scholarly journals THE DEVELOPMENT OF THE RISK MANAGEMENT MECHANISM FOR INNOVATION PROJECT

2018 ◽  
Vol 3 ◽  
pp. 12-20
Author(s):  
Anatoliy Shakhov ◽  
Varvara Piterska
Keyword(s):  
Risk Management ◽  
High Probability ◽  
Net Present Value ◽  
Risk Measures ◽  
Innovative Activity ◽  
Financial Risks ◽  
Present Value ◽  
Management Mechanism ◽  
Management Measures ◽  
Innovation Project

It is established that the high probability of emergence of risk situations in the innovation project, requires the implementation of risk management measures. It is noted that there is currently no mechanism for distributing of financial risks between the customer and the executor of the innovation project, that is largely negatively reflected in the desire to invest own funds in innovation. The methodological bases of risk management of innovative activity of the project-oriented organization are offered in the article. With the proposed approach, it is possible to estimate in advance how much the proposed risk management measures can reduce the risk of an innovation project and how this activity will affect on the project's effectiveness in deciding whether to continue or stop the innovation project research. On the basis of the existing characteristics of the risk measures of the innovation project, it can be concluded that the best indicator of the effectiveness of a certain stage of the innovation project by the results of simulation is net present value of the project. It is better to use the probability of receiving an ineffective result of an innovation project at an appropriate stage for assessing of the risk of the innovation project and the decision to continue or stop the innovation project at a certain stage.

scholarly journals PARAMETRIZATION OF THE MECHANISM OF FINANCIAL RISK MANAGEMENT IN THE DIGITAL SECURITIES CIRCULATION

2019 ◽  
pp. 77-83
Author(s):  
Oleksandr Volodmyrovych Lutskevych ◽  
Keyword(s):  
Risk Management ◽  
Social Life ◽  
Financial Risk ◽  
State Regulation ◽  
Securities Market ◽  
Financial Risks ◽  
Negative Consequences ◽  
Management Mechanism ◽  
Financial Risk Management ◽  
The Impact

Urgency of the research. Digital technologies are transforming all spheres of social life, and the financial sphere is no exception. In general, such trends cannot but leave an imprint on approaches to managing the financial risk of digital securities. Target setting. Currently, scientific and methodological support for the formation of a mechanism for managing the financial risks of digital securities is in the early stages of development, while the quality of state regulation and supervision of participants in digital securities directly depends on the effectiveness of the current mechanism for managing such risks. Actual scientific researches and issues analysis. Theoretical and applied aspects of the securities market, features of the impact of financial innovations and financial risk management in the field of securities circulation, are researched by V. Bodrov [1], O. M. Kovaleva [2], I. V. Krasnova [3], N. V. Tkachenko [4], Yu. B. Kolupaeva [5] and others. Uninvestigated parts of general matters defining. The methodology of formation the mechanism for managing the financial risks of digital securities needs more precise research. The research objective. Deepening the scientific understanding of the term "financial risk management mechanism for the circulation of digital securities" will ensure to outline ways of increasing the efficiency of this financial instrument usage. The statement of basic materials. This article analyzes the essence of the term "financial risk management mechanism". The construction of the mechanism has been adapted to the specifics of digital securities risk management. Conclusions. The essence of the mechanism of financial risks management of digital securities circulation is improved due to application of a set of methods for identification, quantitative and qualitative analysis, measures to prevent realization and / or reduction of negative consequences of financial risks of digital securities circulation, ways of control over some events.

scholarly journals Liquidity risk management: practice among Croatian firms

2018 ◽  
Vol 6 (1) ◽  
pp. 81-97
Author(s):  
Goran Karanović ◽  
Bisera Karanović ◽  
Martina Gnjidić
Keyword(s):  
Risk Management ◽  
Risk Measures ◽  
Management Practice ◽  
Liquidity Risk ◽  
Financial Knowledge ◽  
Financial Indicators ◽  
Liquidity Management ◽  
Management Measures ◽  
Management Plans ◽  
Business Entities

