Evolution of Financial Risk Management Theories

Despite introducing the risk category into science as early as 1921, risk management as a comprehensive concept only emerged in the 1950s. At that time, it was associated mainly with losses, and management had a mostly ex-post character. It changed only in the middle of the 20th century when risk management acquired a preventive ex-ante function. The shocks of the 1970s caused significant shifts and the formation of the first coherent theories of management, which did not consider the company's key objective of market value maximisation. Systemic crises and challenges of the late XX – early XXI century caused the development of holistic and knowledge-based management. The optimal way to build effective risk management is an organic combination of traditional and newer approaches, which would offset each other's disadvantages while enhancing the advantages.