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The purpose of this paper is to fill a gap in the foreign exchange rate exposure management literature as the existing literature has focused only on developed economics, and also the current literature on foreign exchange rate exposure of cedant insurance companies is very limited. As Egyptian insurance companies deal directly with foreign exchange rates, they face exposure to exchange rates through their international reinsurance operations.

Martin and Mauer (2003, 2005) three-stage model is used to estimate foreign exchange rate transaction exposure for the sample of 23 Egyptian insurance companies over the period 2002-2009. However, the author has two innovations to this method. The author's first innovation is that instead of looking at the unanticipated operating income for each cedant company (as in both previous papers), this paper looks at the unanticipated operating income on an aggregate level. The author's second innovation is that instead of the model used in previous papers the author uses a model from the actuarial field that was proposed by Blum et al. (2001) for modelling foreign exchange rates with their relevant constituents (inflation and interest rate).

The central finding of the study is that the foreign exchange rate exposure across the Egyptian insurance industry is not significant (at the 10 per cent level) and investigates this result.

This study has made considerable contributions to the existing academic literature, but the findings also illustrate the limitations of the research undertaken. These limitations, however, provide important directions for future research. This thesis focused exclusively on the transaction exposure that Egyptian insurance companies experience to fluctuations in the US dollar exchange rate in relation to their international reinsurance operations. As a result, investigating both translation and economic exposure was beyond the scope and purpose of this study.

The findings of this research provide meaningful implications for industry practitioners. As Egyptian insurance companies are not immune from exchange rate risks, efforts must be made by each insurer to approximate and quantify their individual foreign exchange rate transaction exposure. Additionally, as Egyptian insurance companies increasingly operate worldwide (through the international reinsurance industry), this research and its results are significant for practitioners not only in Egypt, but also further afield. Finally, it is believed that this research will highlight greater implications for international financial players active in Egyptian financial and non-financial sectors, including banks not exposed singularly to US dollars, but to multiple currencies. One recent Egyptian example is Egypt Air, which lost an estimated US$600 million in 2013 due to foreign exchange rate fluctuations.

Since Egyptian insurance operates worldwide, the results of this paper are of significant not only for Egyptian insurance managers but also to practitioners beyond Egypt.

While economic exposure is an important issue for the management of a multinational financial system, few models have been developed to measure this risk. The major challenge to measuring economic exposure is the interdependence of affiliate performances vis‐a‐vis changes in currency values. In this paper, a model has been developed that not only measures the sensitivity of the value of the firm to changes in currency values, but also recognizes the interdependence among the affiliates. The model takes a global view of the problem and also leads to guidelines for managing economic exposure. While the discussion focuses on geographically diversified multinational companies, the content of the paper is equally applicable to domestic companies.

The purpose of this study is to explore the influence of founder families in medium‐sized manufacturing firms and to investigate the impact of such influence on risk management – more specifically foreign exchange hedging and speculation.

This empirical study uses survey data and publicly available data for descriptive analysis and ordinary least squares/ordered regression analysis.

The authors find that two thirds of medium‐sized manufacturing firms are founder family firms in which the founder of the firm or members of his/her family are active in the management team, are members of the board of directors, and/or are shareholders of the firm. The study finds no difference between such founder family firms and other firms in terms of the use/non‐use decision related to foreign exchange derivatives but a marked difference in terms of the extent decision. Thus, founder family firms tend not only to hedge but also to speculate more extensively than other firms.

The findings are based on medium‐sized manufacturing firms in Denmark.

This study provides empirical evidence on the influence of founder families in medium‐sized firms and adds to the sparse literature on the impact of founder family influence on risk management.

The purpose of this paper is to present scenarios of interactive trilateral foreign exchange (FX) exposure, where a company’s exposures to two foreign currencies depend on those currencies’ FX rate with each other.

A pro forma analysis of three-way FX rate changes illustrates interactive trilateral FX exposure and generates observations for a multivariate regression estimation of FX exposure coefficients.

The multivariate regression estimates of FX exposure provide the basis for a useful financial hedging strategy for interactive trilateral FX exposure. Some of the FX exposure estimates have surprising signs and magnitudes.

Scenario analysis does not result in a general theory of interactive FX exposure, but the study’s diverse and rich scenarios may provide helpful insights to theoretical and empirical researchers.

The scenarios relate to many common real-world situations and thus may help managers and educators better understand how to manage FX exposure.

The topic of interactive FX exposure is under-researched and under-covered in contemporary textbooks or the applied finance literature.

