Business Commons^™

The Relativity Of Risk Assessments In Investment Decisions, Michael Sack Elmaleh

Michael Sack Elmaleh

The level of risk in investing in a closely held firm is related to the qualifications of the control managing investor. While there is generally a minimum threshold of expertise and capital that a control investor must possess, beyond this threshold the potential levels of expertise and capital can vary significantly. The level of enterprise risk is inversely related to the level of expertise and capital possessed by the control investor. The more resources and expertise the investor possesses, the less the operational risk. Thus enterprise risk is a relative and not an inherent fixed property of an enterprise. Furthermore, …