Value-Based Management and Enterprise Risk Management

Robert Rieg, Ute Vanini and Werner Gleißner
Additional contact information
Robert Rieg: Aalen University
Ute Vanini: Kiel University of Applied Science
Werner Gleißner: Future Value Group AG

Chapter Chapter 10 in Enterprise Risk Management, 2025, pp 209-231 from Springer

Abstract: Abstract This chapter outlines the relationship between value-based management and enterprise risk management (ERM). In particular, it is made clear that information from risk analysis and risk aggregation is especially relevant for modern value-based management. ERM provides the risk information that is required to provide unbiased projected values of cash flows or earnings and derive a risk-adequate cost of capital from the fluctuation around this planned value (planning uncertainty). By linking ERM and value-based management, one obtains value-based ERM. This uses insider information about existing risks as the basis for assessing the risk-return profile of options for action. In contrast to traditional concepts such as the capital asset pricing model for deriving the cost of capital, the approach can be used on apparently imperfect capital markets and in consideration of rating and financing restrictions. The application is shown in this chapter with a case study (strategy valuation).

Keywords: Coefficient of variation, Cost of capital, Credit rating, Capital Asset Pricing Model (CAPM), Distress risk, Earnings risk, Economic value added (EVA), Incomplete replication, Insolvency, Probability of insolvency, Rating; Risk-adjusted capital (RAC), Simulation-based valuation, Valuation, Value, Value-based management (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-031-86425-4_10

Ordering information: This item can be ordered from
http://www.springer.com/9783031864254

DOI: 10.1007/978-3-031-86425-4_10

Access Statistics for this chapter

More chapters in Springer Texts in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().