With so many risks a company faces, risk management practitioner has difficulty to measure the total riskiness of a company in a single figure. Why is this figure important to measure? Because, by knowing the single figure, management can determine the acceptable level of riskiness of the company and determine whether the level theriskiness level is in line with strategic goals. Management can then adjust its operation and strategy accordingly.
Value Duration is an innovative method which shows the riskiness level of a company in a single number (called Risk Figure) by utilizing corporate financial model or projection prepared for budgeting and planning. By incorporating different possible strategies, management can evaluate the direct impact of different strategies to riskiness level by observing the Risk Figure. Management can also observe the change of corporate risk from time to time, creating a risk dash board. Management can then choose strategy which reflects the Risk Figure suitable for the company.
The resulting Risk Figure can be used to measure the current riskiness as well as potential future riskiness by developing Value Duration term structure. This helps management to evaluate future riskiness and also determine whether the corporate financial budget has been prepared accurately.
Value Duration has wide applicability. This method is applicable in any industry, whether financial sector, real sector and service industry and can be used to measure the riskiness level of a company, subsidiary or project.Besides company, Value Duration can be appliedtoother institutions, such as government body, non-profit organization, public institution, organizational body and many others. Application of the method can be done in any institution regardless of its size and complexity.
To help you adopt Value Duration in your institution, we provide several services:
Training on Value Duration, applicable as public and in-house training.
Consultancy service on adaptation of Value Duration to your existing platform.
By adapting Value Duration in your risk platform, you can manage your risk more effectively, manage your strategy and create value to stakeholders.