"In the case of Enron, we balance our positions all the time"

This quote by Kenneth Lay, the former CEO of Enron, is referring to the business's method to take the chance of management. By "balancing our settings," Lay is describing the technique of hedging, which is a strategy used to minimize the threat of loss from changes in the marketplace. Enron was known for its aggressive use of hedging, which permitted the firm to handle more danger and also raise its revenues. Nevertheless, this technique eventually resulted in the company's failure, as the firm was not able to manage its danger effectively. The quote is a suggestion of the importance of threat administration as well as the need to balance threat and also reward. It also functions as an alerting to other business to be mindful of the threats they take as well as to make certain that they have the essential safeguards in place to protect their investments.