Investment Risk Evaluation and Preventive Measures in Chemical Industry

Abstract

Chemical industry is one of important cornerstone industries in China. Along with the irresistible development of China's economy, the speculative risks of China's chemical companies have been coming up as a major impediment to development of China's chemical industry to a certain extent. In this sense, it is of great significance to explore investment risks and preventive measures for chemical companies. Based on the Analytic Hierarchy Process (AHP), this paper builds a chemical investment risk analysis indicator system that involves four major ones, i.e. profitability, operation capacity, solvency, and development capacity. We take the chemical company M as a study case to analyze their investment risks herein. According to the results from analysis, M’s investment risk in 2017 made a composite score of 64.32; the risk exposure was relatively high; these figures show that there are huge problems on many indicators. Hence, aiming at huge stakes in business investment, M should take specific preventive measures against risks to constantly facilitate the rationalization of the investment risk management process, examine and assess the implementation effect of investment projects in a timely manner, in conjunction with potential investment risks.