International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Risk Hedging Strategies for Business Enterprises——A Case Study of Rio Tinto
Li Xuepei, Che Siqi

This writing attempts to provide some risk hedging strategies for business enterprises by taking one of the world's biggest mining companies - the Rio Tinto Group as a case study. After talking about the company’s potential risks like interest rate risk, foreign exchange risk, commodity risk and credit risk,it accordingly proposes some effective hedging strategies, such as a transference from fixed-rate borrowing to floating-rate borrowing, extension of AUD/USD future contracts to hedge the losses in case of Australian dollar depreciation, shortening of futures in aluminum and copper futures market to lock in the selling price in the future and signing of credit default swap (CDS) contracts to hedge the risk of default from its loans and bank deposits. Hopefully this research can contribute to the risk hedging of Rio Tinto and also shed some light on the risk hedging of other companies.

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