Abstract
One of the main objectives of real investment management is increasing in company’s revenues and market value. Long time lag of income from investments, the scale of investments, and a high level of uncertainty in their implementation makes the questions of project risk management actual. We focused on systematization of methods to measure, report and manage project risks. The paper suggests the concepts of risk-oriented methodology of project risk management. We assumed similar results ranking of investment projects in terms of risks, using Monte Carlo simulation and the fuzzy sets theory for risk assessment. In this study, was formed the empirical base, including investment projects of Russian pharmaceutical companies. The obtained results confirmed our hypothesis. DOI: 10.5901/mjss.2014.v5n24p11
Highlights
Efficiency of the investments is the essential condition to provide stable activity of the company
During implementation of the Monte Carlo simulation we have evaluated the expected efficiency of each investment project under conditions of 30% of variable expenses and sales volatility; number of quantitative indexes, representing risks was calculated and cumulative profile of project risk was designed
Results achieved in the course of application of simulation modeling of net discounting value of investment projects are displayed in the form of symmetric three-corner fuzzy set i.e. [NPVmin; NPVav; NPVmax]
Summary
Efficiency of the investments is the essential condition to provide stable activity of the company. As for Russian companies such financial value drivers as profitability, financial policy and level of risk are positively related to shareholder value creation [1], so it is rather important to search for and implement new effective methods and tools of real investments management, that on the one hand could led to increase company value, and on the other hand could provide more accurate forecast and evaluation of project risks. Real investment management calls for evaluation of chances to increase business income and company value and should take into account the level of project risks and develop effective measures to reduce them. This highlighted the clear need for risk evaluation prior to implementation. It’s important to understand management’s view of risk, identify methods adopted to highlight potential risk, and explore possible risk assessment in project management [2]
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