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Risk Management in Business Valuation in the Context of Digital Transformation

Risk Management in Business Valuation in the Context of Digital Transformation AbstractThe paper deals with business valuation in unstable conditions of the external environment. Economic recession and the need for digital transformation is coming to the fore in Russia. As a result of this, the valuation of assets and business acquires additional complexity and issues related to effective risk assessment become relevant. The main objective of this paper is to offer non-traditional methods of risk assessment for business valuation at the moment. The qualitative and quantitative risk analysis will help to improve the quality of the assessment reports of the property in an unstable period. The paper focuses on the non-traditional methods of risk assessment (Monte Carlo method, game theory) which must be used in determining the market value of the object of assessment in the current time. A practical example of using the simulation modeling method is given in detail. Summarizing, the use of the simulation modeling method for calculating the market value of the appraisal object will provide additional (compared to the standard method) information and increase the reliability of the results. Moreover, in the period of the coronavirus pandemic, this paper becomes even more relevant and important, seeing as how uncertainty is becoming inherent in countries around the world. Thus, this study is of value to researchers in the field of economic modeling and appraisers across the globe. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Real Estate Management and Valuation de Gruyter

Risk Management in Business Valuation in the Context of Digital Transformation

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Publisher
de Gruyter
Copyright
© 2021 Svetlana V. Pupentsova et al., published by Sciendo
ISSN
1733-2478
eISSN
2300-5289
DOI
10.2478/remav-2021-0016
Publisher site
See Article on Publisher Site

Abstract

AbstractThe paper deals with business valuation in unstable conditions of the external environment. Economic recession and the need for digital transformation is coming to the fore in Russia. As a result of this, the valuation of assets and business acquires additional complexity and issues related to effective risk assessment become relevant. The main objective of this paper is to offer non-traditional methods of risk assessment for business valuation at the moment. The qualitative and quantitative risk analysis will help to improve the quality of the assessment reports of the property in an unstable period. The paper focuses on the non-traditional methods of risk assessment (Monte Carlo method, game theory) which must be used in determining the market value of the object of assessment in the current time. A practical example of using the simulation modeling method is given in detail. Summarizing, the use of the simulation modeling method for calculating the market value of the appraisal object will provide additional (compared to the standard method) information and increase the reliability of the results. Moreover, in the period of the coronavirus pandemic, this paper becomes even more relevant and important, seeing as how uncertainty is becoming inherent in countries around the world. Thus, this study is of value to researchers in the field of economic modeling and appraisers across the globe.

Journal

Real Estate Management and Valuation – de Gruyter

Published: Jun 1, 2021

Keywords: business valuation; market value; risks; simulation modeling method; Russian economy; digital transformation; C5; G32

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