The Value Creation Theory of Risk Management is made up of five detailed theorie

Question

The Value Creation Theory of Risk Management is made up of five detailed theories, each of which itself contains arguments to support detailed analysis of value addition capabilities of risk management in an organisation. It has also been suggested that the theories, taken as a whole, could also be potentially useful for practical use. This could be retrospectively, to learn lessons from past experiences. Or it could be futuristic, to help in mapping out future risk management policies. Examine your own views on the risk management value creation theory, taking a viewpoint which is argue: EITHER

i. primarily optimistic about the ability of risk management to create business value. OR

ii. primarily negative about the ability of risk management to create business value.

Explanation / Answer

I am optimistic about the ability of risk management to create business value. The baisc logic behind this is that when investors will assure that their money is safe they invest a good amount it provides financial strength to the organization and creates value for other stakeholders as well. Even , employees might continue their work with the organization due to its fair policy and value creation for them . In his article ,Bartram (2000) suggested that managing corporate risk is the part of a competitive strategy. When a firm will be successful in managing its systematic and unsystematic risk then it gives value to other managerial activities so far . So , Value creation can be possible through overall risk management capabilities of the firm.

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