Is your risk management program bound for the World Series or the cellar?
By Beaumont W. Vance|June 01, 2007 at 08:00 PM
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Good risk management, in whatever form it takes, is about increasing the company’s ability to hit its goals. For example, the attempt to avoid large losses serves to prevent the kind of adverse impact on the finances of the company that will cause it to miss its targets. Likewise, sophisticated models predicting market or price fluctuations allow the company to plan, invest and hedge in such a way that reaching a goal, if not assured, is more probable.It is often thought that in order to achieve this kind of security, one must trade some upside benefit. This is not always the case. Oddly enough, professional baseball has shown us how knowing the odds and tilting them in our favor can produce fantastic outcomes without trading away any upside potential.
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