ENTERPRISE FINANCIAL RISK MANAGEMENT

Abstract

The functioning of any enterprise as a complex production and economic system is characterized by uncertainty about the results of activities. The level of uncertainty depends on the entity’s activities, its time horizon, the state of the environment and other factors. The objective conditionality of risk, when it cannot be completely avoided, requires conscious management. In this context, the essence of risk, the sources that determine it and the mechanism of its avoidance need in-depth knowledge. The article considers the essence of financial risk, identifies sources of uncertainty and establishes the origin of financial risk. Financial risk is caused by the uncertainty of natural, human and economic factors that under adverse conditions can lead to losses in economic and financial activities. The study and consideration of uncertainty and risk has become one of the main problems in the development of domestic enterprises. Since business is associated with risk and profit. Risk identification and analysis are closely interrelated and involve the choice of risk management method to minimize losses. The net profit (loss) of enterprises in Ukraine and in Zhytomyr region is analyzed by main types of economic activity in 2014-2018. It is established that the share of profitable enterprises has increased, but the number of unprofitable enterprises is quite large. From year to year the situation is quite variable, as entrepreneurial activity requires the presence of financial risk. The main stages of risk management are identified, through which the company becomes more resistant to unforeseen circumstances, especially to different types of risks. A block diagram of monitoring the financial risks of the enterprise has been built, with the help of which business entities will be able to react quickly to unforeseen events. Recognition of financial risk will allow to establish the factors that generate it, so businesses will be able to assess the degree of occurrence and amount of financial losses. Taking into account the main stages of risk management and the application of a block diagram of monitoring the financial risk of enterprises will help businesses to prevent, identify and avoid the investigated risk.