JQ Why does it make sense for a company to purchase insurance or hedge its risk?

It makes sense for companies to purchase insurance or/and hedge against its risks because it lowers the cost of the risk occurring. There is a possibility that cash flows could increase indirectly. The company will find it much easier having insurance than to raise capital for future investments. If the company has to worry about lawsuits or even bankruptcy, the company would make bad decisions which could make matters worse therefore insurance would be a wise move for companies. By hedging companies can eliminate any volatile commodity prices that are required for the companies purposes. It could be a benefit if they control manage prices such as gold or oil for example. For example the airline industry could hedge in oil prices so that the company does not have to charge according to oil prices. Overall I believe that it is in the companies best interest to maximize its value to the firm.