How Corporations Use Risk Management to Influence Financial Decision Making

In: Business and Management

Submitted By ireneh244
Words 5215
Pages 21
How Corporations use Risk Management to Influence Financial Decision Making
Holman Skinner
Keiser University
Dr. Tim Drake
Business Research Writing: DBA700
10/16/2012

How Corporations use Risk Management to Influence Financial Decision Making
Introduction
Corporations make financial decisions that pose a risk to the everyday operations of a business everyday. Risk management comes into play with financial decisions when it is important to enabling organizations to reduce exposures to financial decision making, and measuring risk throughout the organization (Lai, Wang, & Yu, 2009). This research study will focus on the topic of how corporations use risk management to influence financial decision making. This research will answer the research problem, research questions, address the theoretical framework.
Statement of Problem The problem the study focuses is centered on focuses on how corporations can avoid making bad decisions when ultizing utilizing risk management in making financial decision making. For instance, some corporations not taking risk management seriously has resulted in inefficient use of capital, increased liabilities, and reputation risk (Chemobai, Jorion, & Yu, 2011). Furthermore, when a firm is not willing to go through risk management, this will create an uncertain atmosphere that leads to lack of guidance for the organization and poor decision making. Moreover, a lack of certainty can cause confusion as to what a company’s acceptance of risk is, such as a level of acceptance. Without risk management,a company can become overconfident in its methods, which could lead to a financial crisis (Purnanandam, 2008). The failure to objectively take risks leads to bad results like a firm taking inappropriate risks not in the best long-term interests of the firm (Chemobai, Jorion, & Yu, 2011). Furthermore,…...

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