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Hedging the balance sheet
A hedging strategy should be oriented towards hedging the company’s market value to build shareholder value. Normally hedging of balance sheet items is not a good argument for hedging from the shareholders point of view, since a company’s balance sheet not necessarily reflect its market value. In some cases, however, it may be argued that…
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Risk tolerance
One of the most important concepts within risk management is risk tolerance. Without clearly defining risk tolerance it is virtually impossible to implement good risk management, since we do not know what to measure risk against. Defining risk tolerance means to define how much risk the business can live with. Risk tolerance is vitally important…