Capital Allocation Optimization for Operational Assets: A Risk-Adjusted Return Approach

Capital Allocation Optimization for Operational Assets: A Risk-Adjusted Return Approach

Submitted By

Navya Gupta

23042010667

MBA 2023-2025

UNDER THE GUIDANCE OF

Mr. Jyotish Kumar Gupta

SCHOOL OF BUSINESS

GALGOTIAS UNIVERSITY

May, 2025

ABSTRACT

This research proposes an advanced framework for optimizing capital allocation across an organization's diverse portfolio of operational assets, moving beyond traditional approaches that often isolate return and risk considerations. The core objective is to maximize the aggregate risk-adjusted return of the entire asset base, thereby enhancing long-term financial performance and operational resilience.

The framework begins by acknowledging the inherent complexity of operational assets, which differ significantly in their revenue generation potential, operating costs, and exposure to various risk factors. A comprehensive risk assessment methodology is developed to quantify these exposures across multiple dimensions. Key operational risk categories considered include, but are not limited to: