each depositor funds in any assets sooner or later faced with a term such as investment risks.They suggest the possibility of a lack of profit or loss on the transaction receipt due to exposure to a number of factors.Investors need to remember the main rule, which states that the profits and risks are directly related to each other.That is, the larger the projected level of income, the greater the likelihood of an unfavorable situation.
Investment risks must be monitored, and this should know what their species exist, and explore ways of influencing them.Businessman select result which he wishes to receive the result of operation.There are two extreme positions:
- entrepreneur decides that profit margins are not as important as low risk.
- Despite the high riskiness of the project, prefer to get a good income.
Of course, the ideal position for each contributor is a high degree of profitability of the project, not threatening sharp loss of profits.Risk management of the investment project is to achieve a compromise that satisfies the requirements of the most entrepreneur.Experts propose to adjust an existing project, or have to do everything to minimize the risk for a given amount of income or to try to generate more revenue with less risky.Most economists believe that the risks are qualitatively adjusted to give maximum effect, it is possible only by means of own developed strategic plan.
are the following types of investment risks.
Depending on the area of operation is:
- Economics.
- Social.
- political
first kind of risk has the greatest impact on the world of investing and assumes that adverse changes in the economy.Political investment risks include legislative restrictions on the market related to the reform of the State apparatus.And in the social understood as the human factor, such as a strike, the implementation of specific programs, not going for the good of the main activities of the undertaking.
If we classify the investment risks on the criterion of the origin, in this case, there are two kinds:
- systematic.
- unsystematic.
first is called non-diversifiable risk.His influence extends absolutely all investors.This type of risk is composed under the influence of external factors beyond the control of the immediate parties to the transaction.An example would be a risk differential in exchange rates or interest rate risk, as these indicators are established under the influence of many factors, which regulate the investor can not.Many entrepreneurs often suffer from inflation risk, as the value of the securities declines with an increase in the inflation rate, and when it falls, the reverse process.
non-systemic investment risk, so-called specific, involves mistakes by any party to a particular transaction.For example, the loss in the fight against competitors or irrational investment.This risk can and should be prevented in many ways, one of the most common is considered a differentiated portfolio, that is, investing in different market segments.Then the decline in profits in one area necessarily pay for itself by increasing the other.
Specific risks include business and financial risk.The first is due to illiteracy entrepreneur or poor performance of his team.The second involves a risk in choosing a particular financial policy in case of inefficient work.
