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Abstract

Risk management as a basis for ensuring the sustainability of a modern economic system at micro level

Content

Introduction

The management of financial and economic sustainability of an enterprise is carried out under conditions of uncertainty caused by the dynamism of scientific progress, instability of the political situation, increased competition in commodity and financial markets, increased globalization processes and a lack of information, as well as the presence of various ways and options for transforming opportunities into management.

The essence of uncertainty as an objective form of the existence of the environment leads to the emergence of a numerous set of risks affecting the activities of enterprises, as a result of which the actual results of each specific economic decision may significantly deviate from the planned ones, leading to a decrease in the efficiency of activities and destabilization of the economic entity.

1. Recent research and publications analysis

The set of scientific developments regarding the problems of risk management in the context of sustainable development is significant, and includes the work of famous Russian and foreign scientists: V. A. Shvandara, A. D. Kanchaveli, A. A. Kolobova, A. S. Vaganova, A. A. Lobanov and A. V. Chugunov, V. M. Granaturov, G. B. Kleiner, I. T. Balabanova, E. A. Utkina, A. Moore, K. Hlarden and others whose works they are devoted to the study of risk nature, the determination of factors and causes of its occurrence, the characterization of methods for assessing the degree of risk and the means of its management. The complex process of transformation of economic relations in Russia and the world requires the deepening of theoretical and practical developments in risk management of economic activities. At present, practical aspects of risk management are not sufficiently covered, taking into account industry specifics, and there is an urgent need to create an integrated economic risk management system that would be adapted to current trends in the development of economic processes in the country and the world and aimed at ensuring sustainable development.

2. Purpose of the study

The aim of the study is to clarify the nature of risk as a factor affecting the sustainability of the economic system, as well as the development of a scheme for managing the sustainability of an enterprise with regard to risk management.

3. The main results of the study

System stability is a dynamic, complex, complex and multifaceted concept that can be interpreted in relation to each level of economic systems (pic. 1) [1].

Figure 1 – Interpretation of the concept of "sustainability of the system" in the economy in relation to an enterprise
(animation: 7 frames, endless cycles of repeating, 110 kilobytes)

Based on the analyzed literary sources, it is possible to formulate the definition of an enterprise’s economic sustainability as its ability to respond, through mechanisms of opposition or adaptation, to changes in the external and internal environment, with the aim of not only preserving and shaping factors that ensure its self-preservation and effective functioning at the current time, but and to contribute to its further development [2].

Considering the definitions and the nature of risk, it should be noted that the scientific literature interprets the concept of risk and risk management in different ways, determines its features, properties, elements and functions. The ambiguity of the approaches is explained by the use of various methodological foundations in studying this problem, since risk management is a complex multidimensional and multilevel phenomenon, which is characterized by components having a multi directional impact on the control object.

The concept of risk should be interpreted in the following aspects:

  1. risk as a danger or threat. Within the framework of this concept, negative events that lead to damage for a person and an enterprise are considered, and by risk is meant the possibility of occurrence of events with negative consequences, that is, the possibility of realizing the perceived danger. Risk management in this case describes the technique of reducing the likelihood of the occurrence of negative events and (or) the consequences of them with the help of measures that require reasonable costs.
  2. risk as an opportunity – is based on the concept of the existence of a relationship between risk and return. Therefore, in accordance with Ozhegov’s dictionary, risk is an action at random, in the hope of a happy accident. The higher the risk, the higher the potential return. Such a concept of risk is more closely related to chance, and risk management means using the technique of maximizing income while limiting or minimizing losses.
  3. risk as uncertainty – appeals to such a theoretical concept as the probabilistic distribution of possible results (positive and negative). Within the framework of this concept, risk is a measure of inconsistency between different outcomes of decisions, which are evaluated by their usefulness, harm, and effectiveness according to criteria corresponding to the chosen benchmarks. This concept is used in decision theory, in the face of uncertainty and game theory. From this point of view, risk management has as its subject a reduction in the variance between expected outcomes and actual results [3].

Formulating integral definitions of the studied concepts, one can suggest to understand risk as the possibility of an event occurring under conditions of uncertainty associated with deviations from the predicted result, which give rise to the instability of economic systems. Risk management is a system for managing risk and economic relations arising in the process of this management, which allows increasing the stability of the activity of functional business units.

Based on the generalization of economic practices formulated the postulates of:

  1. Overall risk profile.
  2. Burden of risk forecasts.
  3. The need to quantify and evaluate risk.
  4. Changes in the structure and degree of risks under the influence of changes in the external and internal environment, the actions of a number of objective and subjective factors.

