(), Clas Wihlborg
() and Marcus Thorsheim
Lars Oxelheim: Research Institute of Industrial Economics (IFN), Postal: and Lund University, Box 7082, SE-220 07 Lund, Sweden
Clas Wihlborg: Argyros School of Business, Postal: Chapman University
Marcus Thorsheim: Lund Institute of Economic Research
Abstract: In 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.
24 pages, August 20, 2010
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