DIAGNOSTIC MODEL OF MANAGEMENT RISK ANALYSIS

2018. Т. 18, No 4. С. 103–114 103 Introduction The world’s and home practice show that stable and effective work of companies in constantly changing conditions of our outside environment with high level of uncertainty and risk can only be possible through effective management of process strategic development. This management is carried out in accordance with the strategic goals. These goals form the company's investment policy, which reflects the management style (behavior) of the company's management. For a proper study of the attitudes and mechanisms of the decision-making process, it is necessary to take into consideration subjective and psychological aspects of behavioural economics [2]. In modern conditions we feel the need to evaluate the strategic development level of a company in the process of forming its investment policy [12]. The choice of investment policy according to strategic objective of the company is closely connected with a stage of its lifecycle [14]. The process itself can be exercised in different variants: exposure of necessities in the course of reaching strategic aims of the company development, defining form and volume of investments, forming and managing the investment policy in accordance with development strategy, managing the development and accomplishment of investment project portfolio [1]. The investing activities shall provide achievement of long-term goals of the company and are performed according to developed investment policy [6]. Need for forming of investment policy and management according to the declared strategy of the company is obvious, it is caused by limitation of a number of scientific methods of its assessment and control. The management of the companies in practice relies on the accumulated experience and an intuition. How to promote the innovative activities is an important problem for modern society [8]. As a result we have a need for development of new approaches for formation of investment policy taking into account such important factor as management style. Within this article we declare that we understand investment policy as a complex of actions for management of investment activity according to the formulated development strategy of the company. It is demands consideration of the following questions: the choice of strategy at various stages of development of the company; formation of investment policy and control of efficiency of its realization. DOI: 10.14529/ctcr180410


Introduction
The world's and home practice show that stable and effective work of companies in constantly changing conditions of our outside environment with high level of uncertainty and risk can only be possible through effective management of process strategic development. This management is carried out in accordance with the strategic goals. These goals form the company's investment policy, which reflects the management style (behavior) of the company's management. For a proper study of the attitudes and mechanisms of the decision-making process, it is necessary to take into consideration subjective and psychological aspects of behavioural economics [2].
In modern conditions we feel the need to evaluate the strategic development level of a company in the process of forming its investment policy [12]. The choice of investment policy according to strategic objective of the company is closely connected with a stage of its lifecycle [14].
The process itself can be exercised in different variants: exposure of necessities in the course of reaching strategic aims of the company development, defining form and volume of investments, forming and managing the investment policy in accordance with development strategy, managing the development and accomplishment of investment project portfolio [1]. The investing activities shall provide achievement of long-term goals of the company and are performed according to developed investment policy [6].
Need for forming of investment policy and management according to the declared strategy of the company is obvious, it is caused by limitation of a number of scientific methods of its assessment and control. The management of the companies in practice relies on the accumulated experience and an intuition. How to promote the innovative activities is an important problem for modern society [8]. As a result we have a need for development of new approaches for formation of investment policy taking into account such important factor as management style.
Within this article we declare that we understand investment policy as a complex of actions for management of investment activity according to the formulated development strategy of the company. It is demands consideration of the following questions: the choice of strategy at various stages of development of the company; formation of investment policy and control of efficiency of its realization. Much attention in scientific and scientific-practical publications is given to the problem of risk management. However, the issues of theory and practice of constructing the company's risk management systems and policies remain insufficiently developed. Solving the problems of comparative assessment of the level of risks when choosing an investment policy for the implementation of the chosen strategy of the company's development is topical while ensuring the sustainability of the strategic development process. Assessment of management style and level of managerial risks is carried out on the basis of the economic-mathematical model of quantitative evaluation of qualitative parameters. The analysis is carried out by comparing the actual level of its investment activity with a reference value that takes into account the company's life-cycle phase (LCS). The commonly accepted classification of LCS stages and the method of quantitative evaluation of the integrated indicator of the company's investment activity are used in the work. A diagnostic model for analyzing the level of managerial risks in the implementation of the investment policy of the company's development strategy is proposed. The developed mathematical tool allows to diagnose the level of managerial risks, management style, and also the type of investment policy implemented by the company depending on the LCS stage of the company.
Keywords: managerial risks, behavioral model, natural level of investment activity, life cycle stage of company's.

Research objectives and hypotheses
Comparing the actual level of investment activity (C ia ) with the natural level of investment activity (C nat ) we will defined which one of them reflects the type of implemented management. The Natural level of investment activity (C nat ) is determined by the strategic development plan of the company, depending on the stage of the life cycle (LCS).

Forming of strategic objectives at various stages of lifecycle (LCS)
For the answer to questions of the first group it is necessary to consider that practice of management of development of the companies has a big variety of classifications of strategy. In order that in them their classification is necessary to be guided. Within this article the is applied following classification of reference strategy given in Table 1.  The offered classification of reference strategy consists of four groups of strategic directions of activities of the company to which they follow in the course of the development [4]. The important factor influencing forming of the development strategy of the company is the LCS [9].
Each LCS is characterized by a set of unique characteristics. Many researchers give a lot of different sets of characteristics that define the stages of the company development. In this work Greiner model is used as the basis [3,7,15]. It includes 5 stages: birth, growth, stabilization, stagnation and decline ( Fig. 1) [3]. Let's watch how the stages of life cycle company that influence forming of development strategy.

Fig. 1. Stages of life cycle on Greiner's model
On the "birth" stage the product is created and its creation is based on the innovational ideas as the result of the research activity. Then the modification of the product parameters is happening according to the consumer's demands. On this stage strategies are directed at strengthening market positions and they are characterized by high level of investment activity.
On the "growth" stage the product is already on the market and is acknowledged by the consumers. It can be seen through the significant increase in production volume. The key strategy here is the horizontal and vertical integration strategies. They strengthen the company's positions in the market. In this period companies have to support growth of the production volumes and conduct its quality transformation simultaneously.
On the "stabilization" stage is taking place saturation of the market. At this stage the organization has stable amount of buyers, production technology and distribution of shares on the market. All the main parameters of activity is reaching its peak and then gradually decreasing. The main strategy here is the strategy of cost saving which is characterized by the lowering of the level of investment activity.
On the stage of stabilization the company management team starts to develop new strategy that would help to diversify its activity and to go to the new stage of development. It leads to the increase in investment policy.
On the "stagnation" stage main characteristics are: demand weakens, number of competitors and line of goods decrease, sales results lower, profit declines and cashflow becomes weak too. The main strategy here is the cost-saving strategy. It is defined by the significant weakening of investment activity.

Determination of the investment policy
We believe that these peculiar properties of company's life cycle must be considered while planning its investment activity [11]. The instrument for realization of the central strategic aim is the investment policy which in its turn is characterized by different options intensity of the investment activity.
Economical literature describes investment activity as the intensity of investment performance which is the dynamic process of investing in its main capital and turnover capital in order to achieve strategic aims for company's development [18,19]. Within the confines of the offered method we use the quantity evaluation of the level of company's investment activity (C ia ) as the ratio between the value growth of the capital contribution (as the result of the investments) and the index of internal development source [13]: where C iaindex of investment activity; (NcA + CA)increment in value of non-circulating and circulating assets in the period under review; (NP + Am)cash provided by operating activities in the period under review; NPnet profit in the accounting period; Amindex of amortization in the accounting period. Index of investment activity C ia is characterized by the evaluation of ratio between value growth of total assets (the result of cashflow from its investment activities) and the value of its internal development sources (the result of operational activities) [13]. Financial activity fulfills the supporting function on balancing the cashflow of investment and operational activity. Therefore, all the types of activity (operational, investing, financial) are being calculated while defining the index of organization's investment activity C ia .
Offered index C ia allows to evaluate the level of company's investment activity in a quantitative form and helps to notice possible errors during forming and management of investment policy.

Determination of quantitative parameters the stages of lifecycle (LCS)
The intensity of investment activity changes depending on the stage of the life cycle. The number of stages of the life cycle and their names are quite ambiguous because there is no formalized, precise qualitative characteristics of LCS. In the most popular patterns life cycle stages are described by qualitative parameters [15]. Kriteria for qualitative evaluation of integrated index C LC is shown in the Table 2 [16].
The next stage is formalization of interval frame for identification LCS according to the previous stated criteria (Table 2). One part of changing interval frame characteristics of LCS (Table 2) At the next stage we carry out result consolidation X i with the formula (6) and define the value (estimation) of the integrated index LCS: where С LCare integrated criterion of LCS; X inumerical expert score of qualitative criteria that have been gathered by formulae (2)-(6). According to the concept of traditional organisation development the investment policy is characterized by a definite level of investment activity and dependent on the LCS [13].

