Risk management can be competitive advantage in coming years
✍ Scribed by Wilson, William T.
- Publisher
- John Wiley and Sons
- Year
- 2007
- Weight
- 609 KB
- Volume
- 15
- Category
- Article
- ISSN
- 0743-5665
No coin nor oath required. For personal study only.
✦ Synopsis
E distraction as they try to forecast financial results, make investment decisions, and allocate resources. Volatility increases the cost of capital and affects capital investment efficiency. What is more, it is only going to get worse.
Volatility drives managers to
distraction as they try to forecast financial results, make investment decisions, and allocate resources.
Volatility affects energy markets the way topography affects a car's fuel efficiency. As you motor down a long, straight superhighway, fuel efficiency stays at a consistently high level. However, throw in a few hills and curves and watch the miles per gallon bounce u p and down like a golf ball in a concrete culvert. Companies have been riding through economic hills and valleys for the past 15 years. Many have learned how to live with this undulating reality. Fundamentals will win. However, managers who learn to understand and mitigate the risks of volatility can overcome one of the most important challenges facing them now and in the future. These managers will be positioned to reap significant opportunities by turning the potential value of risk into real competitive advantage. In this article, I will discuss the sources and risks of volatility, and some of the ways that Unocal Global Trade manages risk to generate value in volatile markets.