The main purpose of this paper is to explore the practice of liquidity risk management of Croatian business entities. The analysis is based on a survey of 62 business entities in Croatia. The authors investigate the existence of risk management and liquidity risk management measures among the surveyed business entities. The respondents’ knowledge of management, their use of indicators and methods for the management of liquidity risk, in addition to the cited reasons for implementation of liquidity risk measures were also subject to examination. Furthermore, the authors investigate the importance of liquidity management in business. The analysis reveals that Croatian business entities have neither sufficient knowledge regarding the majority of financial indicators, nor they tend to use liquidity management plans. Consequently, the survey’s findings indicate that the overall level of financial knowledge of Croatian managers is inadequate. This can, thus, be identified as one of the reasons for the traditionally high number of illiquid business entities in the market. Finally, this paper provides academia and policymakers with new revelations concerning the management of liquidity risk among business entities in Croatia.

scholarly journals Does executive compensation reflect equity risk incentives and corporate tax avoidance? A Japanese perspective

2014 ◽  
Vol 11 (2) ◽  
pp. 60-71
Author(s):  
Hiroshi Ohnuma
Keyword(s):  
Executive Compensation ◽  
Net Present Value ◽  
Multivariate Analyses ◽  
Risk Measures ◽  
Estimation Method ◽  
Tax Avoidance ◽  
Present Value ◽  
Corporate Tax ◽  
Equity Risk ◽  
Japanese Perspective

This study examines corporate tax avoidance as a determinant of executive compensation on the basis of equity risk incentives. Previous research shows that equity risk incentives motivate managers to make more risky, but positive net present value—investment decisions. Through correlation analyses, this study demonstrates that the tax risk measures adopted in this study are negatively associated with both the adoption of stock options and tax aggressive measures. Through multivariate analyses, this study demonstrates that executive compensations are significantly associated with our measures of tax risk positions despite the inclusion of several control variables. Moreover, this study finds consistent evidence that executive equity risk incentives are significantly associated with aggressive tax positions, regardless of the estimation method and the strength of the corporate governance function, and across several tax risk measures.

scholarly journals EFFICIENCY ASSESSMENT OF IMPLEMENTATION OF THE MECHANISM OF INNOVATIVE RISK MANAGEMENT OF THE FAT AND OIL INDUSTRY IN UKRAINE

ScienceRise ◽  
2020 ◽  
pp. 61-70
Author(s):  
Yuliya Zhadan
Keyword(s):  
Risk Management ◽  
Net Present Value ◽  
Methodological Approach ◽  
Oil Industry ◽  
Pricing Model ◽  
Present Value ◽  
Efficiency Assessment ◽  
Before And After ◽  
Capm Model

Object of research: risk management processes of enterprises of the oil and fat industry in Ukraine. Investigated problem: to assess the efficiency of the implementation of the mechanism of innovative risk management for enterprises of the oil and fat industry in Ukraine Main scientific results: the paper proposes a scientific and methodological approach to quantifying the effectiveness of the implementation of the mechanism of innovative risk management (MIRM) of enterprises of the oil and fat industry in Ukraine, based on comparing the net present value before and after the MIRM implementation and consists of a number of successive interrelated stages, which include: comparative analysis and integrated assessment of unsystematic (financial, production, investment and other types) risks before and after the MIRM implementation at the enterprise; expert assessment of systematic risks that form the environment of the enterprise and can’t be controlled; determination of the total risk value as an arithmetic weighted average non-systematic and systematic component for each type of risk; determination of discount rates taking into account risk before and after the MIRM implementation at the enterprise using the CAPM model (capital assets pricing model) for calculating and comparing the net present value before and after the MIRM implementation at the enterprise (NPV and NPV', respectively). Efficiency assessment of the implementation of the mechanism of innovative risk management (MIRM) was carried out on the example of eleven processing enterprises of the fat and oil industry in Ukraine. The scope of practical use of research results: the risk management system of processing enterprises of the fat and oil industry in Ukraine, which should be the object of constant monitoring of the feasibility of implementation and assessment of the effectiveness of MIRM functioning by management and top management. Innovative technological product: a scientific and methodological approach to quantifying the effectiveness of the implementation of the mechanism of innovative risk management for enterprises of the oil and fat industry in Ukraine, based on comparing the net present value before and after the MIRM implementation (NPV and NPV’, respectively) using the CAPM model (capital assets pricing model) to determine the discount rates taking into account the risk before and after the MIRM implementation (d and d', respectively), which makes it possible to determine the expected amount of reduction in losses at the processing enterprises of the oil and fat industry of Ukraine from the implementation of a set of risk management measures and make informed management decisions on the appropriateness of their application. Scope of application of the innovative technological product: processing enterprises of the oil and fat industry in Ukraine.

