THE OPERATIONAL RISK AND THE APPLICATION OF THE COST-VOLUME-PROFIT MODEL

One of the purposes of our paper is to provide a comprehensive survey of the operational risk, in order to understand the behaviour of costs and the impact of their structure on company's profits. In order to achieve the targeted profits or to analyze the operational risk, managers can use the Cost-Volume-Profit (CVP) model - one of the simplest, analytical tools. This paper presents the basic version of the CVP model as a first step in managers' strategic decisions. A noted application of CVP is in the breakeven analysis and the operating leverage.