Determination of parameters natural level investment activity of company
We can divide approximately the range of index C ia according to the type of development stage the company is at, based on the acquired research results. The division will be described in the Table 3 [17]. It contains the zones which can be described by specific values of investment activity C nat which defines as "natural level of investment activity".
Range of C nat index value for different sectors according to sector's characteristic aspects can be different, but functional dependence of C nat index on life cycle stages is universal.

Diagnostic model forming of company's investment policy
There are two directions in achieving the strategic aimgradual and sweeping change. It correlates with natural and specific types of strategic changes in company's activity.
Natural development is understood as gradual character of strategic changes in the course of consistent company's development through carrying out standard strategies and directions of investment policy on different stages of life cycle.
Specific development is understood as interruptive character of strategic changes in the process of radical renewal of business through carrying out strategies that facilitate the diversification of the company's activity.
Usually specific development is carried out on the "stabilization" or "stagnation" stages, because for protection of the provision of the company practices moderate replanning of activities. It is done through exercising diversification strategies, which is one of the most wide-spread and perspective growth and development directions for companies. In some cases it is the only way of their survival.
Stage life cycle of the company takes dominant position of setting directions for strategy sustainable development. Basic principles of the investment policy development are:  achieving strategic aims;  growth of balance value of total assets and the value of its internal development sources (cashflow);  forming of the investment business-portfolio. It is evident that the process of managing investments is mainly decided by consistent exercising of development strategy as the result of forming appropriate investment policy, consistent with the current stage of company's life cycle. Existing type for evaluation of character of strategic changes in the process of company's development helps to define the type of exercised investment policy on diagnostically matrix (Fig. 2) [16]. Let's analyze the possible directions of C ia index movement on diagnostically matrix. Natural development pathway (C nat ) -3, is characterized by the steady character of strategic changes in the process of gradual exercising of standard strategies and directions of investment policy from the perspective if evolutional development of company's business (Table 3 and Fig. 2, bold line).
Trajectory of specific development (C ia ) -1, 2 is characterized by strategic changes in the process of radical business renewal. If the "diversification" strategy and corresponding investment policy are carried out properly, then trajectory of C ia index is directed towards shifting from stage "stabilization" or "stagnation" to stage "growth" (Table 3 and Fig. 2) .
If the investment policy is directed towards performing the strategy for adjusting the C ia index value to a natural level of investment activity (C nat ), than it is believed to be the most rational investment policy.
Offered diagnostically model of forming investment policy according to the trajectory of investment activity index (C ia ) allows to determine the type of used investment policy and its coordination with for phrased development strategy of the company (Table 4) [16]. Table 4 Correlation of the type of investment policy to the level of investment activity (Cia)

Name of investment policy
Intencity of investment activity 1 Conservative C ia < C nat (passive) 2 Moderate C ia = C nat (moderate) 3 Agressive C ia > C nat (active, high) Type of investment policy and level of investment activity (Table 4) can be detected as the result of comparing real and natural levels (C ia ). The offered methodology of management of development of the organization allows to receive behavioural model which reflects the type of management realized by management.

