1. BASIC CONCEPTS OF FINANCIAL RISKS AND THEIR CLASSIFICATION.
Financial risks are associated with the likelihood of loss of financial resources (i.e. cash).
Under financial risks the probability of occurrence of unforeseen financial losses (decrease in profits, income, loss of capital, etc.) in a situation of uncertainty in the conditions of the financial activity of the organization is understood.
Financial risks are classified into three types:
1. risks associated with the purchasing power of money;
2. risks associated with capital investment (investment risks);
3. risks associated with the form of organization of the organization's economic activities.
1 group of financial risks. The risks associated with the purchasing power of money include the following types of risks: inflationary and deflationary risks, currency risks, liquidity risks.
Inflation risk characterized by the possibility of devaluation of the real value of the capital (in the form of monetary assets), as well as the expected income and profit of the organization due to the growth of inflation.
Inflation risks operate in two directions:
Raw materials and components used in production are becoming more expensive than finished products
Finished products of the enterprise rise in price faster than the prices of competitors for these products.
to pay for material, labor, financial.
Deflationary risk - this is the risk that, with an increase in deflation, there will be a fall in the price level, a deterioration in the economic conditions for entrepreneurship and a decrease in income.
Currency risks- the danger of currency losses as a result of changes in the exchange rate in relation to the currency of payment in the period between the signing of a foreign trade, foreign economic or credit agreement and the payment on it. The currency risk is based on the change in the real value of the monetary obligation in the specified period. The exporter incurs losses when the exchange rate of the price depreciates in relation to the currency of payment, since he will receive a lower real value in comparison with the contract value. For the importer, currency risks arise if the exchange rate of the price rises against the currency of payment. Fluctuations in exchange rates lead to losses for some firms and enrichment for others. Participants in international lending and financial transactions are exposed not only to foreign exchange, but also to credit, interest, and transfer risks.
Liquidity risks are risks associated with the possibility of losses in the sale of securities or other goods due to changes in the assessment of their quality and consumer value.
2 group of financial risks. Investment risk expresses the possibility of unforeseen financial losses in the process of investment activities of the enterprise. In accordance with the types of this activity, the types of investment risk are also distinguished: the risk of real investment; financial investment risk (portfolio risk); innovation investment risk . Since these types of investment risks are associated with the possible loss of capital of the enterprise, they are included in the group of the most dangerous risks.
Investment risks include the following subspecies of risks: risk of reduced financial stability, risk of lost profits, risk of reduced profitability, risk of direct financial losses.
Financial stability risk . This risk is generated by an imperfect capital structure (excessive use of borrowed funds), i.e. too high a leverage ratio. This type of risk plays a leading role in the composition of financial risks according to the degree of danger.
The risk of lost profit is the risk of indirect (collateral) financial damage (lost profit) as a result of failure to take any action (for example, insurance, hedging, investment, etc.).
The risk of a decrease in profitability may arise as a result of a decrease in the amount of interest and dividends on portfolio investments, on deposits and loans.
Portfolio investments are associated with the formation of an investment portfolio and represent the acquisition of securities of other assets. The term "portfolio" comes from the Italian "portofolio", meaning a set of securities that the investor has.
The risk of declining profitability includes the following types:
interest rate risks;
credit risks.
To interest rate risks There is a danger of losses by commercial banks, credit institutions, investment institutions, seling companies as a result of the excess of interest rates paid by them on borrowed funds over the rates on loans provided. Interest rate risks also include the risks of losses that investors may incur in connection with changes in dividends on shares, interest rates on the market for bonds, certificates and other securities. An increase in the market interest rate leads to a decrease in the market value of securities, especially bonds with a fixed interest rate. With an increase in interest, a massive dumping of securities issued at lower fixed interest rates and under the terms of the issue, early accepted back by the issuer, may also begin. Interest rate risk is borne by an investor who has invested funds in medium-term and long-term securities with a fixed interest rate at the current increase in the average market interest in comparison with a fixed level (since he cannot release his funds invested on the above conditions). The interest rate risk is borne by the issuer issuing medium-term and long-term securities with a fixed interest rate at the current decrease in the average market interest rate in comparison with a fixed level. This type of risk with a rapid rise in interest rates amid inflation is also important for short-term securities.
Credit risk- the risk of non-payment by the borrower of the principal and interest due to the lender. Credit risk also includes the risk of an event in which the issuer of debt securities will be unable to pay interest on them or the principal amount of the debt.
Credit risk can also be a form of direct financial loss risk.
Risks of direct financial losses include the following types: exchange risk, selective risk, bankruptcy risk, credit risk.
Exchange risks represent the danger of losses from exchange transactions. These risks include the risk of non-payment for commercial transactions, the risk of non-payment of the brokerage firm's commission, etc.
Selective risks (lat. Selektio - choice, selection) is the risk of wrong choice of types of capital investment, type of securities for investment in comparison with other types of securities when forming an investment portfolio.
The risk of bankruptcy is a danger as a result of the wrong choice of capital investment, the complete loss by the entrepreneur of his own capital and his inability to pay off his obligations.
3 group of financial risks. The risks associated with the form of organization of economic activity include:
- advance
- current risks .
Advance risksarise at the conclusion of any contract if it provides for the delivery of finished products against the buyer's money. The essence of the risk is that the company - the seller (the bearer of the risk) incurred certain costs during the production (or purchase) of the goods, which at the time of production (or purchase) were not covered by anything, i.e. from the position of the risk holder's balance sheet can be closed only with the profit of the previous periods. If the company does not have an efficiently established turnover, then it bears upfront risks, which are expressed in the formation of warehouse stocks of unsold goods.
Negotiable risk- presupposes the onset of a shortage of financial resources during the period of regular turnover: at a constant rate of sales of products, an enterprise may have different turnovers of financial resources in terms of speed.
Portfolio risk - lies in the likelihood of loss for certain types of securities, as well as for the entire category of loans. Portfolio risks are subdivided into financial, liquidity, systemic and non-systemic risks.
Liquidity risk is the ability of financial assets to quickly turn into cash.
Systemic risk- associated with changes in stock prices, their yield, current and expected interest rates on bonds, expected dividend amounts and additional profits caused by general market fluctuations. It combines the risk of changes in interest rates, the risk of changes in general market prices and the risk of inflation and lends itself to a fairly accurate forecast, since the tightness of the relationship (correlation) between the stock exchange rate and the general state of the market is regularly and fairly reliably recorded by various stock indices.
Non-systemic risk - does not depend on the state of the market and is the specificity of a particular enterprise, bank. It can be industry-specific and financial. The main factors influencing the level of non-system-portfolio risk are the availability of alternative areas of application (investment) of financial resources, the conjuncture of commodity and stock markets, and others. The combination of systemic and non-systemic risks is called investment risk.
2. RISK ASSESSMENT
Risk level assessment is one of the the most important stages of risk management,as to manage risk, it must first of all be analyzed and evaluated.In the economic literature, there are many definitions of this concept, however, in the general case, risk assessment is understood as a systematic process of identifying risk factors and types and their quantitative assessment, that is, the risk analysis methodology combines complementary quantitative and qualitative approaches.
Sources of information intended for risk analysis are:
Accounting statements of the enterprise.
Organizational structure and staffing of the enterprise.
Process flow maps (technical and production risks);
Agreements and contracts (business and legal risks);
The cost of production.
Financial and production plans of the enterprise.
There are two stages of risk assessment: qualitative and quantitative.
