We characterize a firm as a nexus of activities and projects with their associated cash flow distributions across states of the world and time periods. We propose a characterization of the firm where variations in the market price of risk induce adjustments in the value-maximizing combination of...

To address the value of risk management, we adopt a new perpspective. We characterize the relationships between operations management and real risk management activities by postulating a transformation possibility frontier for the cash flows of the firm. We show how external changes in the...

We characterize a firm as a nexus of projects with their associated cash flows. Production and operations activities and real risk management activities distribute cash flows over states of nature and time periods, leading to a transformation possibility frontier similar to a production...