There is necessary to develop in the company skills hedging plans execution and sustainable increase of company value. It should allow to manage risk in conscious and efficient way. The possible failures in the modeling and analyzing of risk exposures could lead to wrong decisions, contract concluding and loosing market opportunities, inefficient risk capital allocation in company and hedging not the most important risk for creation in the company added value. That is why risk controlling should be developed in the centralized way and the mandate to risk taking should be delegated to particular responsibility centers as limit based on risk capital value.
Top management and persons that take decisions should consider both expected result and risk connected with particulars action alternatives. These two prism should be harmonized in order to make decisions based on maximization of expected return on unit of risk taken. The higher return on capital the more efficient decision – the most efficient decision secures the highest return on risk among alternatives characterized by the same value of risk. Set of such decisions should guarantee the lowest risk level by given return.
Managers should – taking into consideration necessity of offsetting risk influence on company economy with expectations of its profitability – strive to maximize executed economic profits by acceptable risk exposure for all company stakeholders. It means that there should be taken decisions allowing to minimize risk value and to maximize economic profits.
There can be observed evolutions of decisions makers concentration: from traditional approach, focusing only on costs and revenues, into assessment of relation of economic profits to taken risk (implied risk capital). Company is able to create competitive approach based during making decisions on information regarding expected results adjusted by related risks, what should allow to increase sustainability of profits and to optimize engaged capital structure.
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