Financial
institutions, banks or capital risk entities which are considering the
possibility of investing money in a SME which desires to innovate or expand
to produce and market new products, or in the case of an investment in
new technology based firms (NTBF), there is a need to perform a specific
risk analysis.
Also, whenever there is a need to grant a credit to a completely unknown
company dedicated to a new technology development it is always very difficult
to evaluate all the aspects of the risk involved, with the result that
the conditions for the credit are often penalized by heavy contingency
factors.
The main problem we face, is to evaluate the investment risk or credit
risk in those companies where the activity is not well-known, and where
the future economical growth of the company depends on so many unfamiliar
factors for which there are no historical data directly comparable.
In these cases, for a good assessment of capital investment risk the investor
will generally need to analyze many different economical factors related
to the specific investment, such as:
- Product feasibility from technical point of view
- Possibility of
good market penetration of the company
- Quality of the
management organization of the company
- Sector competitiveness
- Financial suitability
- Opportunity cost
of the investment
- Technology evaluation
- Etc.
All
these areas can be summarized into four big generic economical analysis
modules:
- Marketing analysis
- Financial analysis
- Technical analysis
- Company analysis
At present, many different commercial software packages can be found in
the market for the analysis of some of the above mentioned factors and
modules.
However there is still no software available at present that can integrate
the four analysis modules into one unique and complete capital investment
risk assessment, that could answer to all, or almost all, questions of
the investor, and give him a complete probabilistic risk assessment of
the potential capital investment or loan.
The Cipratech program is intended to respond to this need by integrating
the four analysis modules into one unique probabilistic risk assessment
software using an event tree analysis methodology.
Cipratech will manage the four modules at the same time. Therefore the
analysis of all the economical relevant factors will be considered for
a global and unique capital investment (or loan) risk assessment.
The advantage offered to the end-user by Cipratech is that each of the
four analysis modules can also be used separately to perform a specific
financial, market sector or product/technology analysis.
As mentioned
above, Ciptarech offers the possibility to analyze the global probabilistic
risk of capital investment by considering the four economical modules
at the same time.
In addition, the program allows to make marketing analysis of a specific
sector, or to perform a financial analysis of an investment, or to analyze
a technology or product as individual stand-alone evaluations, or as a
combination of only two or three of the modules.
We have performed
a survey of the software presently offered on the market and made a comparison
between the Cipratech model and the other major commercial programs and
software packages available, that to some extent perform functions similar
to those of Cipratech.
There are many other products offered, especially in the USA market, that
are specifically designed for investing on bonds, equities, futures, etc.
traded in the Stock Exchange.These programs are not comparable to Cipratech
and cannot be used for analyzing the risk of investment or credit in SME’s
and NTBF’s since they do not cover all the risk aspects which need to
be evaluated. The majority of the other programs presently commercialized
give a good coverage of the financial risk, some permit to analyze the
market or industry sector, but are not addressing the technology and product
evaluation of risk.
This preliminary market survey of risk assessment computerized tools presently commercialized has confirmed the belief of the Cipratech Consortium partners that competitors’ products do not cover all the risk aspects to be evaluated when financing a SME or NTBF.
In particular the market and product/technology evaluations are not systematically covered and in the few cases where it is included, the evaluation is performed by comparison against statistical or historical sector data of performance and best practice.
None of the
products analyzed uses systematic risk assessment models based on event
or fault tree methodology.
