Purpose – The purpose of this paper is to show that the duration‐based hedge ratio has many serious defects: first, the yield‐to‐maturity is not the market interest rate, and it cannot even serve as a proxy for the market interest rate. Second, it is difficult to choose an appropriate...

Purpose – The objectives of this paper are to: define business risk; identify whether economic capital could be used to mitigate this risk; and investigate business‐risk measurement methodologies. Design/methodology/approach – The paper analyzes definitions used in theory and practice and...

Purpose – This paper attempts to summarize the information contained in bank financial statements on the risk management capabilities of banks and then ascertains the sensitivity of bank stocks to risk management. Design/methodology/approach – The theoretical framework is derived from a...

Purpose – The objective of this paper is to assess the degree to which Islamic banks in Brunei Darussalam use risk management practices (RMPs) and techniques in dealing with different types of risk. Design/methodology/approach – The researcher developed a questionnaire which covers six...

Purpose – This paper aims to examine the state of risk management practices among Malaysian listed firms and evaluates the value‐relevance of the notional amount of foreign‐exchange and interest‐rate derivatives (FCDs) used by listed firms over the period 2003‐2007....

Purpose – Corporate risk management is one of the critical concerns of managers when they make investment allocation decisions among multiple projects. The purpose of this paper is to address corporate investment issues illustrated by target‐beating in capital budgeting, and further discuss...

Purpose – This editorial, the second of a two‐part series, proposes a new measure of risk for analyzing highly non‐normal (i.e. asymmetric and long‐tailed) random variables in the context of both investment and insurance portfolios. The proposed measure replaces the p ‐norm‐based...

Purpose – The purpose of this paper is to examine various methods of payment and foreign‐exchange risk management among firms involved in either export or import trade only, or both in Brunei Darussalam. The paper also seeks to delineate the relationship(s) between various characteristics of...

Purpose – Property and casualty (“P&C”) insurance companies rely on “risk capital” to absorb large losses that unexpectedly deplete claims‐paying resources and reduce underwriting capacity. The purpose of this paper is to review the similarities and differences between two different...