Are firms hedging or speculating? The relationship between financial derivatives and firm risk

The focus of this article is an investigation of the relationship between the use of financial derivatives and firm risk using a sample of Australian firms. Our results suggest that this relationship is nonlinear in nature. Specifically, the use of financial derivatives is associated with a risk reduction for moderate derivative users. Derivative usage among extensive derivative users, on the other hand, appears to lead to an increase in firm risk. Nevertheless, compared to firms that do not make use of derivatives, there is no evidence that extensive derivative users are exposed to a risk level in excess of that of nonderivative users. The results are, therefore, indicative of a hedging motive behind the use of financial derivatives.

Information security governance : when compliance becomes more important than security

Current security governance is often based on a centralized decision making model and still uses an ineffective 20th century risk management approach to security. This approach is relatively simple to manage since it needs almost no security governance below the top enterprise level where most decisions are made. However, while there is a role for more corporate governance, new regulations, and improved codes of best practice to address current weak organizational security practices, this may not be sufficient in the current dynamic security environment. Organizational information security must adapt to changing conditions by extending security governance to middle management as well as system/network administrators. Unfortunately the lack of clear business security objectives and strategies at the business unit level is likely to result in a compliance culture, where those responsible for implementing information security are more interested in complying with organizational standards and policies than improving security itself.