Business Financial Risk Protection
Companies routinely take out property and casualty insurance policies to protect themselves against the risk of damage caused by fire, theft, storm, or other potential happenstances. But few stop to consider whether various macro-economic business risks (which may have a far greater impact on shareholder value) can be transferred to a third party in the same way.
Higher interest rates or commodity prices are an example of business risks that can seriously damage a company’s bottom-line profitability and asset value. Yet most companies still regard these risks as the inevitable, uninsurable perils of entrepreneurialism.
Companies are starting to recognize the value in implementing business financial risk protection transactions to preserve or even increase shareholder value in terms of return on equity (ROE) by protecting the business cash flow, reducing the amount of capital tied up in the business, or improving their financing terms. In essence, they see business financial risk protection as a new and efficient source of capital.
In our Risk Management Consulting capacity, we can analyze the economics of any type of company, determine what financial risks may adversely impact its future profitability, quantify the risks, and design specific structured transactions to mitigate the risks.
If you did not have fire insurance and started seeing other homes burning on the horizon, you would use that knowledge as an impetus to obtain fire insurance on your home.
The economic reality is that higher interest rates and inflation are on the horizon, and when they arrive, your wealth and purchasing power will diminish. This knowledge should be the impetus to obtain "protection" on your wealth.
Call us to learn how to protect your wealth against the ravages of inflation, before the "fire" starts.
"Intelligent Designs for the Accumulation and Preservation of Wealth"