Unlike other areas of finance, risk management is a practice that is difficult for outsiders to observe. While disclosure about risk management activities has become more prevalent in the past decade, such disclosures tell only part of the story about firm behavior and very little about the underlying thinking of the managers making the risk management decisions within the firm. One of the few ways to understand both risk management practice as well as philosophy within the business community is to survey and interview managers.
This study is designed to provide a benchmark of the state of business risk management in the post global financial crisis world. While part of this survey is modeled loosely on the earlier Wharton survey structures in order to allow for comparisons across similar questions to examine changes in behavior over time, (Bodnar et al, (1995, 1996 and 1998)) this survey is different from past surveys in several important ways. First, it is much more expansive in coverage, both in terms of the risk areas it covers as well as the global expanse of its sample.
The survey questions managers about risk in six different areas: interest rate, foreign exchange, energy, commodity, credit and geo-political. In terms of the breadth of the sample, we include both financial and nonfinancial firms, and geographically this survey is one of the first that is truly global in coverage rather than examining just a single country. This allows for an unprecedentedly large response group from which we draw representative conclusions about current risk management practice and philosophy, both for the sample as a whole as well as for key subgroups.
Second, in comparison to many of the earlier surveys that focus only the use of derivatives for managing risk, this survey is more comprehensive, questioning managers about both financial as well as operational methods for managing risk. As we will see, this is an important expansion of investigation as for many of the risk areas examined; it will be operational methods rather than financial methods that are more commonly used by firms to manage these risks.
Download
Managing Risk Management