scholarly journals STRATEGIC APPROACH TO MANAGING THE RISK OF THE COMPANY'S BUSINESS PORTFOLIO

Management ◽  
2018 ◽  
Vol 27 (1) ◽  
pp. 111-118
Author(s):  
Liudmyla M. GANUSHCHAK-EFIMENKO ◽  
Mаryana S. SHKODA ◽  
Оlena M. NIFATOVA
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Enterprise Risk Management ◽  
Economic Feasibility ◽  
Innovation Activity ◽  
Management Mechanism ◽  
Management Tools ◽  
Management Measures ◽  
Strategic Approach ◽  
Enterprise Risk

Introduction and purpose of the research: The inevitable condition of management is uncertainty. Innovation activity is more risky than other areas of entrepreneurship. In the conditions of instability of the economic situation, the problem of the risk of loss when the company invests in innovations becomes especially relevant.Hypothesis of scientific research. It is assumed that the justification of enterprise risk management measures should be based on the synthesis of the economic feasibility of the method and its ability to address the risk, which will enable competent executives to choose effective risk management tools for the enterprise.The aim is to study the process of risk management in the innovation activity of the enterprise, to develop and substantiate the recommendations for the formation of the enterprise risk management mechanism taking into account the ownership form and its size.Research methods:- comparison methods to identify the weak and strong points of the classification schemes, methods of risk assessment and management;- systematization and classification to determine the characteristics (advantages, disadvantages, peculiarities of application) of methods of enterprise risk assessment, risk management methods and construction of a classification scheme of enterprise risks as the basis of the mechanism of its risk management;- decompositions in the construction of a business risk card due to the division and analysis of the totality of its business activities;- expert assessments in determining the enterprise risks for small, medium and large enterprises in the field of mechanical engineering.Results: substantiated and solved problems of implementation of the strategic approach in project risk management at the enterprise.Conclusions: the mechanism of enterprise risk management based on the system approach combines the administrative, legal and organizational components, makes it possible to identify the risks of the company in three aspects (industry characteristic, form of ownership, size), ensures the formation of a portfolio of risks of a particular enterprise and creates the principles for improving the management mechanism for them.

A holistic review of research studies on financial risk management in public–private partnership projects

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Isaac Akomea-Frimpong ◽  
Xiaohua Jin ◽  
Robert Osei-Kyei
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Real Option ◽  
Net Present Value ◽  
Developing Economies ◽  
Project Managers ◽  
Financial Risks ◽  
Systematic Analysis ◽  
Financial Risk Management ◽  
Content Type

PurposeGlobally, the management of financial risks has gained much attention in the public–private partnerships (PPP) market in recent years. Existing studies rank financial risks among the topmost risk factors that determine the success or failure of a PPP project. As essential for managing financial risks, a systematic review of previous studies on financial risk management of PPP from 1995 to 2019 (inclusive of both years) has been presented in this paper.Design/methodology/approachThe paper undertakes a systematic analysis of 49 relevant and available studies on financial risk management of PPP projects.FindingsFrom the results, high-interest charges, increased construction costs and increased market risks are some of the key financial risks hampering the success of PPP projects. Techniques used to assess financial risks include Monte Carlo Simulation (MCS) and Net Present Value (NPV). Financial risks control adopted by project managers include minimum revenue guarantee and real option pricing. Extremely limited studies on financial risk management in PPP projects in developing economies was revealed.Practical implicationsProject managers in developing financial risk management models may use the outcome of this paper to improve the financial success of PPP projects. Holistically, researchers will be guided to investigate and heighten the pertinent issues on financial risk management of PPP projects in academia.Originality/valueThe results provide a rare guide to project managers in controlling financial risks of PPP projects which is an unexplored topic. It is also the first paper to highlight the issues of financial risk management in PPP projects research.

