Gabriella Maselli, Maria Macchiaroli


Supporting the financial analysis with investment risk assessment is essential when it is not possible to express with certainty forecast judgments on critical project variables. Since both the industry literature and the regulatory landscape do not provide specific criteria to estimate the acceptability of investment risk, we propose an approach that can guide the analyst in assessing the triangular balance between costs, benefits, and risks. It is an approach that aims to integrate the As Low As Reasonably Practicable (ALARP) logic and Capital Asset Pricing Model (CAPM).  The concepts of risk acceptability and tolerability are derived from ALARP. The CAPM is used to estimate the two threshold values, which are a function of both the investment sector and the specific socio-economic conditions in which the project is located. An application shows that a civil project in the Campania Region (Italy) has a tolerable risk as an ALARP if its expected return is between 8.8 and 11.2%.


Economic Evaluation of the Projects, Investment Risk, As Low As Reasonably Practicable, Tolerability Threshold, Acceptability Threshold.

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ISSN online 2421-3187     ISSN print 1973-7688

This work is licensed under a Creative Commons Attribution 4.0 International (CC BY 4.0)