Abstract

VARGAS VIVES, JAIME ANDRÉS  and  CRUZ MERCHAN, JUAN SERGIO. CREATING VALUE THROUGH SYSTEMATIC RISK MANAGEMENT. Finanz. polit. econ. [online]. 2015, vol.7, n.1, pp.55-82. ISSN 2248-6046.  https://doi.org/10.14718/revfinanzpolitecon.2015.7.1.3.

This article explores the concept of risk in terms of its theory, application, management and value. The study shows how risk management models can create value by reducing the discount rate of valuation flows of the underlying asset Three models of real derivatives are put forward: sales derivatives, cost derivatives, and EBIT derivatives. These real derivatives focus on maximizing asset value through systematic risk (beta) reduction strategies. In summary, the results of this study contradict one of the central principles of modern management, put forward by C. W. Smith in his well-known article, "Corporate risk management".

Keywords : beta; systematic risk; underlying asset; value; swap; Earnings Before Interest and Taxes (EBIT); operating utility.

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