Copyright © 2002 Lisa K. Meulbroek
Working papers are in draft form. This working paper is distributed for purposes of comment and
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Management for the
Firm: A Senior
Lisa K. Meulbroek
Harvard Business School
Soldiers Field Road
The author gratefully acknowledges the financial support of Harvard Business
School's Division of Research. Email: Lmeulbroek@hbs.edu
This paper is intended as a risk management primer for senior managers. It discusses the
integrated risk management framework, emphasizing the connections between the three
fundamental ways a company can implement its risk management objectives: modifying
the firm's operations, adjusting its capital structure, and employing targeted financial
instruments. "Integration" refers both to the combination of these three risk management
techniques, and to the aggregation of all risks faced by the firm. The paper offers a
functional analysis of integrated risk management using a wide set of illustrative
situations to show how the risk management process influences, and is influenced by, the
overall business activities and the strategy of the firm. Finally, the paper provides a risk
management framework for formulating and designing a risk management system for the
firm, concluding with a perspective on the future evolution of risk management.
Managers have always attempted to measure and control the risks within their companies.
The enormous growth and development in financial and electronic technologies,
however, have enriched the palette of risk management techniques available to managers,
offering an important new opportunity for increasing shareholder value. "Integrated risk
management" is the identification and assessment of the collective risks that affect firm... [continues]
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