The task qualitative risk analysis is the identification of sources and causes of risk, stages and works, during the performance of which there is a risk, that is:
Identification of potential risk areas;
Identification of risks associated with the activities of the enterprise;
Forecasting the practical benefits and possible negative consequences of the identified risks.
The main goal of this stage assessments - to identify the main types of risks affecting financial and economic activities. The advantage of this approach is that already at the initial stage of the analysis, the head of the enterprise can visually assess the degree of riskiness by the quantitative composition of risks and already at this stage refuse to implement a certain decision.
The final results of quality risk analysis, in turn, serve as initial information for quantitative analysis, that is, only those risks are assessed that are present in the implementation of a specific operation of the decision-making algorithm.
At the stage of quantitative analysis risk, the numerical values of the values of individual risks and the risk of the object as a whole are calculated. Also, the possible damage is identified and a cost estimate is given from the manifestation of risk and, finally, the final stage of the quantitative assessment is the development of a system of anti-risk measures and the calculation of their cost equivalent.
Quantitative analysis can be formalized, for which the tools of probability theory, mathematical statistics, and the theory of operations research are used. The most common methods of quantitative risk analysis are statistical, analytical, method of expert assessments, method of analogues.
Statistical Methods .
The essence of statistical methods for assessing risk is to determine the likelihood of losses on the basis of statistical data from the previous period and to establish the area (zone) of risk, risk coefficient, etc. The merits statistical methods is the ability to analyze and evaluate different scenarios and take into account different risk factors within a single approach. The main disadvantage these methods consider the need to use probabilistic characteristics in them. The following statistical methods can be used: assessment of the probability of execution, analysis of the probable distribution of the flow of payments, d decision trees, risk simulation, and technology Risk Metrics ".
Method for assessing the likelihood of execution allows you to give a simplified statistical assessment of the probability of execution of any decision by calculating the proportion of implemented and unfulfilled decisions in the total amount of decisions made.
Method for analyzing probabilistic distributions of payment flows allows for a known distribution of probabilities for each element of the flow of payments to estimate the possible deviations of the values of the flow of payments from the expected. The flow with the smallest variation is considered less risky. Decision trees are usually used to analyze the risks of events that have a foreseeable or reasonable number of development scenarios. They are especially useful in situations where decisions made at time t = n strongly depend on decisions made earlier, and in turn determine scenarios for further development of events. Simulation modeling is one of the most powerful methods for analyzing the economic system; in the general case, it is understood as the process of carrying out experiments on a computer with mathematical models of complex systems of the real world. Simulation is used when it is unreasonable, costly, and / or not feasible to conduct real experiments, for example, with economic systems. In addition, it is often impracticable or costly to collect the necessary information for making decisions; in such cases, the missing actual data are replaced by values obtained in the course of a simulation experiment (i.e., generated by a computer).
Risk Metrics technology developed by J.P. Morgan ”to assess the risk of the securities market.The methodology implies the definitionthe degree of influence of the risk on the event through the calculation"Risk measures", that isthe maximum possible potential change in the price of a portfolio consisting of a different set of financial instruments, with a given probability and over a given period of time.
Analytical methods.
They allow you to determine the likelihood of losses on the basis of mathematical models and are mainly used to analyze the risk of investment projects. It is possible to use methods such as sensitivity analysis, method of adjusting the discount rate taking into account risk, method of equivalents, method of scenarios.
Sensitivity analysis is reduced to the study of the dependence of a certain resulting indicator on the variation of the values of indicators involved in its determination. In other words, this method allows you to get answers to questions of the form: what will happen to the resulting value if the value of some initial value changes?
Risk-adjusted discount rate method is the simplest and therefore the most used in practice. Its main idea is to adjust some basic discount rate, which is considered risk-free or minimally acceptable. The adjustment is made by adding the value of the required risk premium.
Through true equivalents method the expected values of the flow of payments are adjusted by introducing special decreasing coefficients (a) in order to bring the expected receipts to the values of payments, the receipt of which is practically beyond doubt and the values of which can be reliably determined.
Scripting method allows you to combine the study of the sensitivity of the resulting indicator with the analysis of probabilistic estimates of its deviations. Using this method, you can get a fairly visual picture for various scenarios of events. It represents a development of the sensitivity analysis technique, since it involves the simultaneous change of several factors.
The method of expert assessments.
It is a complex of logical and mathematical - statistical methods and procedures for processing the results of a survey of a group of experts, and the results of the survey are the only source of information. In this case, it becomes possible to use the intuition, life and professional experience of the survey participants. The method is used when the lack or complete absence of information does not allow the use of other possibilities. The method is based on conducting a survey of several independent experts, for example, in order to assess the level of risk or determine the influence of various factors on the level of risk. Then the information received is analyzed and used to achieve the set goal. The main limitation in its use is the difficulty in selecting the required group of experts.
Analog methodis used when the use of other methods is unacceptable for some reason. The method uses a database of similar objects to identify common dependencies and transfer them to the object under study.
3. RISK MANAGEMENT.
Risk management today is a carefully planned process. The task of risk management is organically intertwined with the general problem of increasing the efficiency of the enterprise. Passive attitude to risk and awareness of its existence is replaced by active management methods.
Risk is a financial category. Therefore, the degree and magnitude of the risk can be influenced through financial mechanism... This impact is carried out using the techniques of financial management and a special strategy. Taken together, the strategy and techniques form a kind of risk management mechanism, i.e. risk management. Thus, risk management is a part of financial management.
Risk managementis a system for managing risk and economic, more precisely, financial relations arising in the process of this management.The risk management system can be characterized as a set of methods, techniques and measures that allow, to a certain extent, predict the onset of risk events and take measures to exclude or reduce the negative consequences of the onset of such events.
IN based on risk management lie a purposeful search and organization of work to reduce the degree of risk, the art of obtaining and increasing income (gains, profits) in an uncertain economic situation.
The ultimate goal of risk management corresponds to the target function of entrepreneurship. It consists in obtaining the greatest profit with the optimal ratio of profit and risk acceptable to the entrepreneur.
Based on these goals, the main tasks risk management systems are to provide:
Compliance with the requirements for effective financial risk management, including ensuring the safety of the business of the corporation members;
Adequate reporting status, allowing you to receive adequate information about the activities of the corporation's divisions and the risks associated with it;
Definition in official documents and adherence to established procedures and powers in decision-making.
Risk management includes strategy and management tactics.
Under management strategy the direction and way of using the means to achieve the set goal are understood. This method corresponds to a certain set of rules and restrictions for making a decision. The strategy allows you to concentrate efforts on decision options that do not contradict the adopted strategy, discarding all other options. After achieving the set goal, strategy as a direction and means of achieving it ceases to exist. New goals set the task of developing a new strategy.
Tactics- these are specific methods and techniques to achieve the goal in specific conditions. The task of management tactics is to select the optimal solution and the most acceptable management methods and techniques in a given economic situation.
Risk managementhow the control system consists of two subsystems: controlled subsystem (control object) and control subsystem (control subject).
Control object in risk management are risk, risky capital investments and economic relations between business entities in the process of risk realization. These economic relations include the relationship between the insurer and the insurer, the borrower and the lender, between the entrepreneurs (partners, competitors), etc.
Subject of management in risk management, this is a special group of people (financial manager, insurance specialist, acquirer, actuary, underwriter, etc.)impact on the control object.
Risk management performs certain functions: forecasting; organization; regulation; coordination; stimulation; the control.
