Hrvatsko društvo ekonomista

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July 2008. ::: Vol.59 No.07-08

    Danijela Miloš Sprčić
    Metka Tekavčić
    Željko Šević

CORPORATE RISK MANAGEMENT PRACTICES IN CROATIAN COMPANIES Izvorni znanstveni članak In this paper we present the research results on corporate risk management practices in the large Croatian 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 Croatian 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 price risk and foreign exchange risk have the highest influence on the company’s performance, while companies are not so affected by interestrate risk. Regarding the use and importance of different risk management instruments in risk management strategy, survey results have clearly indicated that Croatian non-financial companies stick primarily with simple risk management instruments like natural hedging. In the case of derivatives use, forwards and swaps are by far the most important instruments. 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 Croatian firms focus also on managing balance sheet and fi nancial ratios. Commercial banks are the primary source for derivatives transactions. The insufficient supply of risk management instruments offered by domestic financial industry, the high costs of establishing and maintaining risk management programs which exceed the benefits of it, as well as diffi culties in pricing and valuing derivative instruments are amongst the most important reasons why Croatian companies do not manage corporate risks. interest rate risk; commodity price risk; exchange-rate risk; risk management; risk management instruments; large Croatian companies Puni tekst (Engleski) Str. 344 - 369 (pdf, 194.58 KB)

CORPORATE RISK MANAGEMENT PRACTICES IN CROATIAN COMPANIES

Izvorni znanstveni članak

In this paper we present the research results on corporate risk management practices in the large Croatian 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 Croatian 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 price risk and foreign exchange risk have the highest influence on the company’s performance, while companies are not so affected by interestrate risk. Regarding the use and importance of different risk management instruments in risk management strategy, survey results have clearly indicated that Croatian non-financial companies stick primarily with simple risk management instruments like natural hedging. In the case of derivatives use, forwards and swaps are by far the most important instruments. 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 Croatian firms focus also on managing balance sheet and fi nancial ratios. Commercial banks are the primary source for derivatives transactions. The insufficient supply of risk management instruments offered by domestic financial industry, the high costs of establishing and maintaining risk management programs which exceed the benefits of it, as well as diffi culties in pricing and valuing derivative instruments are amongst the most important reasons why Croatian companies do not manage corporate risks.

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

Puni tekst (Engleski) Str. 344 - 369 (pdf, 194.58 KB)