Contents -- 1 Macroeconomic Uncertainty in a Corporate Perspective -- 1.1 Introduction -- 1.2 The macroeconomic environment of the firm -- 1.3 What level of concern? -- 1.4 Macroeconomic Uncertainty Strategy (MUST) -- 1.5 The contents of this book -- 2 Concepts of Macroeconomic Risk Management -- 2.1 Introduction -- 2.2 Corporate risk: A brief review of the concept -- 2.3 Corporate risk: Who cares? -- 2.4 Macroeconomic risk -- 2.5 What could be gained from a risk management program? -- 2.6 Risk management and the creation of options -- 2.7 Concluding remarks: The case for risk management -- 3 Traditional Approaches to Measuring Macroeconomic Exposure -- 3.1 Introduction -- 3.2 From transaction exposure to economic exposure -- 3.3 Translation exposure -- 3.4 From translation exposure to economic exposure -- 3.5 Does the translation method matter? -- 3.6 A comparison of exchange rate exposure measures -- 3.7 Interest rate exposure measures -- 3.8 Concluding remarks on traditional exposure measures -- Appendix 3.1: Measuring translation exposure under the monetary/non-monetary and the all-current methods -- Appendix 3.2: Purchasing Power Parity and real exchange rates -- Appendix 3.3: International Fisher Parity -- 4 Measuring Macroeconomic Impact on the Firm: A Comprehensive Approach -- 4.1 Introduction -- 4.2 Determinants of cash flow exposure -- 4.3 Estimating cash flow exposure -- 4.4 Decomposing cash flow exposure -- 4.5 Exposure coefficients and sizes of shocks -- 4.6 The share price and macroeconomic fluctuations -- 4.7 Concluding remarks on the comprehensive approach -- 5 Measuring Macroeconomic Exposure: The Case of Volvo Cars -- 5.1 Introduction -- 5.2 Exposure coefficients -- 5.3 The choice of dependent variable -- 5.4 The choice of independent variables and time horizon -- 5.5 Volvo Cars.

5.6 Results, interpretations, and the use of coefficients -- 5.7 Using the exposure coefficients for future periods -- 5.8 Concluding remarks on the case of Volvo Cars -- 6 Hedging Macroeconomic Exposure -- 6.1 Introduction -- 6.2 Derivative contracts and transaction exposure: An overview -- 6.3 Practices in managing translation exposure -- 6.4 Hedging interest rate and inflation risks -- 6.5 Hedging macroeconomic exposure to market price variables -- 6.6 Hedging with uncertain exposure using derivatives -- 6.7 Taxes and hedge contracts -- 6.8 Concluding remarks on approaches to hedge macroeconomic uncertainty -- 7 Evaluating Cash Flow at Risk -- 7.1 Introduction -- 7.2 From exposures to Cash Flow at Risk (CFaR) -- 7.3 Information requirements for CFaR analysis -- 7.4 Norsk Hydro and its exposures -- 7.5 Estimating CFaR -- 7.6 Hedging exposure to reduce CFaR -- 7.7 Concluding remarks on Cash Flow at Risk -- 8 Strategies for Risk and Exposure Management -- 8.1 Introduction -- 8.2 Choice of target variable and time horizon -- 8.3 Management's risk attitude -- 8.4 Price adjustment in goods and financial markets -- 8.5 Choice of exposure management strategies -- 8.6 Information requirements -- 8.7 Adjustability of commercial operations: Real options -- 8.8 Concluding remarks on the choice of strategy -- 9 Recognizing Macroeconomic Fluctuations in Value-Based Management -- 9.1 Introduction -- 9.2 VBM and macroeconomic fluctuations -- 9.3 Cash flow decomposition and valuation: The case of Electrolux -- 9.4 Decomposition in performance assessment -- 9.5 Taking flexibility into account -- 9.6 Concluding remarks about MUST analysis in performance assessment -- 10 Evaluation, Feedback, and Organization -- 10.1 Introduction -- 10.2 Managers' incentives and the firm's objectives.

10.3 Realized versus non-realized and anticipated versus unanticipated gains and losses -- 10.4 Nominal versus real magnitudes -- 10.5 Evaluation of risk management strategies -- 10.6 Centralization versus decentralization of risk management -- 10.7 Concluding remarks on evaluation, feedback, and organization -- 11 What Shareholders Ought to Know -- 11.1 Introduction -- 11.2 Efforts to create standards -- 11.3 A comprehensive approach to assessing the impact of macroeconomic fluctuations on the firm -- 11.4 Contemporary practice relative to IAS 1 on reporting of macroeconomic influences -- 11.5 Illustration of an information release that satisfies the demands of the outside shareholder -- 11.6 Concluding remarks on the reporting of the impact of macroeconomic fluctuations on corporate performance -- 12 Macroeconomic Uncertainty Strategy (MUST) Analysis: A Summary -- 12.1 Introduction -- 12.2 Shortcomings of traditional methods -- 12.3 Measures of corporate performance and exposure assessment -- 12.4 Elements of MUST analysis -- References -- Index -- A -- B -- C -- D -- E -- F -- G -- H -- I -- K -- L -- M -- N -- O -- P -- Q -- R -- S -- T -- U -- V -- W.