The Impact of Financial Risk Management Practices on Corporate Performance: A Mixed-Methods Study

Description

The Impact of Financial Risk Management Practices on Corporate Performance: A Mixed-Methods Study

Abstract

Financial risk management is essential for organizations looking to optimize their performance and safeguard their stability in today’s dynamic environment. However, the study addresses the relationship between diverse financial risk management strategies and corporate performance. Moreover, it examines the recognition of financial uncertainty and, how desired outcomes are achieved. The potential issue addressed is the insufficient understanding of which aspects of risk management have a high impact on corporate performance.

The earlier research in this field has already shown insights regarding risk management strategies. For instance, this includes hedging, risk diversification, and liquidity management. However, such studies lack the multi-dimensional analytical approach used in this research. With a mixed-methods framework using quantitative data analysis combined with qualitative insights. In addition, this study fills the gap left by the earlier research and identifies contextual factors that affect the effectiveness of risk management.

Whereas a quantitative approach uses statistical methods to examine the associations between financial risk handling practices and KPIs. Some of them include profitability, growth, and stock performance. The robust dataset coming from multiple industries strengthens the robustness of the findings. Moreover, it provides nuanced insight into the complex ways in which risk management practices function in different scenarios. Simultaneously, qualitative interviews with corporate executives and financial managers present technical difficulties and practices involved in implementation.

Additionally, the findings highlight that proactive strategies of risk management significantly contribute to improved financial performance. The research emphasizes the need for organizations to change their practices to adapt to emerging market conditions.​ This study illustrates critical links between financial risk handling and organizational success. Furthermore, it underscores the contextuality of the factors that give rise to such dynamics. Overall, the results suggest integrating risk management frameworks into practices. Finally, it helps to promote continuous improvement and facilitates business resilience despite financial uncertainty.

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