Follow
Calculating the Risk to Net Value in a Portfolio

***

In the Portfolio Optimizer, the Risk to Net Value indicator measures the Potential Risk value taking into account the Net Value provided by all projects in the portfolio. For achieving the most efficiency within the portfolio, you want to see that the Risk indicator is low and the Net Value indicator is high. 

There are two indicators in the Portfolio Optimizer:

  • The red Risk indicator represents the percentage of the Potential Risk Value from the Net Value of the portfolio. This is calculated by the following formula:
    Portfolio Risk Indicator = Portfolio Risk/ Net Value
  • The green Net Value indicator represents the Net Value of the portfolio after eliminating the Potential Risk of the portfolio. This is calculated by the following formula:
    Portfolio Net Value Indicator = (Portfolio Net Value - Portfolio Risk)/ Portfolio Net Value

*** 

Linked to Understanding the Portfolio Optimizer.