Paper Key : IRJ************278
Author: Khushi Garg
Date Published: 05 May 2023
Abstract
The aim of this paper is to define and examine business risk, explore the possibility of using economic capital to mitigate this risk and analyze various methodologies for measuring business risk. The study assesses the effectiveness of three measurement methodologies, namely peer group analysis, statistical methods, and scenario analysis, and evaluates their suitability as management control tools. The research findings suggest that economic capital can serve as a mitigating factor for business risk, although it is not the only solution. Additionally, scenario analysis emerges as a methodology that satisfies most of the criteria for effective management control. The paper's practical implications call for a further discussion to develop the scenario approach in both theory and practice. The study is original as it sheds light on a relatively new field of research that has received little attention in the literature, despite the significant amount of economic capital financial institutions hold to cover the business risk. Overall, this paper is a conceptual study.
DOI LINK : 10.56726/IRJMETS37791 https://www.doi.org/10.56726/IRJMETS37791