engleski

Corporate Risk Management Practices in Slovenian Companies

In this paper we present the research results on corporate risk management practices in the large Slovenian non-financial companies. The implementation of different risk management strategies and the use of risk management instruments are investigated. Additionally, we have explored which financial institutions and intermediaries are the most important in providing risk management instruments and what are the reasons why Slovenian companies do not manage corporate risks or use derivative instruments. The survey has revealed that the majority of analysed companies are using some form of interest-rate, foreign exchange or commodity price risk management and that companies are highly influenced by the price risk, while currency and interest-rate risk exposure have lower impact on the their performance. Regarding the use and importance of different risk management instruments in risk management strategy, survey results have clearly indicated that Slovenian non-financial companies stick primarily with simple risk management instruments like natural hedging, but it should be noted that the use of derivatives is also frequent - not only plain vanilla instruments like forwards and swaps, but structured derivatives as well. The majority of the analysed companies does not have a documented risk management policy and do not measure their risk exposure, while the hedging horizon for financial risk management is typically less than one year. The primary goal of hedging is managing volatility of cash flows, but Slovenian firms focus also on managing balance sheet and financial ratios. Commercial banks are the primary source for derivatives transactions. Very important reasons numbered by respondents that have influenced decision not to hedge financial risks are the costs of establishing and maintaining risk management programmes that exceed the benefits of it, high cost of purchasing risk management instruments, difficulties in pricing and valuing derivative instruments as well as insufficient exposures of the company to financial risks.

interest rate risk; commodity price risk; exchange-rate risk; risk management; risk management instruments; large Slovenian companies

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