Behavioral model style management
The result can be illustrated as behavioral pattern that describes currently practiced type of management that answers the stage of company's life cycle and level of its investment policy [17]. The proposed behavioral model is shown at Fig. 3, it describes 5 zones that characterize the style of company management. Main zone comply with mainstream (natural) level of development. C ia index value is characterized by persistent practicing of standard strategies and related directions of rational investment policy (C ia = C nat ) from the point of view of company's evolutional business development.
Zones of "Eventual development" (with increased and decreased risks) are connected from downside and from above to a mainstream way of development. The value of C ia index describes all the possible states of business which are triggered by the excessive (C ia > C nat ) or/and deficient level of outside financing, which in its turn initiate increased or decreased business risks.
"Potential bankrupts" zone corresponds to positions that connects from downside to eventual development zone (with lowered risks). Those positions are characterized by significant funding gap with naturally weak internal resources of development in the initial phase. Significant fund gap hinders company's steady development. In this zone all positions are characterized by low financial risk (C ia << C nat ) and high business risk (with gradual supersession of company's share from the market and/or seizure of the share by the competitors).
"Ex post" zone with increased risk. In the process of natural development this value of investment activity index (C ia ) characterizes irrational (unallowable from the point of view of logical behavior of top management) states. In the process of specific development this value if investment activity index (C ia ) can be defined by motiveless behavior of top-managers and foreign investors who give out "inadequate" reaction on the current stages of life cycle, or based on the insider information, or non-market factors (administrative resource, access to stable financing sources etc.).
The positions' area is characterized by high financial risk (C ia >> C nat ) which can lead to serious business problems (bankruptcy).

Analysis of the investment policy of the type of pipe leading Russian companies
In order to the proposed method we have analyzed the activities of two leading companies of the Russian pipe industry. The study was conducted in several stages. In a first step cleaning and aggregation balance companies [10]. In the second stage we calculated the index of investment activity of the enterprise according to the formula (1). Index calculation results C ia are shown in Table 5. Table 5 The dynamics of investment activity index Cia In the third step assesses the type of investment policy studied industrial companies (Table 5 and Fig. 4).
1. Graphical representation of the dynamics of the indicator C ia Industrial Company JSC Chelyabinsk Tube Rolling Plant is shown in Fig. 2. The value of C ia indicator of investment activity from 2006 to 2007, well below the natural rate, which corresponds to a passive investment policy (Table 5 and Fig. 4). Since 2008, the rate of investment activity C ia rises sharply to 3.7, which indicate an increase in the intensity of investment activities (conducting an aggressive investment policy). In 2009, C ia indicator shows a steady trend of growth in investment activity to C ia = 7.8, which is two times higher than the natural rate (2.0 < C ia < 4.0). In 2010, investment activity falls to C ia = 1.57, corresponds to the stage of maturity. It can be concluded about the active conduct of investment policies since 2007 to 2010, which corresponds to the implementation of a specific development strategy.
The results of analysis of the dynamics of investment activity index confirmed C ia opinion of financial analysts: "... in 2010 of JSC "ChTPZ" completed structural reforms and large-scale investment program aimed at meeting the needs of a complex fuel and energy complex".
2. Graphical representation of the dynamics of the indicator C ia Industrial Company JSC "VMZ" is shown in Fig. 4. During the period from 2006 to 2010, the value of the investment activity index C ia . It was in the area of the natural values of the level that corresponds to a moderate investment policy (Table 5 and Fig. 4), which also coincides with the opinion of financial analysts. Comparison of the results of the investment policy of the type of assessment, the two leading plants derived from diagnostic matrix coincide with the opinion of financial analysts and allows to conclude that the proposed method is reliable (Table 6). Table 6 Comparison of the results of the investment policy of type ratings

Enterprises
External assessment according to financial analysts Assessment based on the analytical model (C ia -C LCS ) JSC "ChTPZ" active investment policy active investment policy JSC "VMZ" moderate investment policy moderate investment policy

Conclusions
According to the results of the study, the authors proposed a method (behavioral model) of identifying the style of investment policy in achieving its strategic objectives. The proposed behavioral model, based on the qualitative assessment of the investment activity of companies (C ia ) and the integrated index (C LCS ) of company.
As a result of testing of the proposed method for evaluating the investment company's policy of metallurgical production, we can conclude:  diagnostic matrix formation of investment policy allows to determine the type carried out by the investment policy of the company;  this method can be an instrument of strategic management and evaluation of investment risks of the enterprise. Therefore, "Ex post" and "Potential bankrupts" zones are characterized by economically irrational behavior from the point of view of financial (very high/very low) risk, that leads to significant problems in business.
Main zone with mainstream (natural) development and eventual development (low and high risk) characterize area of positions where business and finance risks are balanced and can be controlled by top-management of the company.
As a tool for managing the process of strategic development the use of diagnostic and behavioral patterns of forming the investment policy is offered. Developed toolkit allows to diagnoze and the pick the right investment policy for company that will advocate to the stage of its development according to formed strategy.