Authors: Nayna Sharma and Fayis TN

Abstract

Objective: this paper discusses MNCs financial risk management strategies for dealing with a fluctuating world economy and how these strategies differentiate across various sectors and geographies.

Methodology: A PRISMA systematic review framework is employed where academic literature, industry reports, and case studies published between 2015-2025 are extracted from Scopus, Web of Science, and Google Scholar. Both qualitative and quantitative findings derived from the literature review are integrated using thematic analysis of traditional risk-management approaches and sophisticated tech-based tools.

Results: The paper validates three major hypotheses:

1. MNC risk management depends on institutional and sector-specific contexts (H1).

2. Higher market volatility leads firms to use increasingly sophisticated derivative instruments and structured hedging vehicles (H2).

3. Industries like manufacturing, energy, and banking employ much more advanced risk structures than service-sector oriented businesses (H3).

Additionally, there appears to be a geographical divide: firms located in developed markets tend to utilize standardized ERM systems and developed derivative markets whereas their counterparts in emerging economies resort to operational agility, localized sourcing and geographically diversified business activities in an attempt to buffer against inherent structural and political risks.

Conclusion: There is a growing trend of shifting from siloed financial hedging towards centralized and integrated Enterprise Risk Management systems. Although new emerging technologies like AI and algorithmic modeling were seen to be put to use for optimal risk prediction, there exist unprecedented challenges such as regulatory, model based and system risks. Hence, no single strategy is seen/used as universally effective; long-term financial corporate sustainability is developed from the combination of financial derivatives, operational flexibility and timely regulatory compliance.

Keywords: Financial risk management, Multinational corporations, Enterprise Risk Management (ERM), Hedging strategies, Sectoral volatility, Geographic diversification.