Forecasting in risk management is the development for the future of changes in the financial condition of the object as a whole and its various parts. In the dynamics of risk, forecasting can be carried out both on the basis of extrapolation of the past into the future, taking into account the expert assessment of the tendency of change, and on the basis of direct prediction of changes.
Organization in risk management, it is an association of people who jointly implement a risk capital investment program based on certain rules and procedures. These rules and procedures include: the creation of governing bodies, the construction of the structure of the management apparatus, the establishment of interrelation between management units, the development of norms, standards, methods, etc.
Regulation in risk management, it is an impact on a control object, through which the state of stability of this object is achieved in the event of a deviation from the specified parameters. Regulation covers mainly current measures to eliminate deviations that have arisen.
Coordination in risk management, it is the coherence of the work of all links of the risk management system, management apparatus and specialists. Coordination ensures the unity of relations between the object of management, the subject of management, the management apparatus and the individual employee.
Stimulation in risk management, it is the excitement of financial managers and other professionals to become interested as a result of their work.
The control in risk management, it is a check of the organization of work to reduce the degree of risk. Through control, information is collected on the degree of implementation of the planned action program, the profitability of risky capital investments, the ratio of profit and risk, on the basis of which changes are made to financial programs, the organization of financial work, the organization of risk management. Control involves the analysis of the results of measures to reduce the degree of risk
Stages of the organization of risk management.
The entire risk management process can be displayed as follows:
The first stageorganization of risk management is the definition of the goal of risk and the goal of risky capital investments. Any action associated with risk is always purposeful, since the absence of a goal makes a decision associated with risk meaningless. Target risk is the result that needs to be obtained. They can be winnings, profits, income, etc. The purpose of risky capital investments- getting the maximum profit.
Stagesetting risk management goals characterized by using methods of analysis and forecasting of the economic situation, identifying the capabilities and needs of the enterprise within the framework of the strategy and current plans for its development. It is necessary to clearly articulate the "risk appetite" and build a risk management policy based on this.
On the stage of risk analysis methods of qualitative and quantitative analysis are used. Purpose of the assessment- determine the acceptability of the level of risk. Qualitative assessment involves setting a benchmark in qualitative terms. For example, "minimal risk", "moderate risk", "marginal risk", "unacceptable risk". The basis for assignment to a particular group is a system of parameters that is different for each risk portfolio. A qualitative assessment is given for each operation that is part of the risk portfolio and for the portfolio as a whole.
In the third stage a comparison of the effectiveness of various methods of influencing risk is made: risk avoidance, risk reduction, risk taking on oneself, transfer of part or all of the risk to third parties, which ends with the development of a decision on the choice of their optimal set. The choice of any method of dealing with risk is determined by the specific direction of the organization's activities and the effectiveness of the chosen method.
At the final stage risk management of the selected methods of influencing the risk. The result of this stage should be new knowledge about the risk, allowing, if necessary, to adjust the previously set goals of risk management. That is, the formation of a set of measures to reduce risks, indicating the planned effect of their implementation, the timing of implementation, funding sources and persons responsible for the implementation of this program.
An important stage in the organization of risk management is the control for the implementation of the planned program, analysis and evaluation of the results of the implementation of the selected variant of the risk solution.At the same time, it is recommended to accumulate all information about errors and shortcomings in the development of the program that appeared during its implementation. This approach will allow the development of subsequent risk mitigation programs at a higher quality level using the new knowledge about risk.
Results of each stage become the initial data for subsequent stages, forming a decision-making system with feedback. Such a system ensures the most effective achievement of goals, since the knowledge gained at each of the stages allows you to adjust not only the methods of influencing the risk, but also the goals of risk management themselves.
4. RISK MANAGEMENT METHODS
The purpose of control financial risk is the reduction of losses associated with this risk to a minimum. Losses can be estimated in monetary terms, and steps to prevent them are also estimated. The financial manager must balance these two assessments and plan how best to close the deal in terms of minimizing risk.
Generally methods protection against financial risks can be classified depending on the object of influence on two types: physical protection, economic protection. Physical protection is the use of such means as alarms, purchase of safes, product quality control systems, data protection from unauthorized access, hiring security, etc.
Economic protection consists in predicting the level of additional costs, assessing the severity of possible damage, using the entire financial mechanism to eliminate the threat of risk or its consequences.
In addition, the main methods of risk management are well known: evasion, asset and liability management, diversification, insurance, hedging.
1. Evasion is the refusal to take a risky event. But for financial entrepreneurship, risk aversion is usually a rejection of profit. Also includes absorption and limiting.
Absorption consists in the recognition of damage and refusal of its insurance. Absorption is used when the amount of expected damage is insignificantly small and can be neglected.
Limiting - this is the setting of a limit, i.e. limits on expenses, sales, loans, etc. Limiting is an important technique for reducing the degree of risk and is used by banks when issuing loans, when concluding an overdraft agreement, etc. It is used by business entities when selling goods on credit, granting loans, determining the amount of capital investment, etc. Whereinwiththe strategy in the field of risks is determined by the strategy of the business entity. The more aggressive the strategy, the higher the planned loss limit can be. It is believed that the limit of losses in an aggressive policy is the capital of the enterprise, and in a conservative policy - profit.
Types of limits: structural limits, counterparty limits, open position limits, limits for the executor and controller of the transaction, liquidity limits.
Structural limits maintain the relationship between various types of transactions: lending, interbank loans, securities, etc. It is set as a percentage of total assets, i.e. are not rigid, but maintain general proportions when the size of total assets changes. The size of the structural limits is determined by the bank's risk policy.
Counterparty limits include three subspecies: the limit of the marginal risk per counterparty (a group of related counterparties), a limit for a specific borrower or issuer of securities (a group of related borrowers), a limit for an intermediary (buyer - seller, broker, trading platform).
Limits for executors and controllers of operations limits the powers of persons who directly perform, execute and control operations. Naturally, when placing large sums of money, the risk of loss and error increases. Even if the limits of counterparties and the open position are met, the risk remains. Therefore, the conclusion and execution of transactions for large amounts should be carried out by senior officials. This rule is very important when making transactions related to an open position (currency transactions, shares), here the dealer's qualifications and experience are of primary importance. The set of limits for executors and controllers of operations is called the authority matrix.
Liquidity limits do not refer to a specific operation, but to a set of operations. Their task is to limit the risk of a lack of funds for the timely fulfillment of obligations, both in the current mode and in the future.
2. Management of assets and liabilities aims to carefully balance cash, investments and liabilities in order to minimize changes in net worth. Theoretically, in this case, there is no need to divert resources to form a reserve, make an insurance payment or open a compensating position, i.e. application of a different risk management method.
Asset and liability management aims to avoid excessive risk by dynamically adjusting the key parameters of a portfolio or project. In other words, this method aims to regulate exposure to risks in the course of the activity itself.
Obviously, the dynamic management of assets and liabilities presupposes the presence of prompt and effective feedback between the decision-making center and the object of management. Asset and liability management is most widely used in banking practice to control market, mainly foreign exchange and interest rate risks.
3. Diversification is a way to reduce the total exposure to risk by distributing funds between various assets, the price or profitability of which is weakly correlated with each other ( not directly related)... The essence of diversification is to reduce the maximum possible losses in one event, however, at the same time, the number of types of risk that must be controlled increases. However, diversification from reads the most reasonable and relatively less cost-intensive way to reduce the degree of financial risk.
