113中英文雙語有關企業(yè)公司財務風險管理的畢業(yè)設計外文文獻翻譯成品財務風險管理簡介

1、<p>　　此文檔是畢業(yè)設計外文翻譯成品（ 含英文原文+中文翻譯），無需調(diào)整復雜的格式！下載之后直接可用，方便快捷！本文價格不貴,也就幾十塊錢！一輩子一次的事！</p><p>　　外文標題：Financial Risk Management: An Introduction</p><p>　　外文作者：François-Serge Lhabitant,Olivier

2、 Tinguely</p><p>　　文獻出處:Thunderbird International Business Review, Vol. 43(3) 343–363</p><p>　　英文4402單詞，24567字符，中文7302漢字。</p><p>　　Financial Risk Management: An Introduction</p&g

3、t;<p>　　François-Serge Lhabitant,Olivier Tinguely</p><p>　　Executive Summary</p><p>　　This article provides a brief introduction to risk management. It discusses the rationale for ri

4、sk management for corporations, with a strong focuson financial risk management. It describes the various risks that a company is facing, as well as the various steps to identify and manage them. An illustration of the m

5、ajor tools and methodologies is provided for the case of market risks. </p><p>　　INTRODUCTION</p><p>　　Risk management is in fashion. One cannot open a business magazine or an academic review wi

6、thout reading an article on financial risk management, derivatives, or Value at Risk (VaR). Three main reasons explain this growing interest: the prevailing economic and financial conditions over the last three- decades,

7、 advances in economic and financial theory and, finally, the availability of computing power.</p><p>　　The need for management of financial risk has increased in the wake of two major economic events: the pr

8、ogressive opening of national economies to the world market since World War II and the breakdown of the Bretton Woods fixed exchange rates system in the early 1970s. Since then, companies have been increasingly exposed t

9、o several kinds of risk and various financial crises.</p><p>　　Examples include the world oil price crises, periods of explosive interest rate volatility, successive stock and bond market crashes, currency c

10、rises, the collapse of Long-Term Capital Management, and the financial crises in Mexico, Asia, Russia, and Brazil. These events directly affected the return that most firms received in the course of their businesses, mos

11、t of the time negatively. As a result, instruments and methods of protection to counter these risks have seen a marked rise in demand, c</p><p>　　At the same time, economic and financial research has grown s

12、pectacularly. In economics, the early 1970s saw a new generation of researchers who formulated the basis for new classical economics, which has become the dominant paradigm. Among other things, new classical economic the

13、ory elaborates a complete formalization of the economics of uncertainty, of the economics of information and initiated a renewal of the macroeconomic line of research, which has profoundly renewed the way economists wor&

14、lt;/p><p>　　The availability of powerful computers was the final necessary development. Financial risk management tools rely heavily on complex mathematical models that require both large datasets and highly de

15、manding numerical procedures.</p><p>　　This article is an introduction to financial risk management. We would like to convince the reader that financial risk management is an essential ingredient to successf

16、ully manage a company. Although there will be more focus on financial management, most of the arguments can be extended to risk management in general.</p><p>　　In the next section, we briefly explain the not

17、ion of risk. Then we will present the major risks companies face and describe their possible responses. After that, we attempt to justify the utility of risk management. In the following section, the concept of Enterpris

18、e Risk Management (ERM) is described. Then, we conclude with an application of risk management to some aspects of corporate finance.</p><p>　　WHAT IS RISK?</p><p>　　Risk is inherent in human act

19、ivities. It arises from the unknown nature of future events. Roughly speaking, risk can be defined as the exposure to uncertainty. Accordingly, two notions have to be under- stood and studied: the uncertainty itself and

20、the exposure of an indi- vidual or company to this uncertainty.</p><p>　　Uncertainty can be thought of as the possibility of occurrence of one or several events. Uncertainty is usually represented by a range

21、 of possible realizations of future events, to which a probability distri- bution is assigned.1 Stated differently, each possible realization of all the possible events may occur with a given probability. To study risk,

22、a precise description of future events and the determination of their probability distribution are necessary. From a practical point of view, two </p><p>　　The second component of risk is the exposure to unc

23、ertainty. Different human activities are not affected in the same way by the same uncertainty. A typical example is future weather, which is obvi- ously not known, but affects human activities heterogeneously: weather co

