Join event Co-Chairs Jim Treleaven, Ph.D., ‘90 and Eric Keene, MBA '94, as well as fellow Weatherhead alumni in Chicago for a spectacular event featuring a presentation by Dr. Peter Ritchken, the Kenneth Walter Haber Professor of Finance.
In Finance we often use the discount cash flow model to compute the value of a potential project, acquisition or merger. The model works by computing the stream of expected cash flows over time and then discounting these averages by an appropriate risk adjusted discount factor. This averaging process is typically the most difficult part, and if the scenarios are fairly uncertain, the solution is often to penalize the resulting average by discounting at a high rate.
Rather than averaging over scenarios, strategy is all about contingency planning; about building an infrastructure that positions the firm to take advantage of opportunities as they present themselves. There is no averaging; but rather positioning. So, traditional net present values of finance are of little help. Right?
But wait, finance can help with strategy. Finance can work in harmony with strategy. Finance can quantify positioning; it can quantify the value of building in flexibility; it can quantify the value of learning, of waiting and learning before acting; it can quantify the value of having excess capacity; or by having back up suppliers; it can establish the value of synergies, or deferring investments, expansion or contraction decisions etc.
Using option models, finance offers strategy the ability to quantify flexibility, to act in an adaptive fashion and to exercise strategic initiatives in a way that responds best as new information unfolds. With these insights finance plays a critical role with strategy…….So, please, exercise your strategic option to attend this presentation.
About Dr. Ritchken
Dr. Ritchken has written textbooks on derivatives, is on the editorial board of several journals, and has published extensively in the derivatives area. He consults with large investment banks and brokerage firms, and has conducted executive education programs in the U.S., Europe, Asia, and Australia.
His current research interests are in pricing interest rate claims, implementing stochastic volatility option models, solving real option problems, and banking regulation issues.
6:00 -6:30 p.m. Registration and Reception opens
6:30- 7:30 p.m. Presentation by Dr. Ritchken
7:30 -8:30 p.m. Reception
Associate Director, Alumni Relations