The investment risk assessment by the financial administrator is fundamental in the consolidation of the company in the face of the requirements of the business managers.

The risk is measurable by many methods of analysis, in this article, the application method will be shown by means of risk matrices and its evaluation by means of inherent risk and control risk. An outline and example of its application are also presented.

The assessment of risk in investments by the financial manager is crucial in consolidating the company to meet the requirements of business managers

The risk is measurable by many methods of analysis, this article will show the method of application through arrays of risk and its assessment by means of inherent and controlled risk. It also provides an outline and example of its application.

Inherent risk factors

Origin possible solution

The nature and amount of investments have changed significantly

Application of procedures to ensure the updating of control systems Recessive conditions in the economy cause liquidity problems, generating the sale of investments at unfavorable values

Analysis of sales made before and after the end of the financial year to anticipate eventual losses

The cooperative popular bank entered into a cessation of payments

Analysis of possibilities to recover assets

There is no timely and reliable information available from the companies in which the investments have been made to record the corresponding proportions in their results.

Analysis of alternative possibilities of information, management information, marketing, etc.


  1. Are all investments and securities recorded in favor of the company?
  2. Does the financial statement show the balance of all investments, and securities that involve income for the economic entity?


  1. All investments and securities represent economic events that have occurred during the period and are rights of the entity.
  2. Are the balances of the investment and securities group accounts reflected in the financial statements real?


  1. Investments and securities are recorded in accordance with the provisions of the GAAP.
  2. Are the investments and values ​​recorded in the accounting made by the correctly arithmetic amounts?
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  1. All transactions related to investments and securities are valued according to methods of recognized technical value.
  2. Are all investment and securities group accounts properly valued for the correct amounts under GAAP?


  1. Are all the accounts of the investment and securities group properly classified according to GAAP?
  2. Are all investment and securities group accounts properly described in accordance with GAAP?
  3. Are all investment and securities accounts duly shown in the financial statements in accordance with the applicable rules and regulations?

The risk is inherent to an activity when it cannot be controlled humanly and it is control risk when due to carelessness or omission an anomaly occurs in the proper functioning of one or several processes.

Although there are always risks when investing, today they operate funds that are fully guaranteed. However, the more “risky” funds are expected to have a higher return. For example, The funds that have invested in the Mexican stock market have obtained excellent annualized returns in recent years, but the risk of investing in one of these funds is different than investing in a fund that offers you 3%. The higher the return, the higher the risk.

Finding the right risk/return mix is ​​up to each investor, as it is a function of many things, such as age, wealth, marital status, lifestyle, and risk aversion among other things. The most important thing that must be fixed when making the investment plan is to determine what the money is wanted for, the objective of the savings and to know the instruments, the risk, and the expected return of each one.

Before investing in a mutual fund, check its rating. This rating is made up of two parts, an alphabetical part that indicates the quality of the fund and its management

Inverter utility function

The investor will require certain levels of return according to the risk. For example, you will invest in bills at 10 per 100% with zero risk, or in shares at 15 per 100% and risk 20 per 100%, etc. These two risk/reward combinations may be indifferent to him. If we put in one figure all the risk/reward combinations that are indifferent to it (or equally desirable), we get an indifference curve or utility curve. As the risk increases, so will the requested return. This is justified by the fact that for the investor, profitability is a good thing or increases utility, but the risk is a bad thing or reduces utility. Therefore, for the investor to remain indifferent,

The concave shape of the indifference curves corresponds to the quite usual behavior among investors of showing an increasing aversion to greater risks (utility is reduced); that is, for satisfaction to remain constant, the incremental relationship between profit and risk has to be increasing, something that we explained intuitively in the previous paragraph.

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The investor will prefer, among all the possible utility curves defined by his risk aversion, the one that gives him profitability = infinity and risk = 0, but he is limited by the existing assets in the market, which in no case have these characteristics. Therefore, he will move along utility curves close to existing assets.

We said that investors in general are risk averse, but to prove it we transcribe the following clarifying lines from Sachs and Larraín:

We start from the assumption that most investors are risk averse; that is, they are interested in reducing risk as much as maximizing expected returns. When agents only care about the expected returns of their portfolios, regardless of risk, we say that they are risk neutral. But if most agents were truly risk-neutral, individuals would not buy insurance and investors would not make any effort to diversify their financial portfolio. They would be content to own only one asset (the one that promises the highest expected return). On the contrary, since agents purchase insurance and spend considerable effort diversifying their portfolios, we have to conclude that the risk aversion assumption is appropriate.

Although we could also say that the “firms” or “companies” are family units that want to satisfy these specific needs at the same time as obtaining a monetary utility and are still willing to sacrifice a part of their monetary utility in order to achieve the others. purposes. However, the desires to obtain a monetary utility dominate over the other purposes, which makes the units mentioned approximately agree with our theoretical concept of a company. The degree of approximation between the theoretical conception and its practical counterpart justifies the assumption that the units dedicated to production pursue, as their sole objective, monetary utility, in such a way that the above means a useful simplification of the analysis.

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The consequences derived from the presence of the other ends can be considered at a later stage of this work. However, the desire for security can have such preeminence that on some occasions it is necessary to introduce it from the beginning of the analysis of the company. The foregoing can be achieved by redefining the company as that unit whose sole purpose is profit, “discounting risk.” The presence of a desire for security among companies will be considered compatible with the capitalist character of the economy.

The foregoing can be achieved by redefining the company as that unit whose sole purpose is profit, “discounting risk.” The presence of a desire for security among companies will be considered compatible with the capitalist character of the economy. The foregoing can be achieved by redefining the company as that unit whose sole purpose is profit, “discounting risk.” The presence of a desire for security among companies will be considered compatible with the capitalist character of the economy.


To analyze this topic in depth, we will initially have to review what it consists of, or better what would be the determining factor for this phenomenon to occur, to explore it further.

For this, we will take the real case of lotteries or games of chance, since if we review in depth the main component of this market would be the bets derived from the above prize which will be in most cases entirely monetary. We can analyze that here we return to the principle of utility since for this moment the prize represents the expected utility, the gain, that he expects to receive for his satisfaction, for this case, it would represent the behavior of the consumer in front of his true point of interest that for our case is monetary bets.


  • Bariant macroeconomic analysis (Chapter Risk aversion numeral).
  • (Theoretical Framework Risk Aversion by Brealey Myers).
  • Written “Risk Preference”, research by Christopher Khsee.
  • The field and the Method of the economy (Oscar Lange).