Thus, diversification allows you to avoid part of the risk in the distribution of capital between various types of activities. For example, the purchase by an investor of shares of five different joint stock companies instead of shares of one company increases the likelihood of receiving an average income by him five times and, accordingly, five times reduces the degree of risk.Diversification is one of the most popular mechanisms to mitigate market and credit risks when building a portfolio of financial assets and a portfolio of bank loans, respectively.
However, diversification cannot reduce investment risk to zero. This is due to the fact that entrepreneurship and investment activities of an economic entity are influenced by external factors that are not associated with the choice of specific objects of capital investment, and, therefore, they are not affected by diversification.
External factors affect the entire financial market, i.e. they affect the financial activities of all investment institutions, banks, financial companies, and not on individual economic entities. External factors include the processes taking place in the country's economy as a whole, military operations, civil unrest, inflation and deflation, changes in the Bank of Russia discount rate, changes in interest rates on deposits, loans in commercial banks, etc. The risk associated with these processes cannot be mitigated through diversification.
Thus, the risk consists of two parts: diversified and non-diversified risk.
Diversified risk, which is also called unsystematic, can be eliminated by dissipating it, i.e. diversification.
Non-diversified risk, also called systematic, cannot be reduced by diversification.
Moreover, studies show that the expansion of the objects of capital investment, i.e. dispersion of risk, allows you to easily and significantly reduce the amount of risk. Therefore, the main focus should be on reducing the degree of non-diversified risk.For this purpose, the foreign economy has developed the so-called "portfolio theory". Part of this theory is the Capi-tal Asset Pricing Model (CAPM)
4. The most important and most common risk reduction technique is risk insurance.
By its nature, insurance is a form of preliminary reservation of resources intended to compensate for damage from the expected manifestation of various risks. The economic essence of insurance lies in the creation of a reserve (insurance) fund, deductions to which for an individual insured are set at a level significantly lower than the amount of expected loss and, as a result, insurance compensation. Thus, most of the risk is transferred from the policyholder to the insurer.
Risk insurance is essentially a transfer of certain risks to an insurance company for a certain fee. The benefit of the project is the absence of unforeseen situations in exchange for a slight decrease in profitability.
Insurance is characterized by: the purpose of the created monetary fund, the expenditure of its resources only to cover losses in pre-agreed cases; the probabilistic nature of the relationship; repayment of funds.
As a method of risk management, insurance means two types of actions: 1) seeking help from an insurance company; 2) redistribution of losses among a group of entrepreneurs exposed to the same type of risk (self-insurance).
When insurance is used as a service of the credit market, it obliges the financial manager to determine an acceptable ratio between the insurance premium and the sum insured. The insurance premium is the payment for the insured risk to the insurer. The insured amount is the amount of money for which the material values or the liability of the policyholder are insured.
Business entities and citizens for insurance protection of their property interests can create societies mutual insurance.
Risk allocation is carried out during the preparation of the project plan and contract documents. As a rule, responsibility for a specific risk is assigned to the party through whose fault or in whose area of responsibility an event that could cause losses may occur. Naturally, each of the parties at the same time minimizes its losses.
Large firms usually resort to self-insurance, i.e. a process in which an organization, often exposed to the same type of risk, sets aside funds in advance, from which, as a result, covers losses. This avoids an expensive deal with an insurance company.
Self-insurance means that an entrepreneur would rather insure himself than buy insurance from an insurance company. Thus, he saves on capital costs for insurance.
The creation by an entrepreneur of a separate fund for reimbursement of possible losses in the production and trade process expresses the essence of self-insurance. The main task of self-insurance is to quickly overcome the temporary difficulties of financial and commercial activities. In the process of self-insurance, various reserve and insurance funds are created. These funds, depending on the purpose of their appointment, can be created in kind or in cash.
So, farmers and other agricultural actors create, first of all, natural insurance funds: seed, fodder, etc. Their creation is caused by the likelihood of unfavorable climatic and natural conditions.
Reserve funds created primarily in case of covering unforeseen expenses, accounts payable, expenses for the liquidation of an economic entity.
Their creation is mandatory for joint stock companies. Joint-stock companies and enterprises with the participation of foreign capital are required by law to create a reserve fund in the amount of at least 15% and not more than 25% of the authorized capital.
The joint-stock company also credits share premium to the reserve fund, i.e. the amount of the difference between the selling and the nominal value of shares received upon their sale at a price exceeding the nominal value. This amount is not subject to any use or distribution, unless the shares are sold at a price below par.
The reserve fund of the joint-stock company is used to finance unforeseen expenses, including the payment of interest on bonds and dividends on preferred shares in case of insufficient profit for these purposes.
To mitigate the consequences of risk manifestation, the financial resources are reserved in case of adverse changes in the company's activities. The creation of a reserve to cover unforeseen expenses is one of the risk management methods that involves establishing a balance between the potential risks affecting the value of assets and the amount of funds required to eliminate the consequences of risks.
5. Hedging(eng. heaging- to fence) is used in banking, stock exchange and commercial practice.
In the domestic literature, the term “hedging” is used in a broad sense as insurance against unfavorable changes in prices for any inventory items under contracts and commercial transactions involving the supply (sale) of goods in future periods.
Hedging is designed to reduce potential investment losses due to market risk and, less often, credit risk. Hedging is a form of insurance against possible losses by entering into a balancing transaction. As with insurance, hedging requires the diversion of additional resources.
Perfect hedging involves completely eliminating the possibility of obtaining any profit or loss on a given position by opening an opposite or offsetting position. A similar<двойная гарантия>, both from gains and from losses, distinguishes perfect hedging from classical insurance.
The specialists of our company make full use of modern methods of risk assessment in their work. If you need to assess investment, credit, business or financial risk, you can contact us using our contact information. Call us, we will help!
Risk assessment is a set of analytical measures that make it possible to predict the possibility of obtaining additional business income or a certain amount of damage from a risky situation and untimely taking measures to prevent risk.
The degree of risk is the likelihood of a loss event occurring, as well as the amount of possible damage from it. may be:
- acceptable - there is a threat of complete loss of profit from the implementation of the planned project;
- critical - it is possible that not only profit will not be received, but also revenue and coverage of losses at the expense of the entrepreneur;
- catastrophic - the loss of capital, property and bankruptcy of the entrepreneur are possible.
Quantitative analysis is the determination of the specific amount of monetary damage of individual subspecies of financial risk and financial risk in the aggregate.
Sometimes a qualitative and quantitative analysis is carried out on the basis of an assessment of the influence of internal and external factors: an element-by-element assessment of the specific weight of their influence on the operation of a given enterprise and its monetary value is carried out. This method of analysis is rather laborious from the point of view of quantitative analysis, but it bears its undoubted results in qualitative analysis. In this regard, more attention should be paid to describing the methods of quantitative analysis of financial risk, since there are many of them and some skill is required for their competent application.
In absolute terms, the risk can be determined by the amount of possible losses in material (physical) or value (monetary) terms.
In relative terms, risk is defined as the amount of possible losses, referred to a certain base, in the form of which it is most convenient to take either the property state of the enterprise, or the total cost of resources for a given type of entrepreneurial activity, or the expected income (profit). Then we will consider a loss as a random deviation of profit, income, revenue downward. versus expected values. Entrepreneurial losses are primarily an accidental decrease in entrepreneurial income. It is the magnitude of such losses that characterizes the degree of risk. Hence, risk analysis is primarily associated with the study of losses.
Depending on the magnitude of the probable losses, it is advisable to divide them into three groups:
- losses, the amount of which does not exceed the estimated profit, can be called acceptable;
- losses, the amount of which is greater than the estimated profit, are classified as critical - such losses will have to be reimbursed from the pocket of the entrepreneur;
- even more dangerous is the catastrophic risk in which the entrepreneur risks incurring losses in excess of all his property.