scholarly journals Exploring the Internetization of Private Finance

2021 ◽  
Vol 275 ◽  
pp. 01044
Author(s):  
Yan Kong ◽  
Yanna Wang ◽  
Jieping Cai
Keyword(s):  
Risk Management ◽  
Information Flow ◽  
Financial Risks ◽  
Transaction Cost Theory ◽  
Management Mechanism ◽  
Capital Operation ◽  
Private Finance ◽  
Existing Problems ◽  
New Business ◽  
Two Stages

Following the two stages of booming and tightening supervision, Internet-based private finance is now exhibiting a slowdown in its development. Within the framework of the transaction cost theory, this study explores the motivations for and the boundaries of new business forms, and proposes that their continuous changes in the risk management mechanism, legal relations between transaction entities, and capital operation models have raised financial risks while elevating their own financial availabilities. The author then concentrates on the three core functions that stem from the functional financial theories and analyses the risks private finance has to take during its Internetization from the perspectives of capital flow and information flow. In the end, suggestions have been made from two aspects, the risk early warning and the combination of flexible and forceful supervision. The author points out that Internet-based private finance is an inevitable trend in the future. We should solve the existing problems and refrain from being held back for fear of a slight risk.

scholarly journals New risk measures for variance distortion and catastrophic financial risk measures

2021 ◽  
Vol 25 (6) ◽  
pp. 165-184
Author(s):  
V. B. Minasyan
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Risk Measures ◽  
Financial Risks ◽  
Large Set ◽  
Business Risk ◽  
Distortion Functions ◽  
Significant Area ◽  
Theoretical Risk ◽  
Distortion Risk Measures

In recent years, expectation distortion risk measures have been widely used in financial and insurance applications due to their attractive properties. The author introduced two new classes of financial risk measures “VaR raised to the power of t” and “ES raised to the power of t” in his works and also investigated the issue of the belonging of these risk measures to the class of risk measures of expectation distortion, and described the corresponding distortion functions. The aim of this study is to introduce a new concept of variance distortion risk measures, which opens up a significant area for investigating the properties of these risk measures that may be useful in applications. The paper proposes a method of finding new variance distortion risk measures that can be used to acquire risk measures with special properties. As a result of the study, it was found that the class of risk measures of variance distortion includes risk measures that are in a certain way related to “VaR raised to the power of t” and “ES raised to the power of t” measures. The article describes the composite method for constructing new variance distortion functions and corresponding distortion risk measures. This method is used to build a large set of examples of variance distortion risk measures that can be used in assessing certain financial risks of a catastrophic nature. The author concludes that the study of the variance distortion risk measures introduced in this paper can be used both for the development of theoretical risk management methods and in the practice of business risk management in assessing unlikely risks of high catastrophe.

scholarly journals Decision tools for earthquake risk management, including net present value and expected utility

2006 ◽  
Vol 39 (3) ◽  
pp. 170-175
Author(s):  
W.D. Smith ◽  
G.A. Vignaux
Keyword(s):  
Risk Management ◽  
Decision Maker ◽  
Net Present Value ◽  
Decision Makers ◽  
Earthquake Risk ◽  
Present Value ◽  
Management Decisions ◽  
Decision Tools ◽  
Value Judgements ◽  
The Individual

The results of earthquake risk assessments should be presented in ways that will help facilitate risk management decisions. So the measures of risk that are chosen need to be those that will assist decision-makers. Annualised Loss may not be the best basis on which risk management decisions can be made. The Conditional Expected Value of the loss, defined for a suitable set of probability ranges, is a promising measure of the risk because it is similar to a scenario loss and can be readily comprehended by decision-makers. Utility Theory provides a further measure by taking account of individuals’ perceptions of the severity of losses. It can be combined with the concept of Net Present Value to give an overall measure of the risk in terms of the value judgements of the individual decision-maker. The reduction in risk that would result from proposed mitigation works can be readily assessed, so that the decision-maker who is faced with the costs of mitigation is in a position to assess the benefits.

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