The Strategic Importance of Financial Hedging in Mitigating Business Risks

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@article{1707301,
      author = {Rafael Elias Venturini},
      title = {The Strategic Importance of Financial Hedging in Mitigating Business Risks},
      journal = {Iconic Research And Engineering Journals},
      year = {2025},
      volume = {8},
      number = {8},
      pages = {848-851},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1707301.pdf},
      abstract = {The financial hedging strategy is essential for companies facing economic volatility, such as fluctuations in commodity prices, exchange rates, and interest rates. It allows organizations to ensure predictability in costs and profit margins, providing greater long-term financial stability. Recent studies reinforce the importance of hedging, not only as a tool for protecting against price variations but also as a strategic mechanism that can increase a company?s value, making it more competitive in the market. The adoption of hedging in business decisions enables organizations to make more informed financial decisions, reducing uncertainty and optimizing investments. The use of financial derivatives facilitates the control of production costs and protection against currency risks. However, its application requires a clear understanding of its accounting and financial implications, as evidenced by the studies of Ranasinghe et al. (2021) and Siallagan and Prijadi (2020), which highlight the importance of accuracy in forecasts and risk management. Furthermore, the implementation of data-driven hedge policies and mathematical models, as observed in the studies by Kouvelis and Turcic (2020) and Entrop and Fischer (2020), shows that the use of advanced technologies can further enhance the effectiveness of hedge strategies. By considering factors such as demand elasticity or credit risk, companies can manage financial stress more effectively. The ongoing use of these techniques, with the integration of artificial intelligence and machine learning, demonstrates that financial hedging remains crucial for companies adapting to a dynamic economic landscape.},
      keywords = {Financial Hedging, Risk Mitigation, Financial Derivatives, Financial Stability, Hedge Strategies.},
      month = {February},
  }