If it is possible to predict in one way or another, to assess the possible losses for this operation, then a quantitative assessment of the risk that the entrepreneur is taking has been obtained. Dividing the absolute value of possible losses by the estimated cost or profit, we obtain a quantitative assessment of the risk in relative terms, as a percentage.
Talking about the fact that the risk is measured by the magnitude of the possible. probable losses, the random nature of such losses should be taken into account. The probability of the occurrence of an event can be determined by an objective method and a subjective one. The objective method is used to determine the probability of an event occurring on the basis of calculating the frequency with which the event occurs.
The subjective method is based on the use of subjective criteria that are based on various assumptions. Such assumptions may include the evaluator's judgment, his personal experience, the assessment of the rating expert, the opinion of the auditor-consultant, etc.
Thus, the assessment of financial risks is based on finding the relationship between certain amounts of enterprise losses and the likelihood of their occurrence. This dependence is expressed in the constructed curve of the probabilities of occurrence of a certain level of losses.
Plotting a curve is an extremely complex task that requires employees dealing with financial risk with a sufficient knowledge of the experience. To plot the probability curve of a certain level of losses (risk curve), various methods are used: statistical; cost-benefit analysis; method of expert assessments; analytical method; method of analogies. Among them, three should be highlighted: the statistical method, the method of expert assessments, and the analytical method.
The essence of the statistical method is that the statistics of losses and profits that have taken place in a given or similar production are studied, the magnitude and frequency of obtaining a particular economic return are established, and the most probable forecast for the future is drawn up.
Undoubtedly, risk is a probabilistic category, and in this sense it is most scientifically justified to characterize and measure it as the probability of a certain level of losses occurring. Probability means the possibility of getting a certain result.
Financial risk, like any other, has a mathematically expressed probability of a loss, which is based on statistical data and can be calculated with a fairly high accuracy. To quantify the amount of financial risk, it is necessary to know all the possible consequences of any particular action and the likelihood of the consequences themselves.
With regard to economic problems, the methods of probability theory are reduced to determining the values of the probability of occurrence of events and to choosing the most preferable from possible events based on the largest value of the mathematical expectation, which is equal to the absolute value of this event, multiplied by the probability of its occurrence.
The main tools of the statistical method for calculating financial risk are: variation, variance and standard (root-mean-square) deviation.
Variation is a change in quantitative indicators when moving from one outcome option to another. Dispersion is a measure of the deviation of actual knowledge from its mean.
The degree of risk is measured by two indicators: the average expected value and the variability (variability) of the possible result.
The average expected value is associated with the uncertainty of the situation, it is expressed as a weighted average of all possible outcomes E (x), where the probability of each outcome (A) is used as the frequency or weight of the corresponding value (x). In general, it can be written like this:
E (x) = A1X1 + A2X2 + + AnXn.
The average expected value is that value of the magnitude of an event that is associated with an uncertain situation. It is a weighted average of all possible outcomes, where the probability of each outcome is used as the frequency, or weight, of the corresponding value. This calculates the expected result.
The cost-benefit analysis is focused on identifying potential risk areas, taking into account the indicators of the financial stability of the company. In this case, you can simply get by with the standard methods of financial analysis of the results of the main enterprise and the activities of its counterparties (bank, investment fund, client enterprise, issuing enterprise, investor, buyer, seller, etc.).
The peer review method is usually implemented by processing the opinions of experienced entrepreneurs and specialists. It differs from statistical only in the method of collecting information to construct a risk curve.
This method involves the collection and study of estimates made by various specialists (the given enterprise or external experts) of the probabilities of occurrence of different levels of losses. These estimates are based on taking into account all the factors of financial risk, as well as statistical data. The implementation of the method of expert assessments is significantly complicated if the number of assessment indicators is small.
The analytical method of constructing the risk curve is the most difficult, since the underlying elements of game theory are available only to very narrow specialists. A subspecies of the analytical method is more often used - model sensitivity analysis.
The sensitivity analysis of the model consists of the following steps: selection of a key indicator, against which the sensitivity is assessed (internal rate of return, net present value, etc.); choice of factors (inflation rate, degree of state of the economy, etc.); calculation of the values of the key indicator at various stages of the project (purchase of raw materials, production, sale, transportation, capital construction, etc.).
The sequences of costs and receipts of financial resources formed in this way make it possible to determine the flows of funds of funds for each moment (or period of time), i.e. define performance indicators. Diagrams are built, reflecting the dependence of the selected resulting indicators on the value of the initial parameters. By comparing the resulting diagrams with each other, it is possible to determine the so-called key indicators that most affect the assessment of the project's profitability.
Sensitivity analysis also has serious drawbacks: it is not comprehensive and does not specify the likelihood of alternative projects.
The method of analogies in analyzing the risk of a new project is very useful, since in this case the data on the consequences of the impact of unfavorable financial risk factors on other similar projects of other competing enterprises are examined.
Indexation is a way to preserve the real value of monetary resources (capital) and profitability in the face of inflation. It is based on the use of various indices.
For example, when analyzing and forecasting financial resources, it is necessary to take into account price changes, for which price indices are used. The price index is an indicator that characterizes the change in prices over a certain period of time.
Thus, the existing methods of plotting the probability curve of a certain level of losses are not entirely equivalent, but one way or another allow us to make an approximate estimate of the total amount of financial risk.
Source - O.A. Firsova - METHODS FOR ASSESSING THE DEGREE OF RISK, FGBOU VPO "State University - UNPK", 2000.
Consider financial risk, its types (credit, market, operational and liquidity risk), modern methods of its assessment and analysis, and calculation formulas.
The financial risk of the enterprise. Definition and economic meaning
Enterprise financial risk- represents the likelihood of an unfavorable outcome in which the company loses or loses part of its income / capital. Currently, the economic essence of any enterprise is to create income and increase its market value for shareholders / investors. Financial risks are basic when they affect the result of the financial and economic activities of the enterprise.
And in order for the company to reduce the negative impact of financial risks, methods for assessing and managing its size are being developed. The basic premise put forward by Norton and Kaplan for risk management is that only what can be quantified can be managed. If we cannot measure or quote any economic process, then we will not be able to manage it.
The financial risk of the enterprise types and classification
The process of any analysis and management consists in identifying and classifying the existing risks of an investment project / enterprise / assets, etc. In the article, we will focus more on assessing the financial risks of an enterprise, but many of the risks are present in other economic entities as well. Therefore, the initial task for each risk manager is to formulate threats and risks. Consider the main types of financial risks that stand out in the practice of financial analysis.
| Types of financial risks | Description of the types of risk |
| Credit risk (Credit Risk) | Assessment of credit risk by calculating the probability of default of counterparties in relation to the lender to pay interest on the loan. Credit risk includes creditworthiness and the risk of bankruptcy of the company / borrower |
| Operational risk (OperationRisk) | Unforeseen losses of the company due to technical errors and failures, deliberate and accidental personnel errors |
| Liquidity risk (LiquidityRisk) | The solvency of the enterprise - the inability to pay in full to the borrowers at the expense of funds and assets |
| Market risk (MarketRisk) | The likelihood of a negative change in the market value of an enterprise's assets as a result of the impact of various macro, meso and micro factors (interest rates of the Central Bank of the Russian Federation, exchange rates, cost, etc.) |
General approaches to assessing financial risks
All approaches to assessing financial risks can be divided into three large groups:
- Estimation of the likelihood of occurrence. Financial risk as the likelihood of an adverse outcome, loss or damage.
