should the risk management department be unable to do this then it s not contributing to shareholder value if on the other hand a company s expected earnings are higher than the cost incurred to reduce risk then the risk reduction investment can be considered a positive one 
elsewhere another company that got into the smart luggage business making baggage with embedded microchips and batteries that track location and more bet that the airlines and regulatory agencies would have no problem with customers checking in these bags it bet wrong the smart bags were banned in the u s amid fears about battery fires causing the company to liquidate everything was at risk on that one factor this begs the question of whether the baggage manufacturer and its peers assessed the possibility of rejection at a high percentage of probability if they had done so they likely would have never entered this line of business in the first place value of risk vor calculations are only as good as the data and assumptions imputed limitations of value of risk vor many businesses especially financial ones calculate a value of risk vor for nearly all their activities along with estimated confidence levels that the risk taken will be worth the reward this task sounds relatively straightforward but is actually riddled with complications calculations are often based on subjective assumptions prone to oversight and subject to change in an ideal world potential errors of judgment should be accounted for and every angle covered as objectively as possible by relying on more than one source 