example, exchange rates, interest rates and inflation are taken into account macroeconomic risk management can be considered a relatively self-contained aspect of Integrated Risk Management (IRM) provided relevant information is available to management. Financial risk management cannot be considered a self-contained part of macroeconomic risk management, however, since value increasing investments in flexibility of business operations affect corporate exposure and make it uncertain.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 847.
Length: 24 pages
Date of creation: 20 Aug 2010
Date of revision:
Publication status: Forthcoming in The Strategic CFO - Creating Value in a Dynamic Market Environment, Fabich, M., Firnkorn, L., Hommel, U., Schellenberg, E. (eds.), Springer Verlag .
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More information through EDIRC
Risk Management Strategy; Macroeconomic Risk; Integrated Risk Management; Chief Financial Officer; Information Needs; Corporate Strategy; Financial Risk; Real Options;
Find related papers by JEL classification:
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- G01 - Financial Economics - - General - - - Financial Crises
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- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-BEC-2010-09-18 (Business Economics)
- NEP-RMG-2010-09-18 (Risk Management)
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