Inhaltsangabe:Introduction: The importance of a systematic risk identification, measurement and management as a management duty has increased in recent years. After risk management and interest risk management in particular was primarily relevant for banks in the past, it is a crucial competition factor for all enterprises today. Especially since the recent financial crisis treasurers are far more risk conscious and companies are reassessing their financial risk management procedures. The most important parameter for the cost of financing and the return of capital investments is the interest rate. However the interest rate is subject to fluctuations, what constitute the interest rate risk the company is exposed to. With increasing volatile financial markets and global competition CFOs are focusing more and more on an efficient measurement and management of interest rate risk. In this context this academic paper aims to point out the risks of an adverse change in interest rates for a corporate portfolio of interest-bearing positions and show possibilities to measure and manage these risks. The 2nd and 3rd sections set the scene for interest risk management in a corporate treasury of a service enterprise by providing essential knowledge about financial risk management and giving an insight into the characteristics of a service enterprise as well as the responsibilities of a corporate treasury and the factors that influence the treasury risk management approach. In section 4 and 5 respectively follows a process-oriented instruction of how to quantify interest rate risk and how to manage it. Besides the risk measures duration and convexity (4.2), two different approaches to value at risk, the historical simulation (4.3.2) and the variance-covariance-approach (4.3.3), will be examined. The value at risk is a measure to quantify risk that allows to express the risk exposure with a single absolute figure. For the management of the interest rate risk an overview of possible hedging instruments to reduce interest risk exposure will be given and their different strategies examined (5.1). All approaches will be measured against their practical feasibility and for both, the quantification and the management of interest rate risk, implications for the implementation in a service enterprise will be provided (4.5; 5.2). This will also be illustrated in a case study in section six. The conclusion serves for a critical reflection of all methods being [...]

Financial risk management is currently subject to much debate, especially the accounting for derivative products, and a number of commentators are objecting to the introduction of International Accounting Standard IAS 39 for Derivatives that will be in force by January 2005 for all EU companies. The topic of hedge accounting and the treatment of fair values may have a significant impact on many companies reported profits, and the volatility of earnings is likely to increase. Uniquely this monograph focuses on interest rate risk management. Most studies of corporate risk management have typically dwelt on the topic of management of exchange rate risk, with interest rate risk management being neglected. The book’s findings examine the views of UK corporate treasurers who are usually involved in the risk management strategies of their organisation and who have responsibility for implementing those strategies in practice. * The research is the first comprehensive UK study on this area * Relevant to the imminent arrival of IAS 39, the International Accounting Standard for Derivatives that will be in force by January 2005 for all EU companies. * The findings of the book have implications for government policy and regulators

In the field of financial risk management, the 'sell side' is the set of financial institutions who offer risk management products to corporations, governments, and institutional investors, who comprise the 'buy side'. The sell side is often at a significant advantage as it employs quantitative experts who provide specialized knowledge. Further, the existing body of knowledge on risk management, while extensive, is highly technical and mathematical and is directed to the sell side.This book levels the playing field by approaching risk management from the buy side instead, focusing on educating corporate and institutional users of risk management products on the essential knowledge they need to be an intelligent buyer. Rather than teach financial engineering, this volume covers the principles that the buy side should know to enable it to ask the right questions and avoid being misled by the complexity often presented by the sell side.Written in a user-friendly manner, this textbook is ideal for graduate and advanced undergraduate classes in finance and risk management, MBA students specializing in finance, and corporate and institutional investors. The text is accompanied by extensive supporting material including exhibits, end-of-chapter questions and problems, solutions, and PowerPoint slides for lecturers.

This chapter first discusses financial risk management from a broad perspective, including possible definitions and examples of industry applications of financial hedging. The discussion then moves to a basic review of the theoretical rationales for managing (financial) risk and the related empirical findings. The potential for the interaction of financial hedging with other areas of risk management (such as operational and strategic) is then explored. Finally, there is a discussion regarding the lessons that can be applied to Enterprise Risk Management from the knowledge base about financial hedging.

Scholars and practitioners have known for a long time that risk plays an important, indeed central, role in determining the appropriate discount rate to be used in a sophisticated valuation model. In today's world, however, the very risk of survival, especially for financial institutions, is essential to the health of the world's capital markets and their impact on the global economy.Risk, Value and Default is a vital text for understanding the interaction between enterprise risk management with corporate valuation and corporate default. The book seeks to explore the interaction between the risk of default and enterprise risk, and their joint impact on firm valuation. It aims to address the problem of how corporations should deal with risk and how they can maximize shareholder value. It also examines various conceptual ways to measure risk, thereby bridging the gap between theoretical concepts and pragmatic application.The book combines sound conceptual analytics and empirical tools to provide useful information and tangible guidelines for firms, risk managers and financial analysts and advisors. Scholars and professionals with an interest in risk management, and managers, owners, creditors and potential investors in enterprises will find Risk, Value and Default a particularly useful guide to understanding the relationship between risk generation, risk management and corporate value and default from an interdisciplinary perspective.

Enterprise Risk Management in Finance is a guide to measuring and managing Enterprise-wide risks in financial institutions. Financial institutions operate in a unique manner when compared to other businesses. They are, by the nature of their business, highly exposed to risk at every level, and indeed employ their own risk management functions to manage many of these risks. However, financial firms are also highly exposed at enterprise level. Traditional approaches and frameworks for ERM are flawed when applied to banks, asset managers or insurance houses, and a different approach is needed. This new book provides a comprehensive, technical guide to ERM for financial institutions. Split into three parts, it first sets the scene, putting ERM in the context of finance houses. It will examine the financial risks already inherent in banking, and then insurance operations, and how these need to be accounted for at a floor and enterprise level. The book then provides the necessary tools to implement ERM in these environments, including performance analysis, credit analysis and forecasting applications. Finally, the book provides real life cases of successful and not so successful ERM in financial institutions. Technical and rigorous, this book will be a welcome addition to the literature in this area, and will appeal to risk managers, actuaries, regulators and senior managers in banks and financial institutions.

The treasury manager has to balance the treasury and risk related operations is another job function that helps to leverage the company s financial position. This book explores the securities market, money markets and interest rates; risks faced by trea