How does risk management influence on the investment strategy of the company?

Abstract

The main focus of this survey is in the area of risk management and strategic investment management. The question of the connection between risk management and the investment process is fundamental. The investment process focuses on all activities in the company as well as reflects the ability of the company to organize all of its resources – financial, human resource, material, technological, informational etc. In the course of the investment process different problematic situations appear and different factors influence which the company can influence on with its actions, partially influence on or have no influence on. The role of risk management is of significant importance here in particular in regard to forecasting the appearance of problematic situations and influence of factors. In consequence from this it develops and proposes different solutions to the strategic management for preventive measures aimed at avoiding the influence or limiting the influence of different factors as well as solution of the respective problematic situations. In order to solve these issues risk management must have managers and experts who are highly informed and experienced. In order to achieve an efficient investment process it is significantly important to have a stable and effective interconnection between risk management and the strategic management of the company. The participation of risk management in the decisions of the strategic management and the strategic planning is directly connected with the increase of the efficiency of the investment process. I have chosen the deductive approach as a method for the purposes of the present research. The approach chosen in this dissertation implies collection of both primary and secondary information. The findings from the survey provide evidence that there is a correlation between risk management and the investment strategy of the company. The analyses prove that proper risk management increases the efficiency of the investment process. This leads to conclusions supporting the statement that efficient risk management improves the investment strategy of the company and has significant influence on the later and the overall profitability of the company. Therefore I recommend that further research must be performed in regard to the efficiency of strategic management and the impact of its solutions and opinions on the risk management as well as a more detailed discussion of the factors and their influence on the company. I have suggested several more recommended analyses which may further develop the analysis of the main groups of questions included in this dissertation.