“Risk Engineering and Corporate Resilience: The Strategic Role of Derivatives in a VUCA Economy”
DOI:
https://doi.org/10.69968/ijisem.2026v5Si117-22Keywords:
Derivatives, Financial Engineering, VUCA, Hedging, Risk Management, ResilienceAbstract
In a VUCA (volatile, uncertain, complex, and ambiguous) portrayed by changing market dynamics and perplexity, corporate resilience arising from commodity price swings, exchange rate fluctuations, and interest rate shocks depends significantly on effective risk engineering and financial innovation. This study investigates the crucial and strategic role of derivatives as instrument for handling and managing financial exposure, liquidity management and preserving enterprise value. By reviewing the theoretical underpinnings of hedging, supporting data driven research and case studies of multinational enterprises. It is illustrated that structured risk management tools contribute remarkably to financial viability amid crisis. Finding advocates that firms with well managed and regulated derivative guidelines and policies exhibit exemplary performance amid economic downturns compared with unhedged firms. The paper aims to address that derivatives should be reconstructed as strategic tools for risk mitigation in lieu of being viewed as speculative instrument, particularly in an environment characterised by macroeconomic and geopolitical uncertainty. This research paper uses qualitative measures based on secondary data using Journals, Magazines, News Bulletin, Business Articles, different Case Studies to highlight the impact of derivatives and financial engineering to commercial resilience in a VUCA environment
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