24、nditions are crucial for agriculture, while they do not affect most other economic activities. The identification of which uncertainty is pertinent to a given activity represents the basic ingre- dient of risk management

25、.</p><p>　　WHICH RISKS? WHAT CAN WE DO?</p><p>　　It is important to realize that risk by itself is neither good nor bad. Companies must take risks to stay in business and to gain competitive adv

26、antage. What is important for them is to identify and handle risks correctly. This ability can actually become a source of profit. Conversely, an unidentified, mismanaged, misunderstood, unintended or incorrect- ly price

27、d risk may adversely affect the company’s profit. Successful orga- nizations should take risks that are necessary to achieve their goal</p><p>　　Which Risks Does the Company Face?</p><p>　　In ad

28、dition to traditional business risks (production risks, supply and demand risks, management risks, human capital risks, etc.), most business activities face financial risks. These can be classified into several basic cat

29、egories.</p><p>　　Market risk includes all potential losses due to adverse changes in some financial market variables (such as interest rates, foreign exchange rates, equity and commodity prices, etc.). Thei

30、r impact can be direct (erosion of own operating margins) or indirect (through the consequences of the exposure faced by competitors, suppliers, or customers).</p><p>　　As we will see, the measurement of mar

31、ket risk benefits from the most advanced methodology for risk measurement. Once identified, management of these risks is generally straightforward, because market risks are by definition exchangeable on markets.</p>

32、;<p>　　Credit risk refers to the possibility that a loss will be incurred because some counterpart fails to make payments as due (nonpayment or delayed payment). Most transactions involve credit risk, ranging from

33、 nonpayment of anything from conventional loans and securities to trade credits and receivables. Traditional credit risk management consisted of evaluating the creditworthiness of counterparts (through the use of rat- in

34、gs, for example), of setting prudential risk limits to avoid excessive con</p><p>　　Operational risk is the risk that human errors, system failures, or inad- equate procedures or controls will result in unex

35、pected losses. Although operational risk has always existed, it has taken a back seat to both market and credit risk in the past. Indeed, even finding a working definition of operational risk is a difficult task, and thi

36、s has slowed down the possibility of managing it. Today, operational risk management is a discipline with its own management structure, methodology, tools, a</p><p>　　Liquidity risk can be defined as the fac

37、ility with which a corporation can convert an asset into a cash amount equal to its current market value. The conversion typically consists in either selling the asset, or in using it as collateral to secure a loan. Lack

38、 of liquidity can arise because of insufficient market depth, or because of disruptions in the market- place. Liquidity risk is particularly high in over-the-counter markets.</p><p>　　Because firms rely heav

39、ily on quantitative models (in particular for pricing financial instruments, hedging their positions and monitoring risks), they are exposed to model risk. This new risk category covers several possible failures: a model

40、 is inappropriately applied, an incorrect model is used, or a model is simply wrong. Consequently, inadequate decisions are made and subsequent losses appear.</p><p>　　Attitudes with Respect to Risk</p>

41、;<p>　　Firms can adopt several attitudes with respect to risk.</p><p>　　Avoid risk. Risk, to state the obvious, is inherent in all business and financial activity. It is therefore simply impossible to

42、 avoid risk in any economic environment, where at least some of the firm’s suppliers, consumers, or competitors will face risk and will indirectly expose it. In addition, avoiding risk is generally not optimal for firm’s

43、 owners.</p><p>　　Ignore risk. Even though risk is considered a factor that significantly affects earnings and share prices, several firms do not take any measures against risk.3 Three types of arguments are

44、 usually made to try to justify this attitude.</p><p>　　1.The company does not master the necessary quantitative tools to measure the risk exposure and it is intimidated by the complexity of derivatives.<

45、/p><p>　　2.Managers estimate that financial manipulations lie outside the firm’s field of expertise and shareholders should manage the risks by themselves. A typical assertion is “our business is to produce goo

46、ds, not to speculate on financial markets.”</p><p>　　3.Managers believe that hedging costs systematically exceed the potential benefits of risk management, so that bearing risks is more profitable than hedgi

47、ng them. This is often the case when risk exposure is small. This explains why most large companies self-insure against minor unexpected losses. The same policy is not necessarily acceptable for smaller or less profitabl

48、e companies.</p><p>　　Whatever the motive, ignoring risk is no longer a safe option. Due to spectacular losses, legislators, investors, regulators, customers, and the public are demanding greater accountabil

