Risk Reflection in Business Valuation Methodology
Risk Reflection in Business Valuation Methodology

Summary/Abstract: This article is to investigate relevant and sophisti-cated problem concerned with risk reflection in business valuation methodology. The relevance and sophistication of risk reflection in business valuation methodology is affirmed by the discus-sions of scientists who analyse the problems of business valuation. Description, classification and valuation of risk within context of business valuation have several approaches in scientific literature. Presented classifica-tions of risk are various and include various types of risk and factors determining risk. Considering variety of risk classifications it is sug-gested risk’s classification based on decomposition of systematic (external) and unsystematic (internal) risks to the factors that have influence these kinds of risks. Factors of systematic risk are classified according to factors of macro environment and industry environment. Factors of unsystematic risk are divided into two groups: quantitative and qualitative factors. Classifica-tion based on approach of risk decomposition allows determining the factors of risk of various levels and also shows the connection between these factors and both systematic and unsystematic risks.

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