Gyan Management

Derivatives as Risk Management Tools: Insights from a Systematic Review of the Literature

Shubhangi Bedi¹

First Published 5 May 2025. https://doi.org/10.1177/09747621251329647

Article Information

Corresponding Author:

Shubhangi Bedi, Department of Evening Studies, Panjab University, Chandigarh 160014, India.
Email: shubhangi1354@gmail.com

¹Department of Evening Studies, Panjab University, Chandigarh, India

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (http://www.creativecommons.org/licenses/by-nc/4.0/) which permits non-Commercial use, reproduction and distribution of the work without further permission provided the original work is attributed.

Abstract

This study investigates how the management of corporate risks, particularly through the use of derivatives, influences a company’s capital structure and its overall characteristics. The investigation utilizes a systematic literature review (SLR) approach to analyse previous research on the strategies organizations implement to address financial, operational, and strategic risks using derivatives. The findings indicate that effective risk management, particularly through hedging, stabilizes cash flows, reduces costs linked to financial distress, and enhances the company’s market value. The study emphasizes the necessity of incorporating risk management practices into corporate governance frameworks to improve decision-making quality. Additionally, the study points out areas requiring further investigation and proposes future research on the role of artificial intelligence (AI) and machine learning in risk management. The study provides valuable insights for researchers and practitioners, aiding in the connection between academic knowledge and real-world applications in risk management.

Keywords

Corporate risk management, derivative, literature review

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