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753. Reputation risk mitigation in investment strategies
Invited abstract in session TA-51: Corporate finance risk management, stream Risk management in finance.
Tuesday, 8:30-10:00Room: M5 (building: 101)
Authors (first author is the speaker)
| 1. | Alexandra Moura
|
| CEMAPRE and ISEG - Lisbon School of Economics and Management | |
| 2. | Carlos Oliveira
|
| Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology |
Abstract
We consider an investment model in which a firm decides to invest in the market, taking into account its future revenue and the possible occurrence of adverse events that may impact its reputation. The firm can buy an insurance contract at the investment time to mitigate reputation risk. The firm decides when to enter the market and the insurance strategy that maximizes its value. We consider three types of insurance contracts and different premium principles. We provide analytical conditions for the optimum and study several numerical examples. Results show that the firm's optimal strategy depends on the risk size, the firm's risk aversion, and the insurance premium.
Keywords
- Risk Analysis and Management
Status: accepted
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