Investment decision risk management and investment effectiveness Analysis

Abstract investment enterprise development and operation of the necessary means of production, is to enhance the core values ??and innovation the only way, but there must be investment risk, so companies can invest in a high return, quick, low risk of project up, the company's survival and development, improve investment efficiency, choice of investment projects need to continuously improve the decision-making level, to enhance effective against a variety of project risk management capabilities.

Keywords investment returns investment decision-making assessment of investment risk prevention investments

According to National Bureau of Statistics October 20, 2005 data released by the first three quarters of 2005, China's economy continues steady and rapid growth, GDP grew 9.4%, total fixed asset investment of 57,061 yuan, an increase 26.1% increase over last year dropped 1.6 percentage points in the current economy one of the main problems still remain too large investment in fixed assets, the investment structure is not rational.'s main business as a market economy and the national economy of the basic unit, must be based on profit for the purpose of economic entities. corporate investment activities, the use of funds as the main way business is one of the enterprises in the increasingly fierce market competition to win one of the core aspects of advantage in the next five years, the transformation of economic critical period of growth patterns for the realization of building a conservation-oriented society and harmonious society and environment-friendly society, the grand goal, one of the keys is to continuously improve investment efficiency, economic development will be fully transferred to the track of scientific development concept.

A good or bad investment returns of investment objective is to determine whether the center of

Investment as the main engine of China's economic growth in both demand and supply play an important role on the one hand, investment demand has the effect of current investments, through a variety of investment products and resources (including human resources), constitute part of aggregate demand and stimulate economic growth; the other hand, the results of investment activities, will become part of the total supply to meet future consumption needs of the community may be, this is the investment activities of the supply effect.

On business investment, the investment (FDI) is to direct investment in production and management of capital assets, such as the purchase of equipment, construction plant, purchase of raw materials, etc., in order to obtain investment profits. It is the business one of the main use of the funds, but also enterprises to adjust product structure, to achieve industrial upgrading and enhance the competitiveness of enterprises the main way.

To see the whole process from investment activities, each project has a total investment goal, which in a certain period of time, according to the requirements of the investment budget, with minimal capital investment, optimal combination of resources, improve projects to meet the design quality requirements, to obtain good economic and social benefits, so the choice of analysis of investment projects, should be in accordance with the system theory point of view, investment returns around the core, the project's internal conditions and external environment, integrate local interests and combination of global interests, the interests and long-term interests of the current combination of quantitative and qualitative analysis of the combined analysis of the project evaluation system integrated between the various elements, and elements of the system and between system and environment interactions and linkages to achieve the established investment objectives.

2 decisions on investment projects and a number of criteria

Investment decision-making, is to achieve certain investment objectives, in full possession of information and experiences based on the actual conditions, by means of scientific theories and methods from a number of alternative investment options, select a reasonable solution satisfactory analysis conducted to determine the work of an investment project of scientific decision-making, in addition to the macro-environment for investment analysis and economic evaluation analysis of micro-projects, but also specialized in analysis of investment risk, the use of systems analysis principles, considering the pros and cons of each program , and finally make a choice. Moreover, investment decisions, is a service subject to the requirements of the overall business strategy, technology development and business strategy, product development strategy, marketing strategy and is closely related to human resources strategy. factors influencing the quality of investment decisions than more, depending on the decision-making information, the correct decision-making principles and scientific decision-making process and the excellent quality of decision-makers.

Choice of investment projects based primarily on project feasibility study report. Investment project feasibility study is not only the investment project itself part of the work, but also to make the right investment decisions, project design and an important basis for financing. Feasibility Study work is for investment projects with research, analysis, demonstration and evaluation to determine whether the project in line with technologically advanced, economical, practical implementation of a range of activities required by the project's estimated benefits and risks analysis, to determine the investment and financial recovery Security Investment project feasibility studies, demonstration projects as a method of scientific analysis, have been widely used around the world. feasibility study concluded, is an important basis for investment decisions in the analysis and evaluation of the feasibility of investment projects To achieve the combination of macro and micro, static analysis and dynamic analysis of a combination, and professional analysis and a comprehensive analysis of the combination.

