Risk dimensions in enterprises’ financial decisions

Abstract

Within the current conditions of the context, the managerial financial decisions involve five risk categories: Global Risk, Country Risk, Market Risk, Managerial Risk and Decisional Risk. These categories are always present in a concentric way, from the most general to the most particular. An investment project, for example, implies a decisional risk due to the possibility of investment variation, of revenues, costs, and technology, among others; but, also, this risk is associated to what happens with the enterprise, with the market where the enterprise operates, with the country where the market functions and with the political, economic, financial, and world system. Global risk originates in the interdependence, trans-nationalization and world economic and financial deregulation, the country risk under the political, economic and social conditions of each country, the market risk in the characteristics proper to each market and the managerial risk in the investment structure and of enterprise financing. From this we can see that a financial decision condenses and summarizes these five risk categories that converge and multiply testing even Markowitz and Sharpe’s theoretical models, among others.