Summary classification of risks - Analysis and assessment of risks in business

Summary Risk Classification

We have created a summary table of risk classifications (Table 1.2), which has been broadened to a significant extent both in the number of classification characteristics and in specific risk transfers, which will allow us to describe in detail the set of risks associated with a particular research object. In the process of analyzing a particular investment project, classification characteristics can be expanded and specified in accordance with the goals and objectives of the study.

Table 1.2

Pivot table of risk classifications

Classification

Types of risk in accordance with the classification

Subjects *

global , planetary , when the subject is the whole of humanity (the planet) as a whole

national , country , regional , when the subject is a nation, a country, individual regions

the risks of certain groups or structures , for example, government agencies, social groups, individuals

risks of economic , political , social and other systems

risks of various branches of the economy

risks of economic entities

risks of individual objects (enterprises or projects)

risks of activities

• Other

By degree of damage

partial - planned indicators, actions, results are partially, but without losses

admissible - planned indicators, actions, results are not met, no losses

Critical - the planned indicators, actions, results are not fulfilled, there are certain losses, but integrity is preserved

catastrophic - failure to fulfill the planned result entails the destruction of the subject (society as a whole, region, country, social group, individual, industry, project, enterprise, line of business, etc.)

In the spheres of manifestation, by the nature of the risk

political, associated with the change in the political course of the country (in particular, military-political)

economic, associated with changes in economic factors ( marketing, currency, investment, financial, default risk , etc.)

regulatory-legislative, related

with changes in legislation and regulatory framework ( legal, contractual);

• Banking ( credit, market, or inflation, liquidity, operational , etc.)

In the spheres of manifestation, by the nature of the risk

production and technical (technical and technological, construction, transport , etc.)

social, associated with social difficulties (for example, the risk of strikes, etc.)

environmental ( natural), associated with environmental disasters and disasters (for example, risk of force majeure, in particular, the risk of flooding , the risk of an accident at an NPP, etc.)

Information

By the degree of communication fluctuations in the return on assets with fluctuations in the profitability of the FR (market portfolio of investments)

unsystematic risk ( internal ), inherent in a particular economic entity, depending on its condition and determined by its specific specifics (associated with management accounting and financial planning)

>

systematic risk (external), related

with market volatility, risk that does not depend on the subject and is not regulated by it. It is determined by external circumstances and is the same for the same type of subjects. Systematic risks are subdivided into risks caused by: 1) unpredictable regulatory measures in the spheres of legislation, pricing, standards, market conditions: 2) natural disasters and disasters ( risks of force majeure - force majeure) 3) political changes; 4) crimes

For the type of enterprise activity allocated in the accounting and assessment of business

operational

investment (investment risk, selective, temporary, legislative changes, credit, liquidity , etc.)

financial (price, interest, credit, currency (exchange rate), liquidity, solvency, operational, inflation, default risk) * *

By stages (phases) of the object's life cycle

• The risks of the creation phase, development

• risks phases of development, growth

Risks stages of maturity

the risks of the stage of decline

By time of occurrence

Retrospective

current

promising

If possible, reduce the risk (with diversification of the portfolio of investments)

Diversified

non-diversifiable (for example, systematic risk can not be diversified)

By scale

global

country

Regional

industry-specific

corporate (branded ), project

Relative to the organization environment

external ( exogenous , macroeconomic)

internal ( endogenous , microeconomic)

If possible, manage (and reduce)

Managed

unmanaged

If possible, insurance

insured

not insurable

By the nature of the change

static (due to the possibility of loss of real assets due to damage to property and loss of income due to the incapacity of the organization)

dynamic (associated with the occurrence of unforeseen changes in fixed capital due to management decisions, as well as market or political circumstances)

By Markets

Real Estate Market

of the securities market

the investment market

building etc.

By the nature of the probability distribution

discrete - implies the presence of a finite number of possible outcomes, each of which has its probability of occurrence (the sum of all probabilities is equal to one)

continuous - the result can take any value in a certain interval

In probability of risk realization

homogeneous - risks that have approximately the same probability of occurrence (damage occurrence) and the amount of possible damage

heterogeneous - have different probability of realization and possible size of damage

By the nature of the concept of risk, by the consequences

speculative - implies the possibility of obtaining both a negative and a positive result

pure - means getting only a zero or a negative result ***

Notes

* Correlates with classification based on scale.

** It should be noted that such a division of risks by this criterion is very arbitrary, as many analysts recognize the impossibility (!) to establish clear differences between investment and financial risks.

*** Usually the probability of obtaining a zero result is much higher than the probability of obtaining a negative result. These risks include political, transport, natural and environmental. Some of the risks associated with financial and business activities are also risks of obtaining losses (risks of loss of property, trading, etc.).

For a private classification to acquire the property of systemic nature, one can build on a set of the above criteria a number of useful partial classifications of risks, for example, highlighting the following three characteristics:

1) by sources of origin (external and internal);

2) spheres of manifestation;

3) types of economic activity of the enterprise.

Moreover, for the purpose of adequate risk-taking (without omissions and repetitions), we will try to consider these three classifications in a logical relationship (as a system), thus forming a risk research algorithm (inherent in any business or project ), which will be followed by the analyst/evaluator at a certain stage of the evaluation process.

Fundamental is the division of risks into two categories in relation to the source of occurrence - external and internal (the first classification criterion). Then external (macroeconomic) risks, taking into account the sign of scale, are investigated in the sphere of manifestation (the second sign): the political, economic and socio-demographic risks and factors that generate them on each of the considered levels. In turn, internal (microeconomic) risks are subdivided into types of economic activity (the third sign), which include operational, financial and investment allocated activities for detailed research. Thus, this algorithm will cover almost all the main risks that influence and determine the conditions for both the functioning of the enterprise and the implementation of the investment project, which the evaluator must reflect in his research.

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