- Assessment of possible losses in a particular scenario of the development of the situation. Financial risk as the absolute amount of losses possible adverse event.
- Combined approach. Financial risk assessment as probability of occurrence and size of losses.
In practice, a combined approach is most often used, because it gives not only the likelihood of risk occurrence, but also the possible damage to the financial and economic activities of the enterprise, expressed in monetary terms.
Algorithm for assessing the financial risks of an enterprise
Let's consider a typical algorithm for assessing financial risks, which consists of three parts. First, the analysis of all possible financial risks and the selection of the most significant risks that can have a significant impact on the financial and economic activities of the organization. Secondly, a method for calculating a particular financial risk is determined, which allows one to quantitatively / qualitatively formalize the threat. At the last stage, the change in the size of losses / probability is predicted for various scenarios of the enterprise's development, and management decisions are developed to minimize the negative consequences.
The influence of financial risks on the investment attractiveness of an enterprise
The investment attractiveness of an enterprise is a set of all indicators that determine the financial condition of an enterprise. Increasing investment attractiveness allows attracting additional funds / capital to increase technological potential, innovation, personnel, production. An integral indicator of investment attractiveness is the criterion of economic value added EVA (EconomicValueAdded), which shows the absolute excess of operating profit over the cost of investment capital. This indicator is one of the key indicators in the strategic management system of the enterprise - in the value management system (VBM, Value Based Management). The formula for calculating economic value added is as follows:
EVA (Economic Value Added)- an indicator of economic value added, reflecting the investment attractiveness of the enterprise;
NOPAT (Net Operating Profit Adjusted Taxes)- profit from operating activities after taxes, but before interest payments;
WACC (Weight Average Cost of Capital)- indicator of the weighted average cost of capital of the enterprise. And it is calculated as the rate of return that the owner of the enterprise plans to receive on the invested equity and debt capital;
CE (Capital Employed)- used capital, which is equal to the sum of fixed assets and working capital involved in the activities of the enterprise (FixedAssets +WorkingCapital).
Since the weighted average cost of capital of an enterprise consists of the cost of borrowed and equity capital, a decrease in the financial risks of an enterprise makes it possible to reduce the cost of borrowed capital (interest rates on loans), thereby increasing the value of economic value added (EVA) and the investment attractiveness of the enterprise. The figure below shows the scheme for managing financial risks and investment attractiveness.
Financial risk assessment methods
In order to manage risks, it is necessary to assess (measure) them. Consider the classification of methods for assessing the financial risks of an enterprise, highlight their advantages and disadvantages, presented in the table below. All methods can be divided into two large groups.
So, let's take a closer look at the quantitative methods for assessing the financial risks of an enterprise.
Methods for assessing the credit risks of an enterprise
Credit risk is a component of the company's financial risk. Credit risk is associated with the ability of an enterprise to fail to pay off its obligations / debts on time and in full. This property of an enterprise is also called creditworthiness. The extreme stage of loss of creditworthiness is called the risk of bankruptcy, when the company cannot fully repay its obligations. The methods for assessing credit risk include the following econometric models for risk diagnostics:
Assessment of credit risks according to E. Altman's model
Altman's model makes it possible to assess the risk of bankruptcy of an enterprise / company or a decrease in its creditworthiness based on the discriminant model presented below:
Z is the final indicator for assessing the credit risk of an enterprise / company;
K 1 - own circulating assets / amount of assets;
K 2 - net profit / total assets;
K 3 - profit before tax and interest payments / amount of assets;
К 4 - market value of shares / borrowed capital;
K 5 - revenue / total assets.
To assess the credit risk of the company, it is necessary to compare the obtained indicator with the risk levels presented in the table below.
It should be noted that this model can only be applied to enterprises that have ordinary shares on the stock market, which allows us to adequately calculate the K 4 indicator. A decline in creditworthiness increases the overall financial risk of a company.
Assessment of credit risks according to R. Taffler's model
The next model for assessing the credit risks of an enterprise / company is R. Taffler's model, the calculation formula for which is as follows:
Z Taffler - assessment of the credit risk of an enterprise / company;
K 1 - an indicator of the profitability of the enterprise (profit before tax / current liabilities;
K 2 - indicator of the state of working capital (current assets / total liabilities);
K 3 - the financial risk of the enterprise (long-term liabilities / total assets);
К 4 - liquidity ratio (sales proceeds / total assets).
The resulting value of credit risk must be compared with the level of risk, which is presented in the table below.
| Taffler's criterion | |
| >0,3 | Low risk |
| 0,3 – 0,2 | Moderate risk |
| <0,2 | High risk |
Assessment of credit risks according to the model of R. Lis
In 1972, economist R. Lees proposed a model for assessing credit risks for UK enterprises, the calculation formula for which is as follows:
K 1 - working capital / amount of assets;
K 2 - profit from sales / amount of assets;
K 3 - retained earnings / total assets;
K 4 - equity / debt capital.
In order to determine the level of credit risk, it is necessary to compare the calculated Lis criterion with the level of risk presented in the table below.
| Fox criterion | Credit risk (likelihood of bankruptcy) |
| >0,037 | Low risk |
| <0,37 | High risk |
Operational risk assessment methods
Operational risks are one of the types of financial risk. Consider a method for assessing operational risks for companies in the banking sector. According to the basic technique ( BIA) assessment of operational risks ( Operational Risk Capital,ORC) the financial institution calculates a reserve that should be allocated annually to cover this risk. So in the banking sector, a risk equal to 15% is taken, that is, every year banks must reserve 15% of the average annual gross income ( GrossIncome,GI) over the past three years. The formula for calculating operational risk for banks will be as follows:
Operational risk= α x (Average gross income);
α - coefficient established by the Basel Committee;
GI is the average gross income for each type of bank activity.
Standardized methodology for assessing operational risksTSA
Complicating the BIA methodology is the TS method, which calculates deductions for operational risks arising in various functional areas of the bank's activities. To assess operational risks, it is necessary to highlight the areas where they can arise, and what kind of impact on financial activities they will have. Let's look at an example of assessing a bank's operational risks.
| Functional activities of the bank | Deduction rate |
| Corporate finance(provision of banking services to clients, government agencies, enterprises in the capital market) | 18% |
| Trade and sale(transactions in the stock market, purchase and sale of securities) | 18% |
| Banking services for individuals persons(servicing individuals, providing loans and credits, consulting, etc.) | 12% |
| Banking services for legal entities | 15% |
| Payments and transfers(settlement of accounts) | 18% |
| Agency services | 15% |
| Asset Management(management of securities, cash and real estate) | 12% |
| Brokerage activity | 12% |
As a result, the sum of the total deductions will be equal to the sum of deductions for each allocated function of the bank.
It should be noted that, as a rule, operational risks are considered for companies in the banking sector, not industrial or manufacturing. The fact is that most operational risks arise from human error.
Liquidity risk assessment method
The next type of financial risk is the risk of loss of liquidity, which shows the inability of an enterprise / company to repay its obligations to creditors and borrowers on time. This ability is also called the solvency of the enterprise. In contrast to creditworthiness, solvency is taken into account the possibility of debt repayment not only at the expense of cash and quickly liquid assets, but also at the expense of medium-liquid and low-liquid assets.
To assess the liquidity risk, it is necessary to evaluate and compare with the standards the basic liquidity ratios of the enterprise: the current liquidity ratio, the absolute liquidity ratio and the quick liquidity ratio.
