Based on a large cross-sectional sample, the study demonstrates that the ability of integrative risk management capabilities to reduce earnings variability in the face of diverse economic, operational and strategic risks is associated with superior economic performance. The positive performance relationships of such a holistic approach to risk management are more pronounced among firms operating in knowledge-intensive industries and companies emphasizing investment in research
and development. Hence, the evidence is consistent with the proposition that effective risk management encourages valuable firm-specific investment by essential stakeholders and allows the firm to exploit opportunities as well as guard against downside exposures.