Risks in the activity of business entities: the concept of analysis and management
DOI:
https://doi.org/10.26642/ppa-2022-2(6)-3-9Keywords:
enterprise activity; risk; financial risk; classification; factors; risk sensitivity level; analysis methodology; indicatorsAbstract
The article identifies a list of risks that have an impact on the activities of modern enterprises. It is proposed to improve their classification. In particular, based on the use of the method of generalization and critical analysis, the identified risks are divided into objective and subjective risks based on causality, and systemic and non-systemic based on frequency of occurrence. The classification characteristic for objective risks is their irreversibility and direct impact on changes in the financial state of the enterprise, and for subjective risks - the human factor (they include risks that arise as a result of unqualified actions of responsible persons). Thanks to this, using modeling and formalization, an approach to analyzing the level of sensitivity of economic entities to risks was formed and its indicators and their critical values were substantiated. The graphic method is applied to form the concept of financial risk management based on their analysis. The essential content of the indicator of the level of sensitivity of the economic entity to risks, which is identified as a measure of the vulnerability of the economic entity in the process of its activity to the negative effects of the internal and external environment, is substantiated. Grouping, graphical approach and generalization were used to implement the proposal regarding the methodology and structure of the financial risk analysis process. The application of this approach will allow the company's management to develop a system of measures to eliminate risk factors in order to preserve its stable financial condition.
References
Altman, E.I. (1968), «Financial Ratios, Discriminant Analysis and the prediction of corporate bankruptcy», The Journal of Finance, Vol. 23, No. 4, pp. 589–609.
Berzhanir, I.A., Ulianych, Yu.V. and Hvozdiei, N.I. (2015), «Profitability as the main indicator of enterprise performance evaluation», Visnyk KhNDAU, No. 1, pp. 261–265.
Erol, M., Apak, S., Atmaca, M. and Ӧztürk, S. (2011), «Management measures to be taken for enterprises in difficulty during times of global crisis: An empirical study», Published by Elsevier, Procedia Social and Behavioral Sciences, No. 24, pp. 16–32.
Grosch, H.R.J. (1953), «High Speed Arithmetic: The Digital Computer as a Research Tool», Journal of the Optical Society of America, No. 43, pp. 306–310.
Havatiuk, L.S., and Pilat, A.K. (2020), «Improving the profitability management system as a condition for the effective functioning of enterprises», Visnyk Khmelnytskoho natsionalnoho universytetu, No. 2, pp. 47–50.
Hrushko, V.I. and Pylypchenko, O.I. (1998), Financial risks, ZhITI, Zhytomyr.
Lytvyn, B.M. and Stelmakh, M.V. (2008), Financial analysis, navch. posib., Khai-Tek Pres., Kyiv.
Mishkin, F.S. (1992), «Anatomy of a financial crisis», Journal of Evolutionary Economics, No. 2, pp. 115–130.
Neskorodiev, S.M. and Hrachova, O.O. (2014), «Study of the essence of financial risk management of the enterprise», Visnyk ekonomiky transportu i promyslovosti, No. 47, pp. 132–136.
Nusiv, V.J. (2021), «Estimating the probability of bankruptcy of the enterprise taking into account the forecasting horizon», Ahrosvit, No. 7–8, pp. 18–25.
Ostrovska, H.I. (2008), Financial management, navch. posib., Pidruchnyky i posibnyky, Ternopil.
Poliakova, O.Iu. and Holtiaieva, L.A. (2013), «Basic principles of forming a complex of financial risk management models of the enterprise», Biznes-Inform, No. 6, pp. 106–110.
Portovaras, T., Harbar, Zh., Sokurenko, I. and Samoilyk, Iu. (2020), «Management of Small Business Entities», Independent Journal of Management & Production, No. 11 (8), pp. 680–694, doi: 10.14807/ijmp.v11i8.1226.
Sova, O.Yu. and Morozov, Ye.Yu. (2021), «Strategies for preventing bankruptcy of enterprises in the context of risk management», Problemy ekonomiky, No. 1, pp. 91–97.
Sukrusheva, H.O. (2017), «Causes and consequences of bankruptcy of domestic enterprises in modern conditions», Ekonomika ta suspilstvo, No. 9, pp. 682–686.
Tiutiunnyk, Yu.M. and Tiutiunnyk, S.V. (2019), «Peculiarities of analysis of financial results and profitability of small business entities», Ekonomichnyi forum, No. 2, pp. 99–10.
Vasylyk, O.D. (2000), Theory of finance, pidruchnyk, NIOS, Kyiv.
Χένρυ Μίντζμπεργκ, Μπρούς Άλστραντ και Τζόφελ Λάμπελ (2004), Το σαφάρι της στρατηγικής, (1η έκδοση) Καστανιώτη Α.Ε., Αθήν, ΑΣΤΑΝΙΩΤΗΣ, 464 p. [in Greece].
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Tetiana Portovaras
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
