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Improving the capital allocation decision-making process Logo cgma

  Free |   AICPA and CIMA |   28 Jan 2015 |   CGMA Magazine

In an increasingly complex business environment, using risk-return techniques to allocate resources across projects or business units can promote more robust decision-making. This article discusses a new Deloitte report, including the steps towards an enhanced approach to corporate portfolio management.

Topics covered:
  • Management accounting: Technical: Risk management & internal control: Risk identification & assessment, Advanced

4 Comments/Reflections

Abiodun Ayeni

Abiodun Ayeni May 2020

I learned how to apply best practices in identifying and managing project risk and cash flowing. This course upskilled my corporate finance techniques especially in building risk to every aspect of capital rationing for competing projects.

Now I can adapt capital rationing skills to various projects.

Tiancheng Wu

Tiancheng Wu Sep 2018

The 4 steps towards an enhanced approach to corporate portfolio management is very hlepful
Maxine Graham

Maxine Graham Aug 2015

Focusing on cash, plan operational cash with residual cash to ensure liquidity of the organisation. look at risk of investment along with working capital life cycle.

Lakshitha Wijesinghe

Lakshitha Wijesinghe Feb 2015

It is a practice to include "Risks associated" with a particular investment, just for the sake of doing that. However the impact that it will make in prioritizing investment options and sizing the investment is negligible in most cases. 

Through a mechanism of quantifying the risks and incorporating that in to the investment formula will ensure that the risk profile of the investment matches with the risk appetite of the organisation. (Eg. A Bank using public funds should have a particular risk portfolio which should be inline with the regulator)