Abstract
In projects, a strategic component is to identify all risks that might influence their success, prevent and manage them effectively. Risk management is essential to add value to an investment and improve results. With the economic and financial crisis in recent years, increasingly, more companies have realized the importance of using a system of risk management, given the multitude of variables that can influence the success of a project. These include: legislative changes, global political and economic instability, natural disasters, climate change, human resources, liquidity risk, environmental impact, risk of erroneous calculation of total project costs, risk of failure into initial project schedule, prolongation risk, the risk of failure of internal rate of return (IRR) and net present value (NPV) etc. The study proposes a new method of risk assessment and management in the investments projects with environmental impact and its application in a case study. The method will take into consideration besides the economic and financial indicators, hard to be understood by smaller investors, a set of simple and important questions that they have to analyze before deciding to start an investment project. The new methodology will have a comprehensive approach from identifying the investment opportunity, writing investment project until its implementation. This will take into account macroeconomic variables and the microeconomic environment that can influence the success of project implementation. The main advantage of applying the new methodology are: knowing all the variables that influence the success of a project realization; awareness of the importance of applying an effective risks management related to investment projects with environmental impact, increasing the quality and success of projects.
Highlights
The objective of risk management is to ensure that significant risks are identified and appropriate measures are taken to manage them
With the economic and financial crisis in recent years, increasingly, more companies have realized the importance of using a system of risk management, given the multitude of variables that can influence the success of a project
The study proposes a new method of risk assessment and management in the investments projects with environmental impact and its application in a case study
Summary
The objective of risk management is to ensure that significant risks are identified and appropriate measures are taken to manage them. Dikmen et al [8] consider that “calculating the overall risk level of each project by multiplying the relative impact with the relative probability of each risk and adding the scores compares the risk of projects and provides a relative risk score”. Another approach to assess different risk types is the stochastic methods which dealing with duration risk or cost risk while the risk has been seen as a synonym for variability of expected duration or estimated cost. Taroun et al [9] propose a method to assess risk impact as a percentage of project net present value (NPV), a common use economic project appraisal criterion to reflect the impact of damage on an intangible objective arising from a risk
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