Acta Univ. Agric. Silvic. Mendelianae Brun. 2016, 64(3), 949-959 | DOI: 10.11118/actaun201664030949

Optimizing Risk Structure in Connection with the Corporate Life Cycle and Sector Cyclicity

Zdeněk Konečný, Marek Zinecker

Department of Economics, Faculty of Business and Management, Brno University of Technology, Antonínská 548/1, 601 90 Brno, Czech Republic

Entrepreneurial activities and thus also investments are connected with two kinds of risks, namely with the operational and financial risk. Both of them are dependent especially on the corporate life cycle and on the sector sensitivity to the economic cycle. The main aim of this article is to propose a methodology supporting managers and investors when estimating the shares of operational and financial risks in the entrepreneurial risk with taking into account the corporate life cycle and the sector sensitivity to the economic cycle. This methodology is subsequently applied in a selected company in the form of a case study and thus their results prove its practical applicability for both financial managers and potential investors as decision makers. This study relies on both secondary and primary data that were collected using databases and a semi-structured questionnaire. The data were processed by using descriptive statistical methods and a case study. The proposed methodology considers the actual phase of the corporate life cycle and the degree of sector sensitivity to the economic cycle. Determining the risk structure should simplify the risk management and subsequently raise the capital access. The methodology also contributes to investment decision-making, because the investors can assess investments with regard to their risk profile.

Keywords: monetary policy, business cycle, macroeconomics, microeconomics, management, corporate life cycle, financial risk, operational risk, investment decision-making, risk management

Prepublished online: July 4, 2016; Published: July 1, 2016  Show citation