Quantifying Opportunities and Risk in Alternative Investments

Abstract:

The project studies alternative investments as a topical area within finance. Alternative investments, in this study but also as a definition per se, relate to investments that are not considered traditional such as listed bonds or stocks.More precisely, the overall objective of the project is to study how risks and opportunities related to alternative investments should be quantified.Specifically, the project aims to develop a framework that thoroughly incorporates risks and opportunities with regards to alternative investments in renewable energy. In an attempt to quantify risk factors stemming from economic, political, social or technical reasons, a new framework should be developed. This very framework serves as a model to value renewable energy projects and potentially also other types of alternative investments. Aside from the contribution to the academic literature, this work would benefit several other stakeholders, including investors, investment brokers, policy makers and FSAs (Financial Supervisor Authorities), who are all increasingly exposed to aspects of alternative investments.Given the current focus on green investments and the pension funds’ increased appetite for alternative investments, the project will also provide important insight into how more green investments can be ensured without putting pension savings too much at risk.