Risk Tolerance and Appetite Risk of a Startup: Essence and Assessment

Abstract

The article, on the basis of the research on the innovative activity of enterprises in terms of economic activity for 2014-2018, substantiates that the scale and importance of startups increase the competitiveness of the efficiency of innovative products. It is specified that the startup is an effective direction of innovative development of the country due to its advantages (creation of new jobs, development of regions, improvement of living standards of the population, etc.), which is characterized by a high level of risk and which is influenced by a number of factors. It is substantiated that the risk for startups is a multidimensional tangle of interconnected risks, which changes taking into account factors and depending on the stages of the startup life cycle (research, verification, efficiency, scaling, selling/updating). The factors influencing the formation of a methodology for assessing risk tolerance and appetite risk (stage of development of the startup life cycle, the stakeholders’ opinions, accounting and legislative policy factors, probability of fraud, external factors, restrictions on the part of the State, factors depending on the life level of the startup, cultural factor) are defined and systematized. Methodologies of assessing risk tolerance and appetite risk of a startup, which should be «loyal» and constantly updated in case of new risks, as well as take into account the stages of its life cycle, are recommended. It is noted that risk tolerance should be reflected in the startup’s risk registry for further analysis and research. The practical significance of the proposed assessment is that its application will allow the funder to analyze risks at each stage of the startup’s life cycle, subjecting each risk industry to analysis.

Keywords

• appetite risk
• life cycle
• startup
• risk tolerances
• funder