49、ity and effective controls. CEOs, directors, and managers increasingly become personally accountable for losses. Therefore, they need to understand the implications and risks associated with each decision they take.</

50、p><p>　　Limit risk. It is common practice that higher levels of management place limits on the amount of risk that lower levels of management can take. However, the effectiveness of such limits is contingent up

51、on the ability of both upper and lower management to measure and monitor risk exposures, i.e., in having implemented the first steps of a risk management program.</p><p>　　Diversify risks. Diversification—ta

52、king multiple uncorrelated risks— provides an effective method to reduce risk at virtually no cost. Usually, it is automatically integrated into the operations of larger firms, which have more product lines, but is harde

53、r to achieve for smaller firms that are more specialized.</p><p>　　Manage risks. Finally, risk can be managed, which does not necessarily mean eliminated. Firms can decide which risks are part of their core

54、activities and should be retained, and which ones should be transferred or insured to third parties. Through financial engineering, risks can be unbundled and reallocated in a highly calibrated manner among people that a

55、re interested in bearing them. Nevertheless, it is important to recall the law of the “conservation of risk”: financial engineering does not</p><p>　　A RATIONALE FOR RISK MANAGEMENT</p><p>　　At

56、its most general level, the term “risk management” denotes the decisions and actions taken independently of the operating business by an individual or a firm to alter the risk/return profile of its future cash flows. Typ

57、ically, an attempt to reduce risk through such actions is called hedging, while an increase in risk exposure is called speculation.</p><p>　　From the perspective of an individual, risk sharing and thus risk

58、management increases a sense of well-being because, by nature, humankind is risk averse. For example, the risk of a serious disease is a major concern for most of the population. Individuals typically share this risk thr

59、ough health insurance contracts. This behavior can be viewed as risk management at the individual level.</p><p>　　Unfortunately, this type of explanation cannot be applied directly to firms. The usefulness o

60、f risk management in a firm is not so clear. Improving shareholder value5 is the primary objective of most publicly held companies. Therefore, a fundamental question needs to be addressed, namely, does risk manag

61、ement add value for shareholders? The answer is not obvious.</p><p>　　Early academic research gives no motivation for hedging. Nobel Prize winners Miller and Modigliani (1958) showed that financial manipulat

62、ion—such as hedging—does not influence a firm’s value in a perfect world.6 Their fundamental premise is that shareholders can hedge risks more effectively in their own portfolio than managers at the firm level. Sharehold

63、ers can account for their respective risk aversion and preferences, and benefit from the cost-free diversification of offset- ting risk exposur</p><p>　　Similarly, another line of reasoning suggests that ris

64、k management wastes resources because economies tend to follow equilibrium long- term relationships.7 In this environment, there is no risk in the long term, and the rationale for risk management is found in s

65、hort-term deviations from long-term relationships. The cost of eliminating this short- term risk can easily offset the profit and, therefore, risk management represents only a dead-weight cost that destroys shareholder v

66、alue.</p><p>　　The growing interest in risk management suggests that new factors have to be considered. In addition to regulator influence,8 there are two primary nonmutually exclusive influences driving th

67、e demand for risk management: the presence of market imperfections and manage- rial risk aversion.</p><p>　　Managerial Risk Aversion</p><p>　　Empirical evidence suggests the existence of a relat

68、ionship between risk management and managerial risk aversion.9 Some stakeholders, such as employees and managers, may engage in hedging strategies because they have disproportionately large investments in a firm.

69、These investments are often nonvisible, in the form of human capital and business specific skills, and poorly diversified. In this case, hedg- ing becomes a natural form of job protection.</p><p>　　Along the

70、 same lines, managers may decide to hedge or speculate because of specific incentive issues. For instance, performance bonus- es can encourage taking larger risks toward the end of bad years (“double-or-quit”), as well a

71、s lowering risk exposure tolerance toward the end of good years (“freeze and wait”). This suggests that risk management performance benchmarks need to be carefully aligned with shareholder objectives to avoid perverse be

72、haviors.</p><p>　　Last, but not least, a pragmatic approach would be to assert that firms increasingly manage their risks because they consider this activity profitable.</p><p>　　In conclusion,

73、the true motive for risk management is difficult to determine. Does risk management increase managers’ utility or the value of the firm? Although these two objectives conflict most of the time, their respective theories

74、(managerial risk aversion and the pres- ence of market imperfections) accounting for the growth of risk man- agement are not mutually exclusive. That is to say, both theories could be independently contributing to growth

75、 in this area.</p><p>　　ENTERPRISE RISK MANAGEMENT (ERM): A GLOBAL VIEW</p><p>　　A firm represents a complex network of activities that are generally managed by functional and operational areas.

