The Handbook of Corporate Financial Risk (2nd edition)

BNP Paribas Stanley Myint and Fabrice Famery return to author the eagerly-awaited follow-up to their 2012, five-star, bestseller The Handbook of Corporate Financial Risk Management. Much has changed in the world of corporate risk since 2012 and the authors have fully updated the second edition to reflect this, adding 20 new chapters and dropping 12 chapters that did not seem relevant to today's readers.

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ISBN
978-1-78272-392-9
 

BNP Paribas Stanley Myint and Fabrice Famery return to author the eagerly-awaited follow-up to their 2012, five-star, bestseller The Handbook of Corporate Financial Risk Management. Much has changed in the world of corporate risk since 2012 and the authors have fully updated the second edition to reflect this, adding 20 new chapters and dropping 12 chapters that did not seem relevant to today's readers.

The focus of the book is the management of financial risks i.e, funding, interest rate and inflation, currency, credit, commodity and equity risks. This book is primarily about corporate problems and how to solve them. Myint and Famery posit that the key question is not what kind of product is used, but how it is used.

This book is targeted to everyone who is interested in the subject of corporate risk management, and in particular four groups of readers: 1. corporate treasurers, CFOs, CROs, CEOs, financial directors, Treasury dealers; 2. management consultants, pension consultants and any other company advisors on the subject of risk; 3. corporate bankers, coverage officers, corporate financiers, private equity investors, capital markets and derivatives marketers covering non-financial companies; and 4. academics and students in the field of corporate risk management.

As with the first edition, the book is based on real-life client discussions had in the risk management advisory team at BNP Paribas between 2005 and 2018. Common questions and problems regarding risk management and capital structure, raised by CFOs and corporate treasurers alike, are rarely addressed by the existing literature and the aim of this book is to lead to a fruitful collaboration between companies and their banks and aid in solving those common questions and problems, based on the outcomes from real-life scenarios.

The reader will find here answers to the most commonly-asked practical questions about financial risk. Some of the situations will be brief (eg, how to obtain a credit rating) and some will require a significant amount of thought and detailed quantitative analysis (eg, how to improve your fixed/floating mix and duration), but all are based on real-life situations.

The book is divided into seven parts:

Part I deals with a variety of issues related to corporate funding via fixed income instruments, with a particular focus on unsecured debt.

Part II deals with the next set of issues once the corporate debt structure is in place: interest rate risk on the debt side of the balance sheet and that of assets and liabilities.

Part III is devoted to the management of currency risk, the most common risk affecting companies.

Part IV deals with credit risk i.e, the risk of default by financial counterparties.

Part V covers risk management within the context of mergers and acquisitions.

Part VI is focused on commodity risk management.

Part VII (new in the second edition) covers the management of risk related to listed equities, via what is known as strategic equity solutions.

Depending on your interest, you can read this book either by part or by topic covered, or simply dip into individual chapters in any order.

More Information
ISBN 978-1-78272-392-9
Navision code MINT
Publication date 1 Sep 2019
Size 155mm x 235mm
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Stanley Myint and Fabrice Famery

Stanley Myint is the Head of Risk Management Advisory at BNP Paribas and an Associate Fellow at Saïd Business School, University of Oxford. At BNP Paribas, he advises large multinational corporations on issues related to risk management and capital structure. His expertise is in quantitative and corporate finance, focusing on fixed income derivatives and optimal capital structure. Stanley has 25 years of experience in this field, including 14 years at BNP Paribas and previously at McKinsey & Company, Royal Bank of Scotland and Canadian Imperial Bank of Commerce. He has a PhD in physics from Boston University, a BSc in physics from Belgrade University and speaks French, Spanish, Serbo- Croatian and Italian. At the Saïd Business School, Stanley teaches two courses with Dimitrios Tsomocos and Manos Venardos: “Financial Crises and Risk Management” and “Fixed Income and Derivatives”.

Fabrice Famery is Head of Global Markets corporate sales at BNP Paribas. His group provides corporate clients with hedging solutions across interest rate, foreign exchange, commodity and equity asset classes. Corporate risk management has been the focus of Fabrice’s professional path for the past 30 years. He spent the first seven years of his career in the treasury department of the energy company, ELF, before joining Paribas (now BNP Paribas) in 1996, where he occupied various positions including FX derivative marketer, Head of FX Advisory Group and Head of the Fixed Income Corporate Solutions Group. Fabrice has published articles in Finance Director Europe and Risk Magazine, and has a master’s degree in international affairs from Paris Dauphine University (France).

About the Authors

Abbreviations

Introduction

1 Theory and Practice of Corporate Risk Management *

2 Theory and Practice of Optimal Capital Structure *

PART I: FUNDING AND CAPITAL STRUCTURE

3 Introduction to Funding and Capital Structure

4 How to Obtain a Credit Rating

5 Refinancing Risk and Optimal Debt Maturity*

6 Optimal Cash Position *

7 Optimal Leverage *

PART II: INTEREST RATE AND INFLATION RISKS

8 Introduction to Interest Rate and Inflation Risks

9 How to Develop an Interest Rate Risk Management Policy

10 How to Improve Your Fixed-Floating Mix and Duration

11 Interest Rates: The Most Efficient Hedging Product*

12 Do You Need Inflation-linked Debt

13 Prehedging Interest Rate Risk

14 Pension Fund Asset and Liability Management

PART III: CURRENCY RISK

15 Introduction to Currency Risk

16 How to Develop an FX Risk Management Policy

17 Translation or Transaction: Netting FX Risks *

18 Early Warning Signals

19 How to Hedge High Carry Currencies*

20 Currency Risk on Covenants

21 Optimal Currency Composition of Debt 1:

Protect Book Value

22 Optimal Currency Composition of Debt 2:

Protect Leverage*

23 Cyclicality of Currencies and Use of Options to Manage Credit Utilisation *

24 Managing the Depegging Risk *

25 Currency Risk in Luxury Goods *

PART IV: CREDIT RISK

26 Introduction to Credit Risk

27 Counterparty Risk Methodology

28 Counterparty Risk Protection

29 Optimal Deposit Composition

30 Prehedging Credit Risk

31 xVA Optimisation *

PART V: M&A-RELATED RISKS

32 Introduction to M&A-related Risks

33 Risk Management for M&A

34 Deal-contingent Hedging *

PART VI: COMMODITY RISK

35 Introduction to Commodity Risk

36 Managing Commodity-linked Revenues and Currency Risk

37 Managing Commodity-linked Costs and Currency Risk

38 Commodity Input and Resulting Currency Risk *

39 Offsetting Carbon Emissions*

PART VII: EQUITY RISK

40 Introduction to Equity Risk*

41 Hedging Dilution Risk *

42 Hedging Deferred Compensation*

43 Stake-building*

Bibliography

Index

Note: Chapters marked with * are new to the second edition