Feasibility analysis of investment projects in the macro analysis is to analyze the investment environment, the analysis of investment projects, where the political environment, economic environment, legal environment, social and cultural environment and natural conditions, environment details are: ① in the choice of investment projects First is to understand the project site (country) political environment, including project approval procedures, approval procedures, government agencies, office efficiency, materials circulation system and other related management system with the government; ② economic impact of investment projects; ③ legal the environment. A good legal environment, which can effectively protect the vested interests of investors, stable investors to invest and expand the scale of investment; ④ social and cultural environment. Social and cultural environment is the main population of local residents and structure, living habits, education level, religious beliefs and values; ⑤ natural and geographical environment, mainly analyze the project site's location and natural resources for the location, should analyze the traffic convenience, geology and climate conditions; for natural resources, should analyze all kinds of material resources to meet the investment needs of the situation.

Therefore, the use of economic and engineering systems analysis principles to the analysis of corporate investment decisions, is to reduce investment risk, a reasonable portfolio, select investment decisions satisfactory solution, to ensure that enterprises get the necessary prerequisite for the expected return on investment. Enterprises of all economic activity, to obtain cost-effective services to be around, usually, in the evaluation of cost-effectiveness analysis of investment projects, there are two general methods: static and dynamic evaluation methods evaluation methods. Static evaluation method that does not take into account the time value of money method, mainly for projects and programs of the primary stage of the static evaluation method is simple, intuitive advantages, but does not consider differences in the economic life of the program as well as the shortcomings of the time value of money. Commonly used are payback period, investment rate of return and payback period method the difference between Dynamic evaluation that takes into account the time value of money approach. This method is in line with the movement of funds, to make assessment results more in line with the movement of funds, evaluation of results more realistic Commonly used methods are net present value of the specific (NPV) and internal rate of return (IRR).

In determining the investment projects, investment programs, the application of principles of systems analysis, business development strategy, from requirements, a comprehensive analysis of the firm's environment and their overall ability to determine the investment objectives and then, from the analysis of investment where the investment environment to start for the realization of the established investment objectives, project analysis and comparison of various aspects, demonstration, select the static analysis indicators (payback period and return on investment), and dynamic analysis of indicators (net present value and internal rate of return) as the project technical and economic indicators, in order to reduce investment risk for the investment decisions provide a solid foundation, thereby improving the overall effect of corporate investment decisions, to achieve its business objectives in the technical and economic evaluation of projects, the need for the product cost and market sales and sales price forecasting and analysis. consumer buying behavior in general is driven by its purchase of motivation occurred, subject to many factors, these factors can be divided into two categories, one external factors, including social factors, economic factors, business factors, and the other is internal factors, namely, individual psychological factors, so the consumer buying decision process research can influence the degree of realization of investment.

3 investment project risk identification and prevention

When investors make investment decisions, not only to consider the expected return, investors must also be analyzed and compared risk depends on the size of the risk of the volatility of investment returns the size of the investment portfolio through the appropriate use of the diversification of investment assets to distributed non-systematic risk. the structure of the portfolio, including asset allocation and portfolio optimization, in order to achieve the stated investment objectives, the best returns. Links to free download
As the project investment-specific long time, large amounts of complex decision-making, many factors affect the investment results and other characteristics, determines the risk of large investment projects, Investment performance of project risk political and legal risk, social risk, economic risk, technological risks and natural risks in. divided by the progress of investment projects, investment risk is mainly reflected in: First, the early development phase of the project may result in loss of investment risk factors are: unknown, hasty decision-making; the wrong way, wrong estimates; ill-considered, missing item omissions; fraud, irresponsible; review is not fine, not strict, etc. Secondly, investment in the project implementation phase leading to the risk of loss include: building construction schedule delays; engineering and equipment of questionable quality; project organization and management is not Yan Finally, the project put into operation in the early stages of the risk of investment losses have led to: adverse changes in business environment; neglect to improve the quality of personnel and training; management system is not perfect.