76、 Historically, many organizations adopted a decentralized approach to risk management, encouraging each department or business unit to dutifully manage its risks. Consequently, risk managers focused on segregated risks w

77、ith- out a clear picture of their combined impact.</p><p>　　Over the last few years, firms have begun to consider the sum of indi- vidual risks as a combination of risks that are interrelated. For exam- ple,

78、 market risk certainly influences default probabilities and recovery potentials. Operational risk is created by the same activities that cre- ate market and credit risk. The progressive recognition that risks influence o

79、ne another, and that they jointly affect the performance of a company has promoted the management of risk at a global level instead o</p><p>　　This concept, usually referred to as Enterprise Risk Management

80、(ERM), provides two important immediate tangible benefits. It allows for better identification, understanding, and control of all existing risks simultaneously. Moreover, it improves the efficiency of hedging: offsetting

81、 positions significantly reduce transaction costs and lead to improvements in procedures or systems that may reduce operational risk. Through a comprehensive risk management framework, ERM helps companies to develop <

82、/p><p>　　The ERM process can be decomposed down into three phases. It begins with an enterprise risk diagnostic, devoted to identifying, understanding and prioritizing the critical risks that affect enterprise

83、value. It continues with the quantification of these risks, both individually and jointly, so that correlations among risks can be under- stood. It concludes with the adoption of organizational and financial strategies

84、 to control and manage risk at a firm wide level.</p><p>　　AN ILLUSTRATION OF FINANCIAL RISK MANAGEMENT: MARKET RISK</p><p>　　We will now provide an illustration of a market-risk management pro-

85、 cess. For the purposes of our analysis, we will take the case of a U.S. firm (U.S. dollar based, U.S.D.) manufacturing goods in the United Kingdom (costs in British pounds, GBP) and selling them mostly in France (revenu

86、es in Euros, EUR). All investments are financed through</p><p>　　U.S.D. debt. We will also assume that managers seek to maximize share- holder’s value, measured as quoted stock price increase in U.S.D.</p

87、><p>　　Identifying Market-Risk Factors</p><p>　　The first step consists of identifying the market risk factors that sig- nificantly affect the firm. Regressing the firm’s past revenues,expenses, or

88、 stock returns against various financial variables like mar- ket index returns, interest rates, commodity prices, etc., will often provide valuable information.</p><p>　　Quantify Exposures</p><p&g

89、t;　　Once risk factors have been identified, the next step is to decide on the nature of the firm’s exposure to be managed. There are basically three different exposures in a firm. The transaction exposure is the effect t

90、hat a price or rate change has on cash flow or firm value. It concerns mostly near cash flows from past business deals and existing contractual obligations. The operating exposure (also called eco- nomic exposure) is the

91、 effect that a price or rate change has on the future expected c</p><p>　　The existence of these simultaneous exposures illustrates several pop- ular misconceptions about market risks. For instance, it is of

92、ten said that only firms with foreign operations are exposed to the exchange rate, or that if a firm denominates all sales and purchases in its own currency, it faces no exchange rate risk. Although this is true from a t

93、ransaction exposure perspective, it is false from the operating expo- sure perspective. Even if our firm invoices its French customers in dollars, </p><p>　　Despite the importance of long-term competitive ex

94、posure for a firm’s future cash flows, firms tend to use financial instruments to hedge primarily near-term (less than one year) transaction and contractual exposures (see, for instance, Bodnar & Gehardt, 1999). Even

95、 in this situation, there are numerous possible risks to be hedged: net operating cash flows, taxable income, accounting earnings, etc. The choice will often be driven by the effective motives for risk management. If man

96、agers manage r</p><p>　　Manage the Risk</p><p>　　Once individual and global market risk(s) exposure(s) are available, strategies to control and manage them can start. To be honest, the optimal r

97、isk management strategy is often company specific—an assertion consistent with the observation that there is wide variety in the risk management practices of companies. Each firm needs to assess which method best suits i