Formulas for calculating the liquidity ratios of the enterprise
Analysis of various liquidity ratios shows the ability of an enterprise to repay its debt obligations using three different types of assets: fast liquid, medium liquid and low liquid.
Market risk assessment method - VAR
The next type of financial risk is market risk, which is a negative change in the value of the assets of an enterprise / company as a result of changes in various external factors (industry, macroeconomic and microeconomic). For a quantitative assessment of market risk, the following methods can be distinguished:
- VaR method (Value at Risk).
- Shortfall method (Shortfall at Risk).
Risk assessment methodVaR
The VAR method is used to assess market risk (Value at Risk), which allows you to assess the probability and amount of losses in the event of a negative change in the company's value on the stock market. The calculation formula is as follows:
where:
V is the current value of the company's / enterprise's shares;
λ is the quantile of the normal distribution of the company's / enterprise's stock returns;
σ is the change in the profitability of the company's / enterprise's shares, reflecting the risk factor.
A decrease in the value of shares leads to a decrease in the market capitalization of the company and a decrease in its market value, and, consequently, investment attractiveness. You can learn more about how to calculate the VaR risk measure in Excel in my article: ““.
Risk assessment methodShortfall
Shortfall Market Risk Assessment Method (analogue:Expected Shorfall, Average value at risk, Conditional VaR) more conservative than the VaR method. The risk assessment formula is as follows:
α is the selected level of risk. For example, these can be values 0.99, 0.95.
The Shortfall method better captures heavy tails in the distribution of stock returns
Summary
In this article, we examined various methods and approaches to assessing the financial risks of an enterprise / company: credit risk, market risk, operational risk and liquidity risk. In order to manage risk, it is necessary to measure it, this is the basic postulate of risk management. Financial risk is a complex concept, therefore, assessing various types of risk allows us to weigh possible threats and develop a set of measures to eliminate them.
FEDERAL EDUCATION AGENCY
State educational institution
higher professional education
"ALTAI STATE UNIVERSITY"
Faculty of Economics
Department of Information Systems in Economics
Specialty: "Applied Informatics (in Economics)"
RISK ASSESSMENT METHODS FOR ENTERPRISES
(course work)
Completed by a student
2nd year, 273 groups
Yanush Valentina Anatolyevna
(signature)
Supervisor:
assistant professor
Isaeva Olga Vladimirovna
(signature)
Work is protected
Barnaul 2009.
INTRODUCTION 3
1. GENERAL CONCEPTS OF RISKS 4
1.1 Fundamental principles of management 4
1.2 Risk classification 8
2. METHODS OF RISK ACCOUNTING, THEIR QUALITATIVE AND QUANTITATIVE ASSESSMENT 12
2.1 Risk Assessment Techniques 12
2.2 Areas of risk 16
2.3 Ways to reduce the degree of risk. nineteen
CONCLUSION 24
LIST OF USED LITERATURE: 26
INTRODUCTION
Any entrepreneurial activity in a market economy is associated with entrepreneurial risk, that is, the risk of obtaining a negative result.
The risk category is associated with uncertainty in the ratio of gains and losses, chances of success and failure. In practice, the risk can be represented as a combination of probable economic, political, moral and other positive and negative consequences of the implementation of the chosen decisions. An economic entity is constantly in a situation of risk. This is especially characteristic of a market economy, where there is a constant need to choose one of several options with different probabilities of implementation, and, in particular, innovation.
Two factors of the organization's activity are most susceptible to the influence of risk:
The level of profitability of financial transactions of the organization
Financial risk is the basis for the formation of the threat of bankruptcy, since the financial losses associated with this risk are the most tangible.
The risk and profitability of the organization are closely related and represent a single system of "profitability-risk".
1. GENERAL CONCEPTS OF RISKS
In the practice of financial analysis, entrepreneurial risk is understood as the likelihood (threat) of loss by the organization of part of its resources, loss of income or the appearance of additional costs as a result of activities. Based on this, we can say that risk is uncertainty, variability in the value of profit, return on invested capital.
Risk gives a chance to get excess profits, and at the same time means the likelihood of being at a loss.
A high rate of return in comparison with the prevailing average return in the industry or in the financial market is achieved, as a rule, at the cost of risky actions. Thus, a high return on assets can be achieved by minimizing reserves, which can lead to production disruptions and means the risk of losing liquidity and incurring losses.
Risk is inherent in any type of capital investment, but capital can be distinguished, which is directly related to risk. This is venture capital, or risky investments, that is, investments in the form of the issue of new shares produced in new areas of activity, associated with great risk.
Venture capital is invested in unrelated projects with the expectation of a quick return on investment. Companies are created abroad that attract funds from many investors and create a venture capital fund. The fund takes the form of a partnership, in which the organizing firm of the fund usually contributes 1% of the capital, but does not bear full responsibility for the management of the firm.
The central place in risk assessment and subsequent risk management is occupied by the analysis and forecasting of possible losses of resources, a decrease in profitability. This is a multi-stage process, the purpose of which is to reduce or compensate for damage to an object in the event of undesirable events. It should be remembered that minimizing damage and reducing risk are inadequate concepts. The second means either a decrease in the possible damage, or a decrease in the likelihood of adverse events occurring.
1.1 Fundamental principles of management
The management process is carried out on the basis of a number of fundamental principles. Figure 1 shows a diagram describing the principles of risk management.
As mentioned above, the risk management process is complex and multi-stage. It includes such stages as:
risk analysis
choice of methods of influencing risk when assessing their comparative effectiveness
decision-making
direct impact on risk
control and correction of the results of management processes
The sequence of these steps is shown in Fig. 2.
Let's consider the content of the listed stages.
Risk analysis is the initial stage, the purpose of which is to obtain the necessary information about the structure, properties of the object and possible risks. The information collected should be sufficient to make adequate decisions at subsequent stages.
The sequence of the analysis is as follows:
identification of internal and external factors that increase or decrease a specific type of risk
analysis and assessment of identified risk factors
assessment of a specific type of risk from the financial side and using two approaches: determining the financial viability (liquidity) and economic viability of the project
determination of the acceptable level of risk
analysis of individual transactions for the selected level of risk
development of risk reduction measures
In the process of analysis, not only certain types of risks are identified, but also the likelihood of their occurrence is determined, and a quantitative and qualitative assessment of their impact is also given. In the process of assessment, the possible damage is calculated and a set of scenarios for the development of unfavorable situations is formed. For various risks, the distribution functions of the probability of the occurrence of damage depending on its size can be constructed.
Often the analysis goes in two opposite directions - from assessment to identification and vice versa. In the first case, there are already (recorded) losses and it is necessary to identify the reasons. In the second case, based on the analysis of the system, risks and their possible consequences are revealed.
The next step is to choose a method of influencing risks in order to minimize possible damage in the future. Each type of risk allows for two or three traditional ways to reduce it. Therefore, the problem arises of assessing the comparative effectiveness of methods of influencing risk to select the best one. The comparison is based on various criteria, including economic ones.
The choice of the best ways to influence specific risks makes it possible to form a general strategy for managing the entire range of risks of the organization. This is the stage of decision-making, when the required financial and labor resources are determined, tasks are formulated and distributed among managers, the market for relevant services is analyzed, and consultations with specialists are carried out.
