Having explored the three basic tools for firm-wide risk management, we close with an
integration of the preceding sections that frames the broad managerial issues surrounding
the development and implementation of a risk management system for the firm. Risk
reduction has the potential to increase firm value. Whether risk reduction actually
increases firm value depends upon the cost of that reduction. As a general matter,
managers should eliminate all risks that need not be borne by the firm in order to capture
the positive net present value of its activities and that are costless to shed. If, however,
risk reduction is costly, managers must evaluate whether the benefits of elimination
justify the costs.