WEB-ресурс научно-практических конференций

Grinevich O.

Ukraine

UKRAINE ’S FINANCIAL RISKS AND ITS MINIMIZATION

Introduction. The modern period of Ukraine development is characterized by aspiration to be integrated into the world markets of the goods and services. One of leading directions in this process is country attraction in a global financial system. The financial markets is peculiar «blood system», the indicator of state economy stability that define degree of social development.

Financial risk remains relatively high in Ukraine . The financial sector is still underdeveloped, and there is little long-term finance available domestically for the private sector.

Problem statement. Despite long time of a functioning the financial relations, a domestic science faces today necessity of creation the control system of financial risks in the market economy conditions.

Results. There are three major financial risks that Ukraine is currently facing:

· high inflation;

· increasing current account deficits;

· large private foreign borrowings, particularly short term, that can jeopardize the banking sector and lead to devaluations;

· an inadequate local bond market, while the illiquid stock market plays little role in providing equity finance.

Management of financial risks is understood as set of methods, receptions and the actions allowing in certain degree to predict realization of risky events and to take measures under their prevention or decrease in negative consequences of realization. For this reason, managements includes stages of the prevention, neutralization and minimization of negative financial consequences[ 1].

Methods which allow to model and form scenarios of realization of a risky situation in the conditions of introduction of particularly chosen strategy of development of the enterprise are a basis of the prevention of financial dangers. The most widespread among them are:

1) SWOT-analysis applications;

2) modeling of business processes;

3) the analysis of the clashing purposes;

4) modeling of risks-advantages on the basis of the utility theory;

5) application of a benchmarking on the basis of the analysis of competitors indicators and the best branch companies;

6) construction of financial balance matrixes;

7) monitoring of indicators of a financial condition of the enterprise, revealing of threat of bankruptcy to the enterprise; forecasting of bankruptcy of the enterprise according to officially confirmed technique;

8) forecasting of external economic conditions in the country, managing region etc.

On the basis of use of these methods at the enterprise working out and introduction of some the preventive actions directed on evasion from risk among which the most influential on financial safety are possible :

1) usage of world achievements in business technologies;

2) introduction of innovations;

3) working out and control system introduction by the currency risks directed on minimization of financial losses, connected with economic activities;

4) introduction in management practice by financial risks of the compromise concept between risk and profit;

5) updating of enterprise’s strategic and tactical plans;

6) refusal of unreliable partners and of the actions connected with considerable probability of realization of risk;

7) increase in relative density of turnaround actives;

8) search of "guarantors" introduction of any administrative decision[2].

At a stage of risk neutralization (minimization) the most widespread in practice is use of following methods:

1) methods of risk localization: allocation of "bottlenecks" in structurally or financially independent divisions of the enterprise (an internal venture);

2) methods of risks minimization or risk deduction within the comprehensible: limitation of financial risks: an establishment of the minimum sizes high liquid enterprise actives, an establishment of the limiting size of extra means in economic circulation; an establishment of the maximum size of the depositary contribution placed in one bank; limitation of concentration of risks, reception from counterparts of certain guarantees by granting of commercial credits and loans; sale of the goods on the terms of financial leasing;

3) methods of risks dissipation: integration responsibility distribution between partners in manufacture; a diversification of kinds of activity, commodity markets and managing zones, expansion of a circle of partners-consumers and partners-suppliers of raw materials, materials, etc.; distribution of risks on work stages on time; a diversification of an investment, currency and depositary portfolio of the enterprise, a diversification of a portfolio of securities; hedgings [ 3].

Simultaneously, in parallel with the prevention of development of risks and neutralization of threats, maintenance of financial safety of the enterprise can provide indemnification of possible losses. Overcoming or minimization of negative consequences of realization of risks is based on it. The most widespread in practice of a finance administration by methods of indemnification of risks are: reservation of a part of financial resources for maintenance of overcoming of negative financial consequences: formation of insurance fund of the enterprise according to requirements of the current legislation and formation of target reserve funds; introduction "awards for risk" and systems of penal sanctions; introduction of strategic planning; introduction of "aggressive" marketing; lobbying of bills, probable risks neutralized or compensating factors; issue of convertible preference shares; struggle against industrially-economic espionage; insurance of financial risks: results of economic activities, non-material actives, financial investments; creation of associations, mutual support and help funds, creation regional or branch structures of a mutual insurance and reinsurance systems.

Conclusions. Success of subjects activity appreciably depends on the accepted concept of risks management. The mechanism of financial risks neutralization is based on use of methods set and receptions of possible financial losses reduction .

The basic methods of financial risks neutralization concern: avoidance of risk, risk deduction, minimization of risks, risk transfer. Minimize financial risks the enterprise can as by an establishment and use of internal financial specifications in the course of working out of the program of certain financial operations realization or financial activity of the enterprise as a whole, and uses of external insurance.

References

1. Hlistunova N.V. Financial risks and solvency of the enterprises / / Actual problems of economy. – 2003. – № 7(25). – p . 63 – 68.

2. Vushnivska B. Methods of financial risks minimisation / / The Economist. - 2007. - № 6 - p. 58 -59

3. Kramarenko G. O. Chorna O.E. Financial management: the Textbook. - Kiev : the Center of the educational literature, 2006. – 520p.