How can risk management strategies be applied in the context of u

Risk management strategies can be applied in the context of unpredictable events like a pandemic by maintaining a healthy cash balance. This acts as a hedge against any risk that cannot be identified or quantified ahead of time. It's also important to constantly monitor the situation and adjust strategies as necessary. This includes being prepared for different outcomes and using the information available to minimize risks and maximize opportunities.

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Risk Management

Set expectations and be prepared for different outcomes at all times. Our Risk Management presentation allows you to outline ways to monitor and contr...

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Purnanandam meditates on the question of what can the managers do to control risks that are not even identifiable? "Unlike exchange rates or commodity prices, there are no market-based derivatives contracts that can be used to hedge such a threat," Purnanandam writes. He's answer is cash balance. Cash balance is the best vaccine against unpredictable events such as the pandemic, Purnanandam writes. Moreover, he believes that cash is actually the best hedge against any risk that cannot be identified or quantified ahead of time. So in case of Apple, a $200 billion pile of cash is what makes it resistant to the risk.

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What are some examples of risks that cannot be hedged using market-based derivatives contracts?

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Some examples of risks that cannot be hedged using market-based derivatives contracts include unpredictable events such as pandemics, political instability, changes in consumer behavior, or technological disruptions. These risks are difficult to quantify and predict, and therefore, cannot be effectively hedged using market-based derivatives. Instead, companies often rely on strategic planning, diversification, and maintaining a strong cash balance to mitigate these types of risks.

How can businesses prepare for risks that cannot be quantified ahead of time?

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Businesses can prepare for risks that cannot be quantified ahead of time by maintaining a healthy cash balance. Cash balance acts as a buffer against unpredictable events, such as a pandemic. It is considered the best hedge against any risk that cannot be identified or quantified in advance. For instance, a company like Apple maintains a $200 billion pile of cash, making it resistant to unforeseen risks.

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How can risk management strategies be applied in the context of unpredictable events like a pandemic?

Risk Management

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