Measuring Business Risk Through Cash Flow at Risk: Modeling and Hedging Choices in a Multinational Company Based in an Emerging Country

21 Pages Posted: 11 Dec 2013

See all articles by Jorge Arturo Martínez González

Jorge Arturo Martínez González

Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) - EGADE

Roberto J. Santillán-Salgado

EGADE Business School (Tecnológico de Monterrey)

Date Written: January 10, 2006

Abstract

This paper describes a real life experience of cash flow modeling in the context of Enterprise Risk Management (ERM). Increasing evidence supports the adoption of a disciplined approach to forecast “value-driving” variables and to develop functional relationships that estimate their impact on the value of the firm. We present a brief theoretical discussion of the arguments in favor and against the utilization of ERM techniques, and proceed to the presentation of the Measurement of Cash Flow at Risk model (MCFR) and the Risk Calibration Choices (RCC) model used at Cemex, a Multinational Company based in Mexico.

Keywords: Risk, Emerging Markets, Cash Flow Modeling

Suggested Citation

Martínez González, Jorge Arturo and Santillan-Salgado, Roberto J., Measuring Business Risk Through Cash Flow at Risk: Modeling and Hedging Choices in a Multinational Company Based in an Emerging Country (January 10, 2006). Available at SSRN: https://ssrn.com/abstract=2366111 or http://dx.doi.org/10.2139/ssrn.2366111

Jorge Arturo Martínez González

Instituto Tecnologico y de Estudios Superiores de Monterrey (ITESM) - EGADE ( email )

Av. Epigmenio Gonzalez No 500
Fracc. San Pablo
Queretaro, Queretaro 76130
Mexico

Roberto J. Santillan-Salgado (Contact Author)

EGADE Business School (Tecnológico de Monterrey) ( email )

AV. Fundadores y Rufino Tamayo
Garza García, Nuevo León 64619
Mexico
(52) 81 86 25 61 80 (Phone)

HOME PAGE: http://www.egade.mx/

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