Impact of Risks on the Enterprise Performance in the European Union by using Enterprise Risk Models
Impact of Risks on the Enterprise Performance in the European Union by using Enterprise Risk Models

Summary/Abstract: We analyse an impact of systematic and unsystematic risks on the performance of production systems in the period of 2003- 2015 by creating of novel enterprise risk models, with focus on Slovakia within the euro area. The method of this paper is based on the methodology of Capital asset pricing model in comparison with Building- up I Model and Building- up II Model (proposed in Czech Republic), used by the valuation Cost of Equity and its applications on Slovak conditions. For the risk analysis we used and compared data of food sectors in selected countries of the EU. By testing hypotheses was confirmed Hypothesis 1 that the valuation Cost of Equity with application of systematic risks using historical data (based on CAPM) was lower than the valuation with application of business and financial risks using expected market data (based on Building-up I). Results proved that systematic risks have a lower impact on the enterprise performance than unsystematic risks. Finally, we constructed novel 3- dimensional Enterprise Risk Models according to Slovak market conditions using our approach to modelling, scoring of risks and prediction models. We confirmed Hypothesis 2 that the enterprise performance reached the better position with the application of systematic risks and forecasting of risk parameters using prediction methods and ex ante data (in ERM2) than with the application of risk parameters based on historical data (in ERM1). Models can be applied by the modelling and strategic planning as early warning models worldwide.

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