Decision Model on Financing a Project Using Knowledge about Risk Areas

Ioana Florina Popovici, Emil Scarlat () and Francesco Rizzo ()
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Emil Scarlat: Academy of Economics, Bucharest, Romania
Francesco Rizzo: International Consortium for Economic, Scientific, Cultural and Social Aspects, Rhein-Kreis Neuss, Germany

Journal of Knowledge Management, Economics and Information Technology, 2011, vol. 1, issue 5, 3

Abstract: The research presents an alternative to the classical method of measuring financial risk in funding a project. The goal of the model described in the paper implies identifying "risky areas" within the financial balance of the project. The model analysis the financial risk behavior studied along four scenarios by varying only the cost of financing source used according to the specific type of funding. The model introduces the time factor into the analysis of financial risk due to the specific type of financing source used because of the influence on financial balance of project' budget due to the distribution in time of the receipts and costs incurred in the life cycle of a project. Model presented help identifying the "risk areas" within the financials flows of a project offering a warning signal to the decision-maker to select the most suited risk management strategy.

Keywords: risk management; financial disequilibrium; decision-making (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:spp:jkmeit:1155

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