Topic_11_E1

Topic_11_E1 - managerial decisions. This structure makes it...

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Topic 11, Exercise 1 Risk Management Judy C. Lewent is the Chief Financial Officer of Merck and Company. She is recognized for her risk management techniques, including the 2000 Excellence Award by CFO Magazine. She manages a staff of 750 than has responsibilities that stretch beyond the typical CFO. In the CFO Magazine article , she is recognized for her management techniques and her skills at structuring alliances and managing the pipeline of drugs to assure long-term revenues. After reading the article answer the following questions: 1. What major factor does she identify in making joint ventures successful? The element that she emphasizes is structuring the joint venture. The joint venture’s management structure consists of two co-directors who are responsible for all of the
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Unformatted text preview: managerial decisions. This structure makes it possible to streamline the decision process and in turn leads to greater efficiency and lower joint venture costs. 2. What risk-management elements does she apply that distinguish her from other CFOs? She has developed strong technical skills in revenue hedging and research planning. Her hedging model is praised for integrating economics, finance, statistics, and computer science to yield improved analyses. The hedging helps insulate Mercks operations from foreign exchange volatility. In the research planning area, she uses Monte Carlo simulations that incorporate statistical distributions to assess the risk and return prospects of drugs that are in various stages of the pipeline....
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