(Brief description of the Program)
RISK ASSESSMENT is the first step to the Risk Management and further
repeated on each level of business development. This problem is an “industry-standard” model for sophisticated “agent-based modeling”.
It is not solely designed for risk management, but parts of the functionality walk the developer through quality assessment of posterior
probabilities for dome events to occur and suggest management approaches to controlling the financed business venture. This parts of the
software package allow users, such as groups of experts, to pay with financial risk factors of the business that incorporate
various types of capital investors
(strategic investor,
angel investor,
venture capitalist).
The investor must first decide whether to invest
in a project in an early design stage. If YES
then to manage the risk as mitigating some selected factors, and
finally to advise the executive management staff how to operate in order to reduce, or escape,
the potential loss and to reach or exceed planned performance.
It can be very difficult to measure permanently all the time the
business environment around
because risk with a large potential loss and a low
probability of occurring is often treated differently from one with a low potential loss and a high likelihood of occurring.
In theory and the proposed treatment, both are of nearly equal priority.
The software, we developed and hereby represent, is a
Metalogic master matrix
used during the QUANTITATIVE RISK ASSESSMENT to define various
levels of risk factors, actual and of the harm probability and harm severity categories
for the the business. This is a mechanism, transformed in simple and user friendly for operation Excel-based model for operation
with permanent support by the data srore in our server.
It increases the visibility of risks and assists the management decision making.
The system, which we practice and have been updating for a long time, consists of this independent
Quantitative Risk Assessment • OPEN-SOURCE COMPUTER PROGRAM • (the Program)
which is part of the complex Online Cash-Flow Control System (OCFCS).
The operators are selected eight risk factors, variable as the case so requires, in two polar coordinate systems.
The Program treats two components of each risk Factor
(F): the magnitude of the potential loss
(Assessment Scoring) (S)
and the possible impact and probability that the loss will occur (Ratio)
(R). These are the two fields in the “matrix of states” wherein the
assessor makes (S) and from time to time to select different (R)
for some (F).
The Program computes the each relative impact and the total level of risk. That’s all you have to do.
8F: Capital Risk
(a often practice version)
Political Risk
(e.g. war or the inconvertibility of currency)
The Program allows the investor to assign risk assessment to up to four groups of auditors.
Group A. For audits performed by an outside financial advisor
(as we are), risk asses-sment is a very crucial stage before accepting an audit engagement. According to
ISA 315
"the auditor should perform risk assessment procedures to obtain an understanding of the entity and its environment,
including its internal control." Then, we have to be assigned to make
a Feasibility Study of the project (together with the
Project Company) and implement the complex OCFCS
(Recommended).
Group B. Risk assessments performed by
internal auditors are entirely different.
They are usually designed to facilitate the annual audit plan. Using various elements, coupled with the knowledge and experience of
management regarding the particular area, each auditor determines which areas have more risk and should be a priority within the audit
plan, the respective value of the R and S of the matrix.
So the Client must view the DWMO
version of the program and it is recommended to purchase it
(at certain stage of development).
Group C. Prior probability idependent expertise of the assessment(s)
is also reco-mmended in various cases e.g. when the investor is
“angel” type or
venture capitalist.
Group D. Posterior probability independent expertise (also called “what if” expertise)
provides means of computing the risk of two (or more) posterior mutually exclusive events of interest that can possibly occur in each one
F—specifically answers the question what happen if posteriorly some events cause the
S of a F suddenly to jump up? This
compuration utilizes
Bayes’s theorem,
extensively used in deceision analyses.
The following block diagram shows probability revision using Buyes theorem.
The software can compute the probabilities level of risk which totals the Group’s assess-ment and averages with the final result of
quantitative assessment of all Groups of assessors. The result of this service exceeds
all expectations, and surpasses models used by the so called major bankers and the investment companies.
Each auditor from a Group of experts enters his assessments in the main
matrix. The Program computes the final specific subtotals and average level of risk, creates charts to illustrate and
compare data, compares with average data collected in the server from
users of similar business, our clients over the world, etc.
This model was successfully applied when the investor will develop its production in different countries.
Typical examples are chain stores (i) grocery and household goods,
(ii) motor oils,
(iii) gas stations, etc., with the intention to produce and / or packages part of the goods in local countries.
In the modern world investment decisions in any business (development of manufacturing, sports, etc.),
solely based on personal experience, intuition, or insights from the cosmos are equal to an absurd.
They must be easy to use, accessable, computer models and expertise.
More about the theory of Formal System
Washington, D.C. U.S.A.
Background. This is EIGHT-FACTOR MODEL that majority of experts use to present
how the economy works and sometimes found inadecuate coprporate operation.
The depression of the 1930s and the “stagflation” of the 1970s both forced rethinking. The recent financial crisis has sparked another.
The crisis showed that the standard macroeconomic and risk assessment models used by major bankers and investment
companies neither represent the financial system accurately nor allow for the booms and
busts observed in the real world
(as discussed in Economist, Jan. 2013). Open demo version →
You should have a solid business plan
Auditors
Easy for Operation
Conclusion
DOCX-form of Questionnarie (for online fill in)
Power Point presentation (general idea)
Presented by: Prof. George Angelow
Cybernetics eng., economist, PhD of Mats
President of IIC-Group
