Risk Management in Financial Firms

Financial firms face constant exposure to unpredictable swings in exchange rates, interest rates, and asset prices, and risk management research examines how they identify, measure, and respond to those exposures using instruments such as derivatives and hedging strategies. A central concern is whether these practices actually preserve or increase firm value, or whether they primarily serve the interests of managers rather than shareholders—a tension that pulls corporate governance research directly into the conversation. Scholars are still working out when foreign currency derivatives reduce genuine economic risk versus when they introduce new complexities, and how enterprise-wide risk frameworks can be designed to account for the interdependencies between different types of financial exposure. Ongoing debates turn on how governance structures, disclosure requirements, and regulatory environments shape the incentives firms have to hedge at all.

Works

46,999

Total citations

266,572

Keywords

DerivativesHedgingExchange Rate ExposureFirm ValueCorporate GovernanceFinancial Risk