Rating Approach to Assess the Level of Investment Risks of Power-Generating Companies: The Case of Russia
The paper is devoted to assessing the risk of development of capital-intensive investment projects in the electricity sector. The paper hypothesizes that the modern condition of the branch system of risk management does not allow us to objectively and quickly assess the threat level of investment risks of power-generating companies, causing a slowdown in investment activity and innovative development of this sector. This creates a need for improving the quality of evaluating investment risks with the allocation of object-structural component. The original methodological approach allows us to rank the investment risk level of hazard and to assess its impact on the process of making investment decisions. In the research process, mathematical tools used analysis of multidimensional data, which allows one to solve the problem of subjectivity in the implementation of the objectives. In practice, the use of the proposed methodological approach allows us to develop a comprehensive program of measures to reduce the specific risks of the development in the financing of capital-intensive investment projects in the power sector.
KeywordsDevelopment Capital Projects Risk Mathematical tools Investment risks Power-generating company Financing
The work was supported by Act 211 Government of the Russian Federation, contract № 02.A03.21.0006.
- 1.Markowitz, H.M.: Portfolio Selection: Efficient Diversification of Investment. Wiley, New York (1959)Google Scholar
- 2.Sharpe, W.: Portfolio Theory and Capital Markets. Economics, Boston (1970)Google Scholar
- 3.Smith, V.: Investment and Production. Harvard University Press, Cambridge, MA (1961)Google Scholar
- 4.Merton, R.C.: On the pricing of corporate debt: the risk structure of interest rates. J. Financ. 29, 449–470 (1974)Google Scholar
- 5.Gorby, M.B.: A risk-factor model foundation for rating-based bank capital rules. J. Financ. Intermed. 25, 199–232 (2003)Google Scholar
- 6.Vasicek, O.: Loan portfolio value. Credit Portfolio Models. 15, 160–162 (2002)Google Scholar
- 7.Basel Committee on Banking Supervision. Proposed enhancements to the Basel II framework, www.bis.org
- 9.Market risk management in Russian electricity companies. Analytical study; KPMG (2012)Google Scholar
- 10.Hertz, D.: Risk analysis in capital investments. Harv. Bus. Rev. 41, 95–106 (1964)Google Scholar
- 13.Domnikov, A., Chebotareva, G., Khodorovsky, M.: Evaluation of investor attractiveness of power-generating companies, given the specificity of the development risks of electric power industry [in Russian]. Vestnik UrFU. 3, 15–25 (2013)Google Scholar