This master´s thesis specifies theoretical and formal procedures used while controlling and limiting risks in a company´s business activities. It covers analysis of external and internal risk factors which affect the analyzed company and analysis of the methods of limiting the mentioned risks. Consecutive suggestions and recommendations result from the performed analyses.

Master thesis touches upon the interesting spheres of risk classification, measurement and management of financial institutions. Modern banks have numerous credit risk measurement models at their disposal. However, agreement about performance of those models is not that unanimous and to some point the models are blamed for breaking out of 2007 financial crisis. In the theoretical part of the thesis we provide survey of risk measurement practices in banks. We investigate the main types of risk of banks in their day-to-day activities. Special focus is paid on the credit risk and on the models and techniques of its measurement; Practical part of thesis then contains construction and accuracy estimation of particular credit-risk-model (Altman Z-score). In it we construct and compute Altman Z-score for sample of firms from two chosen sectors in United Kingdom. Main goals of the work are a) testing accuracy of the model by comparing its outputs to real development, and b) econometric testing of the specification of the model itself.

The main aim of this thesis is to design a new and more advanced methodology for valuation of real estate portfolios and incorporate uncertainty into the valuation process. From the comprehensive real estate literature we identified the main value drivers whose treatment is often neglected in the traditional appraisal methodology as they are used as a single point estimates. The identified parameters are the discount rate, inflation, prime rent, occupancy and market capital value changes. In contrast with the traditional approach, we calibrate distributions of these parameters from historical data and allow their variation through the Monte Carlo simulation. This enables us to model their impact on the market value of our real estate portfolio, which comprises of A-class office buildings with detailed property level data including their lease structure. The methodology presented here builds on the widely used DCF approach, which is augmented by the risk parameters and through the thousands of iterations of the Monte Carlo simulation we arrive to a distribution of all potential values of the portfolio. Finally, the knowledge of relevant risk factors and their impact on returns of their property portfolio then provides investors with better and more reliable foundations for their decisions and...

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This research sheds light on the nature of the role of the operational risk controller in the financial services industry. The focus is on understanding how operational risk controllers interact with different layers of the organisation and become influential with the business lines and senior management. Nine semi-structured interviews were conducted with operational risk controllers, and it was found that their work is becoming increasingly focused on managing people with a view to creating mutual understanding. To achieve this, operational risk controllers should work more as independent facilitators in their interactions with the first line and senior management, as engaged toolmakers when adapting and reconfiguring tools, and as non-financial risk controllers when attempting to enable business leaders to understand the magnitude of operational risks.

In today’s world, project risk management has always been a complex topic, especially inconstruction industry; thus managing project risks is required as compulsory for anyconstruction project to be successful. This master thesis presents a critical analysis ofproject risk management and significant impacts of its application on the success of aspecific project’s delivery. It identifies different types of project risk managementprocesses and frameworks used by construction projects. In order to examine how risk andrisk management process is perceived in construction projects, a case study of a LeheHome reconstruction project is chosen and data collection methods of semi-structuredinterviews and questionnaires are applied. The main purpose of this thesis is to explore,describe and analyze the perceived risk management practice in Lehe Home reconstructionproject. Managing risks in Lehe Home project has been recognised as a very importantproject management process in order to achieve the project objectives in terms of time,cost, quality. The study will examine and evaluate the risk management process in specificphases of Lehe Home project and essentially analyze the empirical findings. Finally, thestudy generalizes and develops the project risk analysis and management from Lehe Homeproject and suggests for public sectors to help project managers to make better decisionsunder risky conditions.

Background: The implementation of procurement concepts such as JIT or singlesourcing have resulted in the emergence of new supply risks forautomotive suppliers. The economic crisis in 2008 and volatiledemand in recent years had enormous impact on the sector.Consequently, in association with lean purchasing models, newdimensions of supply risks have emerged. This creates the need forautomotive suppliers to adapt and improve their supply riskmanagement in response to the increased risk potential. There hasbeen no research on how automotive suppliers have furtherdeveloped their supply risk management recently. Purpose: The purpose is to examine how automotive suppliers have adaptedtheir supply risk management in response to the fluctuatingeconomy since 2008. Frame of reference: In this section the Kraljic matrix and the risk management processare presented. The theories lead to a synthesis including the researchquestions for fulfilling the purpose. Method: This research is based on a qualitative multiple case study. In orderto gather the necessary in-depth data, four automotive suppliersfrom Germany and Northern Europe were interviewed by theauthors. Conclusions: Automotive suppliers have clearly reacted on increasedconsequences of supply risks. The general grown awareness andsensitivity have lead to the implementation of new managementtools. Particularly the cooperation between supply chain membershas considerably intensified and contributed to a better riskreduction. Moreover, the financial stability of vendors has risen inimportance and is considered more thoroughly. All the instrumentsand methods may, however, be more powerful and efficient ifautomotive suppliers had standardized and linked them into aconsecutive process.

The purpose of this study is to describe the financial risk tolerance of young swedish residents, which factors that affect their financial risk tolerance, and how their risk tolerance affects their investment behavior. Previous studies within the subject of financial risk tolerance have focused on a wider range of ages, and most of the studies have been made on an American population. This study also contributes with more factors in the same study than many previous studies. The factors included in this research are Gender, degree of education, relationship status, income, mood, birth order, future economic expectations, and financial knowledge. The research contains a quantitative study, where the data have been collected with a survey. The study has a deductive approach, which means that the study starts with theory and moves on with empiricism and hypotheses. The hypotheses have been developed from the results of earlier studies. The survey was dedicated to young Swedish residents in the ages of 18 to 30 years old. There were 123 respondents who answered the survey, which contained 24 questions. To measure the risk tolerance of young swedish residents, the Grable and Lytton’s Risk Tolerance Scale have been used. The result of the study tells us that the financial risk tolerance of young swedish residents are affected by the factors: Gender, future expectations on the stock market and financial knowledge. The study also tells us that there is a significant different in financial risk tolerance between young swedish residents who invest in stocks, compared to those who do not invest in stocks.

The research presented in this thesis considers the question of whether individual-level risk preferences are consistent or inconsistent across decision domains. For example, do people make the same decisions with respect to work, health and finance? Some previous authors have suggested that risk preferences are inconsistent, e. g. Kahneman and Tversky (1979), while others have put forward the idea that people have generalised tendencies to take or avoid risks, e. g. Sitkin and Pablo (1992). The work of Sitkin and Pablo was drawn upon to develop hypotheses concerning the conceptualisation and construction of risk propensity. Risk propensity was operationalised as the degree of consistency of cross-domain risk preferences. It was proposed that a propensity to take or avoid risks is associated with whether individuals have consistent tendencies across different decision domains, that personality will be a key predictor of risk propensity, and that inconsistent cross-domain risk preferences will be associated with risk domain-specific cognitive and emotional aspects of decision making. A survey measure was developed to assess risk and decision preferences both across and within the domains of work, health and finance. Biographical and personality factors were also measured. The sample comprised 360 participants drawn from five sample groups chosen to capture a range of risk preferences. The results showed that risk propensity can be conceptualised and measured in terms of the consistency of cross-domain risk preferences. People who were consistent in their risk preferences were characterised by the personality traits of emotional stability, low extroversion, low openness and high agreeableness. Additionally, consistent risk preferences were associated with relative consistency of attention to situational information and perceived risk. The majority of participants, however, had different risk preferences in different domains, and showed variability in their decision preferences. The implications of the research for understanding risk propensity and risk management are discussed.

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