The final stage of risk management is control and adjustment of the results of the implementation of the chosen strategy, taking into account new information. Control consists in obtaining information about losses and measures taken to minimize them. It can be expressed in identifying new circumstances that change the level of risk, monitoring the effectiveness of security systems, etc. Then, the data on the effectiveness of the used risk management measures can be revised, taking into account information about the losses that have occurred during this period.
When developing a strategy, an organization chooses a form of risk management at this stage. In the practice of analysis, the following forms of risk management are distinguished:
active - the use of available information, forecasting the development of events, active influence on the activities of the organization, the maximum prevention of negative consequences;
an adaptive form of managing risk factors is based, as it were, on the principle of choosing the "lesser of evils", adapting to the current situation. With this form of management, control actions are carried out in the course of a business transaction. In this case, only part of the damage is prevented;
a conservative form of risk factor management means that control actions are lagging behind. The risk event has come, the damage from it is inevitable and is absorbed by the economic entity. In this case, management is aimed at localizing damage, neutralizing its influence on other events.
The risk assessment manager is responsible for the enterprise risk assessment. He develops, advises and directs risk management programs and loss prevention activities to maximize the protection of corporate assets and capital. Conducts investigation and reports on accidents, incidents related to the company's products, and then coordinates the actions of insurance companies and lawyers. Reviews and analyzes data and develops programs to minimize risks. Monitors compliance with safety regulations, ensures that the company's products comply with industry standards and market requirements.
There are several approaches to risk assessment in an enterprise. Let's take a look at some of them.
The main task of the first of the considered methods of risk assessment is their systematization and the development of an integrated approach to determining the degree of risk affecting the financial and economic activities of the enterprise. The following risk assessment algorithm is proposed, which is shown in Fig. 1.1.
All risk researchers do not pay due attention to assessing the quality of the information with which they assess risk.
Rice. 1.1.
The requirements for the quality of information should be as follows:
- - reliability (correctness) of information - a measure of the proximity of information to the original source or the accuracy of information transmission;
- - objectivity of information - a measure of how information reflects reality;
- - unambiguity;
- - the order of information - the number of transmission links between the primary source and the end user;
- - completeness of information - a reflection of the exhaustive nature of the correspondence of the information received to the purposes of collection;
- - relevance - the degree of approximation of information to the essence of the issue or the degree of correspondence of information to the task;
- - relevance of information (significance) - the importance of information for risk assessment;
- - the cost of information.
It is proposed to establish the relationship between the risk and the quality of the information on which it (risk) is assessed. It is suggested that the probability of the risk of making a poor-quality (unprofitable) decision depends on the quality and volume of information used. This assumption is taken from neoclassical risk theory. According to this theory, in the presence of several options for making a decision (with equal profitability), such a decision is chosen in which the probability of risk (fluctuation) is the smallest. It can be assumed that also in the presence of several options with the same profit, a decision is chosen that is based on better quality information, that is, there is a relationship between risk and information.
In fig. 1.2. the assumed dependence of the probability of the risk of making a low-quality (unprofitable) decision and the volume / quality of information is shown.
A high probability of risk occurrence corresponds to a minimum of quality information.
Figure 1.2. Dependence of risk and information
To assess the quality of information, it is proposed to use Table 1.3.
Table 1.3
Evaluation of the information used
This table allows you to analyze any information and clearly verify its quality. The numbers 1-10 at the top of the table denote the quality of the information: the better the information, the higher the number is assigned to it. The result of the analysis can be the final value of the information quality, which is found as an arithmetic mean.
Fixing risks. When assessing financial and economic activities, it is proposed to fix risks, that is, to limit the number of existing risks, using the principle of "reasonable sufficiency". This principle is based on taking into account the most significant and most common risks for assessing the financial and economic activities of an enterprise. It is recommended to use the following types of risks: regional, natural, political, legislative, transport, property, organizational, personal, marketing, production, settlement, investment, currency, credit, financial.
Drawing up an algorithm for the decision to be made. This stage in assessing the risks of financial and economic activities is intended for the phased division of the planned solution into a certain number of smaller and simpler solutions. This action is called composing a decision algorithm.
Qualitative risk assessment. Qualitative risk assessment implies: identification of risks inherent in the implementation of the proposed solution; determination of the quantitative structure of risks; identification of the most risky areas in the developed decision algorithm.
To carry out this procedure, it is proposed to use a qualitative analysis table. In this table, the algorithm of actions when making a decision is presented by rows, and by columns - previously fixed risks. So, when deciding to place new base stations at one of the communications enterprises, the risk assessment may look like this (see Table 1.4).
Table 1.4
Qualitative risk assessment
|
Decision algorithm |
Risk type |
||||||||||||||||||||||||
|
regional |
natural |
transport |
political |
legislative |
organizational |
personal |
property |
calculated |
marketing |
industrial |
currency |
credit |
financial |
investment |
|||||||||||
|
Identifying the need to place new equipment in the area |
|||||||||||||||||||||||||
|
Attraction of working capital |
|||||||||||||||||||||||||
|
Organization of the transaction, purchase |
|||||||||||||||||||||||||
|
necessary equipment |
A quantitative assessment of risks is carried out on the basis of data obtained during their qualitative assessment, that is, only those risks that are present in the implementation of a specific operation of the decision-making algorithm will be assessed. For each recorded risk, a risk assessment table is compiled based on data obtained from statistical, scientific, periodic sources, as well as based on the personal experience of managers. These risk assessment tables are compiled in such a way as to most fully determine the constituent risk factors. When using this approach, a high efficiency of the qualitative assessment of the financial and economic activities of the enterprise is achieved. In the tables compiled, the values that most closely correspond to the questions posed are selected. In some cases, it is proposed to independently determine the value of the risk on a ten-point scale. After choosing the risk value at its level exceeding 0.8, an arbitrary mark (+) is made in the corresponding column. The final stage of filling in the columns of the table is the setting of the value of the quality of the information, on the basis of which the decision was made. At the end of the table, the final quantitative assessment is summarized as the arithmetic mean of all indicators of risk components. Decision-making. Decision making is the final and most responsible procedure in assessing the risks of financial and economic activities. When developing a strategy of behavior and in the process of making a specific decision, it is advisable to distinguish and highlight certain areas (risk zones) depending on the level of possible (expected) losses in financial and economic activities. So, based on the generalization of the research results of many authors on the problem of quantitative assessment of the risks of financial and economic activities of enterprises, an empirical scale of risk has been developed and proposed, which can be used in its quantitative assessment (Table 1.5). Table 1.5 Empirical risk scale
Making a decision consists of three stages:
As mentioned earlier, when making a decision under conditions of uncertainty, special attention should be paid to the quality of information. In this regard, it is proposed to use the risk information table of decision making (Fig. 1.3).  Rice. 1.3. The Delphi method can also be used for a qualitative risk assessment. This method is a collective peer review. It was developed by renowned expert from the DAND Research Corporation Olaf Helmer, a mathematician by training. Therefore, this method combines a creative approach to solving the problem and sufficient forecast accuracy. The essence consists in conducting questionnaires among specialists in the chosen field of knowledge. The obtained personal data are subjected to statistical processing, as a result of which a range of experts' opinions is formed, reflecting their collective opinion on the selected problem. Usually, after the first survey, there is a wide range of opinions. Therefore, the procedure for implementing the Delphi method involves conducting another three or four surveys, on the eve of which each of the experts is introduced to the result of the previous survey, but not in order to put pressure on him, but so that the experiment can obtain additional information about the subject of the survey. Ideally, the survey is repeated until the opinions of experts coincide, in reality - until the narrowest range of opinions is obtained. |
