That diversification helps mitigate the company-specific risks
of investing in a mismanaged oil company that loses money when all its peers are prospering.
, instead of the CAPM, is that the assumptions
Question 2: Has the company evaluated and approved a cyber-security strategy addressing company-specific risks
We also see high potential upside in MRSK North Caucasus, but note that it bears fairly significant company-specific risks
They can thus gain extra protection against company-specific risks
, such as employee liability, by purchasing this already-insured risk via the reinsurance market.
The principles-based approach quantifies company-specific risks
with respect to individual products, eliminating the need to hold redundant reserves.
"While company-specific risks
will likely cause volatility, we believe that valuation is compelling relative to its growth prospects," the analyst wrote.
The reason is that an investor can easily diversify away these company-specific risks
without much cost.
The discount factor, or required rate of return, applied to future financial results is unique for any given company and is a function of market interest rates, the general risk associated with the equities markets at any point in time, risk factors peculiar to the industry or industries in which the company operates, and company-specific risks
that may reflect such factors as the product portfolio, potential legal liabilities, perceived opportunities or vulnerabilities, and, importantly, the credibility of management.
On our estimates, the market does not correctly price in individual earnings profiles and company-specific risks
. As a result we see major upside Co or downside eAE in most electricity distribution stocks.
Today, the framework is based on the determination of company-specific risks
. Although there are different approaches to modeling economic capital, current practice focuses on fat-tailed events to set up capital hedging against low-probability, extreme-loss events.
We raised our WACC estimates to reflect company-specific risks
associated with its relatively high debt burden and the value of investments held for sale.