Strategic risk management
In comprehensive risk management the financial risks and opportunities are balanced so that the organization’s operations can develop in the best possible way.
An accumulated risk perspective provides for stability
The goal of many companies is that their risk management creates the stability necessary for their operations to develop in the best possible way. When considering a company’s risks, there is no such thing as “zero” risk. Instead it is a question of balancing risks and opportunities. AGL works with comprehensive risk management. This implies that the risk management is performed in a manner witch takes into consideration how the whole company is affected by the operational risks.
The method of approach covers both business risks and financial risks.
For many companies changes in interest rates and currency prices play a critical role for their future results; however the development of these parameters is not within the control of the individual company. AGL has developed simulation models in witch different strategies for the management of financial risk are quantified and analysed. The models AGL has at its disposal manage the analysis of interest rates, currencies and electricity and commodity prices. The effects of these various strategies on a company’s income statements and balance sheets are taken into consideration in these analyses. The result of the analyses are presented in the form of probability distributions with respect to chosen parameters such as result, interest coverage ratio and debt to equity ratio. By applying this methodology it is possible to set different positions and instrument up against each other until the solution that best fulfills the goals of the company is identified.
The method can be used to develop strategies for risk management for lenders, for currency and commodity management of energy prices and for the investment strategies of asset managers.
For further information, kindly contact Linus Ericsson, 08-545 017 05