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Navigable Slide Index

1. Introduction
2. Motivation
3. Outline
4. Preliminary discussion: hedging
5. Risk management and hedging
6. Examples of hedges
7. Operational hedge example
8. Production hedge as call option
9. Hedge comparisons
10. Implications for valuing hedges
11. Imperfections and operational valuation
12. Evaluation without capacity limit
13. Evaluation with capacity limit
14. Other operational effects
15. Farmer's example
16. Futures contracts as hedges
17. Futures for the farmer
18. Farmer's operational hedge
19. Farmer's silo hedge - expected returns
20. Copper miner's example
21. Copper hedging
22. Copper futures?
23. Best financial hedge for copper mine
24. Overall observations
25. Operational flexibility and foreign exchange risk
26. Alternative operations
27. Valuing the alternatives
28. Value of flexible capacity
29. Flexible capacity results
30. General cases
31. Earnings and operations
32. Use of risk criterion
33. Key considerations
34. Hedging takeaways
35. Conclusions
36. References
37. Thank you

Topics Covered

• Risk management and hedging definitions
• Foreign exchange risk mitigation alternatives
• Production as an option
• Comparisons of operational and financial hedges
• Capacity evaluation
• Hedging with storage
• Hedging with variable production
• Flexible capacity evaluation
• General risk reduction strategies

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Series:

• Operations Strategy

Categories:

• Finance, Accounting & Economics
• Technology & Operations

Talk Citation

Publication History

• Published on December 6, 2012