Reviewing the Framework of Risk Management: Policy and Hedging

Abstract

Purpose: The main purpose of this study is to evaluate different policies for managing the business risks in an effective manner. Theoretical framework: In order to identify the hazards within the organization and evaluate several risk factors, risk management is necessary. This is a method of “analysing and evaluating” the risks, which are associated with the hazard. After making identification the risks need to analyse properly. Evaluation of the risks is based on the position and activities of the firms. Hazard identification is a process of finding out the hazards, then making a list of those hazards and after that characterizing. Design/methodology/approach: The deductive approach is the best approach to understand the structure of the study. The deductive approach focuses on the evaluation of different theoretical views for finding out the pattern related to the generic views of a particular research topic. Findings: It is identified that the risk management is one of the major parts of business companies, which creating specific policies. The usage of hedging can lead to an effective risk management process. Research, Practical & Social implications: Businesses can benefit more from a strong foundation for managing risks. Risk assessment is applicable to all industries and is not just related to businesses or companies. Originality/value: This study is different from the previous studies because it examined the risk management framework (policy and hedging) in detailed way.