Using the Decomposition Method in The Analysis and Reduction of Business Risks

The quality and efficiency of the implementation of a business project depends on a complex of multidirectional factors, including the development of business decisions at the planning stage. The accuracy of the implementation of planned decisions is affected by the possibility of entrepreneurial risks. To level and predict undesirable consequences, it is possible to apply the decomposition method in the analysis of sources and causes of entrepreneurial risks, applied on the basis of a specific financial model using tools for evaluating the effectiveness of entrepreneurial projects, business plans, tools for evaluating the effectiveness of current economic activity, tools for assessing break-even and profitability of entrepreneurial activity . As an indicator, the amount of the net profit of the enterprise, profitability, the value of the break-even point can be selected. The application of the method consists in choosing a key indicator that can be harmed by risks and methodically decomposing risk factors from more general to specific, with an accompanying analysis of the reality of significance. The success of the application of the method lies in the methodical decomposition of directly acting factors into components (causes).