Currently, many investment projects, project feasibility study does not attach importance to investment risk prediction, uncertainty analysis is limited to the risk of technical analysis in simple, even with only a subjective experience and intuition, after completion of the project may not predict the risk factors for the implementation of the project a security risk, therefore, strengthen the awareness of investment risks, make investments in the pre-feasibility study work risk prediction, develop measures to prevent and resolve, is to avoid making mistakes, and constantly improve investment efficiency, and achieve investment scientific project fundamental guarantee of investment projects risk prediction include the following aspects:
(1) market risk, and if you do not understand the market trends, project construction has become a source of water in the country under the guidance of macro-control policy, only the sort of clear industrial policy and industrial investment environment, be possible to avoid duplication construction is possible and reasonable use of limited resources, to make the best decisions, get the best return on investment. does not represent a huge market share of the market share of investment projects, and only through market research and organize the implementation of marketing strategy, while competition in the industry and potential competitors, in-depth study for the project in order to accurately find the product market opportunities.

(2) resources and raw materials, fuel, power supply risks in the scientific concept of development under the guidance of the investment activities of enterprises need to co-ordinate resources and investment relationship. First of all, from project construction and operation of the objective requirements, constraints and research resources the chain constraints; Second, also from the perspective of corporate social responsibility to fulfill the investment will help build a resource-saving and environment-friendly society investments, and reduce all kinds of waste, take the content-type of development path, so in the project feasibility study stage, the need for raw materials, especially raw materials, resource reserves, extraction or production, consumption and supply to be a high priority. the project required the original fuel and power supply conditions, the supply in a manner that not only to meet the production needs of the project reasonable to use both the economy and carefully implemented.

(3) technical process risks increasing investment activities as an enterprise independent innovation capability is one important way, it should be in the investment project feasibility study, both properly handle the advanced technology, applicability of. Have to fully consider the technical feasibility of space on the basis of independent innovation through the use of foreign investment projects, advanced technology, the actual production process through the digestion and absorption, there may have independent and innovative development opportunities by leaps and bounds, and driven by demand in the market, set a certain time the human and financial resources to effectively improve the capability of independent innovation, will quickly generate economic benefits.

(4) financial risk. For investment projects, financing is to first implement capital investment projects, according to the specific circumstances of investment projects, raising bank credit funds, non-bank financial institutions, funds, foreign funds, etc. to enhance the risk of financing investment projects prevention, the need to focus on analysis of the stability of funding sources, and strictly follow the rationality, efficiency, scientific principles. try to choose low-cost capital financing ways to reduce the risk of financing.

(5) invest in risk investment projects must meet the industrial layout of the site selection and urban planning requirements, and close to the raw materials, fuels or products are mainly sold to, close to water, power, transport conditions and to facilitate cooperation in economic conditions. Engineering Geology and hydrological conditions to meet the needs of the project site selection, general layout should be compact and reasonable, to maximize the efficiency of land use. investment facility layout shall conform to the current fire, safety, health, transportation and environmental ecology and other relevant standards, requirements specification, through an objective , just and scientific manner than the multi-site selection in order to achieve better investment returns.

Investment projects include: project management risks, environmental risks, human resource risk, force majeure. In essence, the risk throughout the investment project always. By increasing the level of investment decisions, investment decisions to reduce errors caused by low-level redundant construction, in a small area to prevent excessive competition in the industry, it is entirely possible to control the investment from the investment direction of the source and amount of investment to reduce waste, continuously improve the investment returns, while, only to strengthen investment in risk prevention, to avoid all kinds of hidden or overt investment trap, be possible to reduce losses, achieve the investment objectives of maximizing investment returns.


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