Jul 2026· International Journal of Finance and Investment· Vol 5, pp. 10-12· 0 citations· 10 references
Abstract
Option instruments are frequently used in corporate finance to reduce the risk of a decline in price asymmetrically and do not restrict the upward movement of the price. Research on the application of options in enterprise risk management. The above options are relatively more suitable for handling the firms' uncertain exposures and non-linear risks and demand for strategic flexibility. Options are relatively precise hedging instruments for foreign exchange risk, commodity price risk and interest-rate risk, etc., and can be used to manage equity exposure of a company. Based on the study of corporate option use and real options and option incentives, the four dimensions of value in this paper are downside protection, flexible hedging, strategic real-option value, and risk governance. In short, options are for speculation; however, if they are well-managed by the company, the risk can be reduced and firm value increased at the same time.
Introduction. In the current conditions of financial market instability, geopolitical challenges and increased inflationary processes, the issues of price risk management, which directly affect the financial results and competitiveness of business entities, are of particular relevance. Price risks arise due to fluctuations in market prices for raw materials, goods, financial assets, interest rates and exchange rates. To minimize the negative consequences of such changes, enterprises actively use financial risk management instruments, in particular forward and futures contracts, options, swaps and other hedging mechanisms. The effectiveness of the use of these instruments largely depends on the quality of information support, the timeliness of accounting data and the reliability of the audit assessment of transactions related to risk management.
The purpose of the article is to determine the features of the use of digital technologies in auditing, as well as the features of the use of financial tools in price risk management.
Results. It was found that the increase in the volatility of financial and commodity markets, the intensification of global economic challenges and the need to ensure the financial stability of business entities actualize the need to implement modern digital solutions to increase the efficiency of accounting and auditing support for risk management processes. The features of the application of financial instruments for hedging price risks were considered and the role of digital technologies in improving the quality of their accounting, assessment, control and audit was determined. As a result of the study, the main directions for improving the accounting and auditing support for financial instruments for managing price risks based on digital technologies were identified.
Conclusions. The study made it possible to establish that the digital transformation of the economy significantly affects the development of accounting and auditing systems for financial instruments for managing price risks. In the context of increasing instability of financial and commodity markets, increasing global challenges and increasing requirements for the quality of information support for management decisions, digital technologies are becoming an important tool for increasing the efficiency of accounting, control and audit risk assessment processes.
V. Panasyuk, Roman Kulyk, Anastasiia Punda· WORLD OF FINANCE· 0 citations
This article studies a dynamic corporate risk management problem by considering the decision-making of risk-averse managers who exert costly effort and select project risk. We study how a Value-at-Risk (VaR) constraint affects managerial decisions and the distribution of firm value when the manager's objective is non-concave with a fixed salary and options. By the concavification technique, we analyze the optimal terminal firm value on the concave envelope of the objective function. Applying the quantile formulation and the martingale approach, we can derive explicit solutions for optimal effort, terminal firm value, and project choice. The optimal terminal firm value can be divided into nine cases by carefully discussing the choices of VaR floor and tail probability. Compared with the benchmark case, we find that a VaR manager will smooth terminal firm value across states, reducing it in good states while supporting it in adverse states. Moreover, a VaR requirement generally improves downside protection and reduces bankruptcy probability when the VaR floor is low or moderate. However, when the VaR floor is sufficiently high, it can increase bankruptcy probability and induce gambling-for-recovery behavior in adverse states. Our sensitivity analysis indicates that greater managerial effort uniformly improves firm value. Moreover, more incentive options make managers more responsible, leading to a smoother terminal firm value across states. In contrast, a high fixed salary makes the manager less responsible and ultimately causes a more dispersed firm value.
Modern corporations are exposed to multifaceted risks because oil prices, interest rates, and exchange rates can change greatly, thus affecting the company's profits and stock prices. Companies need to manage these risks and maintain value and stability. This paper mainly studies how financial derivatives (futures contracts) can help companies cope with risks and maintain stable performance in different market environments. Panel data regression, quantile regression, and Generalized Autoregressive Conditional Heteroskedasticity Model (GARCH) are used to analyze the data of airlines in the Asia-Pacific region and financial companies in South Africa and Africa, respectively. The results show that derivatives can reduce the negative impact of oil price fluctuations on returns and make stock returns more stable. It performs best under extreme market conditions, and gold futures perform best. The use of derivatives can improve the risk-adjusted performance, that is, Sharp ratio. However, its effectiveness is affected by the types of derivative products and market conditions, and there are some problems, such as over-reliance on models, difficulties in implementation, and a lack of clear information.
Ruo-Yuan Ying· Journal of Innovation and De...· 0 citations
This paper provides an overview of risk management in the insurance sector, combining theoretical principles with practical and regulatory perspectives. Starting with a simplified model of risk pooling, we demonstrate how diversification creates benefits for risk-averse policyholders. In a next step, we present a simple model to illustrate the main goal of quantitative risk management: The optimization of performance subject to a variety of constraints rather than a pure minimization of risks. We continue by reviewing the main fields of application of risk management and elaborate on the rationality of risk management due to market frictions. Finally, our discussion of solvency regulation and alternative policyholder protection mechanisms highlights the trade-offs between financial resilience, costs, and market efficiency. Overall, the paper demonstrates that, in addition to being a regulatory requirement, risk management in insurance is a strategic instrument for balancing policyholder protection, economic efficiency, and long-term sustainability.
Manuel Rach, H. Schmeiser· Journal of Business Economic...· 0 citations
Foreign exchange risk has become one of the most significant financial challenges for organizations involved in international trade, foreign investment, and cross-border financial transactions. Exchange rate fluctuations directly affect import costs, export earnings, profitability, cash flows, and overall business performance. This study examines the emerging trends in managing foreign exchange risk in India by analysing various types of currency risks, modern hedging techniques, derivative instruments, technological innovations, and regulatory developments. A descriptive research design was adopted using both primary and secondary data collected from 100 respondents through a structured questionnaire. For analytical purposes, Multiple Regression Analysis was applied to examine the influence of hedging strategies, technological adoption, and regulatory support on effective foreign exchange risk management. The findings indicate that forward contracts, currency futures, options, swaps, artificial intelligence, digital treasury management systems, fintech solutions, and regulatory initiatives significantly strengthen foreign exchange risk management. The study concludes that technology-driven financial solutions and strategic risk management practices enhance organizational resilience, financial stability, and global competitiveness.
Malle Jayanth Yadav, M. Rajitha· International Journal of Cre...· 0 citations
Against the background of increasing volatility and complex risk factors in global markets, options and futures have become important instruments for risk hedging and uncertainty management. This paper systematically explores the risk hedging logic of options and futures, clarifies their theoretical boundaries and applicable constraints, and discusses feasible paths for stock market risk mitigation. First, based on financial derivatives theory, the internal mechanisms of directional hedging using futures and structured hedging using options are analyzed. Second, the theoretical boundaries of the two instruments are defined from the perspectives of pricing model assumptions, market efficiency requirements, and risk factor coverage. Furthermore, empirical analysis is conducted using data from major global stock indexes and derivatives markets to verify hedging effectiveness under different market environments. Finally, a multidimensional risk mitigation framework integrating tool matching, strategy optimization, and regulatory coordination is constructed. The findings provide theoretical support for quantitative risk management and offer analytical references for uncertainty modeling, dynamic response mechanisms, and information propagation in complex engineering systems.
Easter Tang, C.-J. Liu, Y. Zhang· Advanced Electromagnetics· 0 citations
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