This study provides evidence on the importance of operational hedges in foreign-exchange risk management, an issue that has been largely ignored in the literature. One possible reason for the absence of empirical evidence in the literature may be related to the difficulty in devising the appropriate measures of a firm's ability to construct operating hedges. We utilize measures of the structure of an MNC's foreign subsidiary network as proxies of the firm's ability to devise operational hedges and examine their relationship to exposure coefficients computed prior to and during the 1997–1998 Asian currency crisis. Our results show that the mean exposure during the Asian crisis period was significantly higher than the pre-crisis period. In addition, the mean of the absolute change in the exposure of MNCs that only operate in the Asian crisis region was significantly higher than that of MNCs without operations in the crisis region. We find a strong relationship between our proxies for ability to construct operating hedges and exchange-rate exposure measures both prior to the crisis and during the crisis. An even stronger association between exposure and measures of the MNC network structure is found for the sub-sample of MNCs that have some operations in the Asian crisis region. Similar results are obtained when the relationship is examined separately for “net importers” (MNCs with positive exposures) and “net exporters” (MNCs with negative exposures). Overall, our results are consistent with the notion that operational hedges significantly reduce a firm's exposure to foreign-exchange risk.

Methods of capital budgeting have been well established in the finance literature as well as in corporate practice. In general, the discounted cash flow methods (IRR, NPV, PI) are considered to be superior. An investment project is therefore acceptable (at least in financial terms) when its net present value is positive or its internal rate of return is above the specified cut‐off rate. In case of capital rationing, we allocate funds and consequently approve projects in descending order of their profitability index to make sure we obtain the maximum present value per dollar invested.

The effect of exchange rate movements on firm value is important to firms engaged in international transactions. These accounting exposures can be managed using financial instruments. However, the competitive or strategic effects that create economic exposure require firms to adopt a strategic approach. This paper reports on the extent to which large, publicly‐listed UK firms adopt a strategic approach to the management of exchange rate risk. Unlike earlier studies, the results indicate the widespread use of a range of operational hedging techniques. A significant proportion of firms are also found to incorporate currency risk management as a factor in decisions made by their operating departments. However, the study also indicated considerable variation in the application of operational techniques between firms and industry sectors.

The purpose of this paper is to use a risk management perspective to identify the risks of employment discrimination law liability for multinational employers.

Data from 101 US Federal Court cases that involved multinational employers operating both inside and outside of the USA were content coded and then used to identify factors that predict the frequency that foreign employers operating inside the USA – and US employers operating outside the USA – were subject to lawsuits under US employment discrimination laws.

This study found that employment lawsuits based on sex discrimination against females was the most significant risk exposure. Employers whose home country was from a Western culture were at comparatively greater risk for charges of both age and religious discrimination. Employers whose home country was from an Asian culture were at comparatively greater risk for charges of both race and national origin discrimination.

This study demonstrates the viability and usefulness of a risk management framework for examination of issues related to law and management.

This study enables the identification of risk factors that multinational employers can use to strategically target their loss prevention efforts in order to more effectively and efficiently avoid or reduce potential liability for employment discrimination.

The risk factors identified in this study can help employers to take efforts to reduce employment discrimination in their multinational operations, thereby reducing the frequency and likelihood that such discrimination may occur.

This is the first study to use a risk management framework to empirically identify employment law risk exposures for multinational employers.

Operating exposure to foreign exchange risk and exchange rate pass-through are investigated in the context of a Cournot model of equilibrium in a homogeneous product market, i.e. an industry populated by N firms, which compete exclusively on the basis of quantities produced/marketed and where each firm optimizes its decision based on expectations regarding the actions of its rivals that in fact eventuate. Whereas one firm sources its product domestically, the remaining N−1 firms source their product in a foreign country. The paper aims to discuss these issues.

By invoking two simplifying assumptions, namely, constant marginal cost functions and a linear inverted demand curve, and then deriving the Cournot equilibrium, this paper obtains clear implications regarding the effect of a currency devaluation on the competitive positions of the industry’s N constituent firms as well as the pass-through effect on the industry price.

The N−1 firms that source the homogeneous product from a foreign country, which experiences a devaluation, gain, while the single competing firm that sources domestically loses, both market share and profit. Formulas are derived which elucidate this intuitive result. The extent of exchange rate pass-through on the resulting equilibrium price is gauged to be incomplete, consistent with extant empirical evidence. As the number of firms increases, the extent of exchange rate pass-through likewise increases, approaching a limiting situation of complete pass-through.

This paper is the first to examine the issues of exchange rate operating exposure and pass-through in the context of a Cournot model of competition, under the indicated two simplifying assumptions.