All objects of risk are systems – sets of elements of an arbitrary nature, having connections and forming a certain integrity, the effectiveness and conditions of operation of which are not precisely defined in advance. At the micro level, a separate enterprise, an industry, a sociocultural community of people of a certain territorial unit can be an object of risk; at the macro level – country, region and the like [4].

Establishing the relationship of risk and sustainability, we consider the current level of risk as an indicator reflecting the strength of the influence of internal and external factors and the strength of resistance to it from the subject of management. Then the risk level is a point showing on a certain assessment scale the state of the internal and external environment of the enterprise, corrected for the strength of the managerial influence, that is, any changes are reflected in the risk level. If the risk level is within the limits acceptable for the enterprise, then the condition of the enterprise satisfies the condition of sustainability. The risk mechanism, remaining within the limits specified to it, is constantly evolving, which cannot but affect the state of the enterprise in a similar way. From this it follows that the accuracy of the risk management mechanism determines the sustainability of the enterprise’s development, that is, it emphasizes the strategic goal of risk management - the preservation of the sustainable development of the enterprise.

It is necessary to note one more relation between risk and sustainability. It is known that sustainability is caused by the action of two polar tendencies, one of which is associated with the reproduction and preservation of the old systemic qualities (system-forming, or in other words negative), while the second, on the contrary, provides a positive ability of the system to adapt to new conditions, changes in the external environment. An enterprise with a high level of risk (one that pursues an active innovation, investment policy) ensures high positive resilience. An enterprise with a low level of risk (which adheres to the so-called conservative innovation and investment policy) ensures high negative resilience [5].

On the basis of modern developments in the theory of risk, we can distinguish two goals of enterprise risk management. The first (strategic) goal is to ensure (maintain) the sustainable development of the enterprise [6].

The second (current) goal assumes the content of the risk value within the limits (limits) acceptable for the enterprise.

It should be noted that a detailed analysis of the risks that affect the stability of the enterprise allows identifying the potential hazard and its sources, and having assessed the consequences, take measures to localize or minimize the negative manifestation of risk factors. An important tool to ensure the financial sustainability of an enterprise in the long run is a set of measures and risk management procedures that affect its level [7].

Noteworthy is the study of the actual risk management process, by which we understand the systematic work that combines a set of measures to identify and analyze risks, to develop and implement measures to optimize risk management. In an industrial enterprise, risk management is based on the concept of acceptable risk, providing for the possibility of rational influence on the level of risk and bringing it to an acceptable value [8].

In our opinion, the subsystem for managing the risk of the financial sustainability of an enterprise, as an integral component of the strategic management system for the financial sustainability of an enterprise under uncertainty, is implemented as a two-stage set of measures for assessing and managing the risk of reducing sustainability (pic. 2).

Figure 2 – Resilience management process diagram with a risk management subsystem

This approach is due to the double response of strategic management to external changes: long-term and operational at the same time. The long-term response is embedded in strategic plans, and the operational one is implemented in real time. Therefore, the enterprise risk management subsystem should provide for monitoring and managing risks both when making strategic decisions and when implementing them through tactical and operational decisions.

Conclusion

In modern economic conditions, characterized by a high level of uncertainty, the achievement of the strategic goals of enterprises and ensuring their long-term sustainability is impossible without taking into account the possibility of the occurrence of a risk event involving deviations from plans. Building an effective system of strategic management of financial sustainability, including a risk management subsystem, will help increase the sustainability of business entities in the context of growing competition and instability in the domestic and global markets.

References

  1. Risks in the economy: Textbook. manual for universities / ed. prof. V. A. Shwandar – M.: UNITY-DANA, 2002. - 380 p.
  2. Blank I. A. Financial strategy of the enterprise. – K.: Elga, Nick Center, 2004. – 720 p.
  3. Strategic management of organizational and economic sustainability of a company: Logistics design of business / A. D. Kanchaveli, A. A. Kolobov, I. N. Omelchenko et al. Ed. A. A. Kolobova, I. N. Omelchenko. – M.: Publishing House of Moscow State Technical University. N. E. Bauman, 2011. – 600 p.
  4. Beloshapka V. A., Zagoriy G. V. Strategic Management / V. A. Beloshapka, G.V. Zagoriy. – K .: Absolute – 2008. - 258 p.
  5. Vaganova A. S. Scientific and methodological aspects of risk controlling in industrial enterprises: author. dis. for competition uch. degree of candidate econ sciences. : special 08.00.05 Economy and management of national economy / A. S. Vaganova. – Nizhny Novgorod, 2010. – 24 p.
  6. Yahneeva I. V. Controlling in the risk management system / I. V. Yakhneev // RISK, 2013. ¹1. – p. 75-79.
  7. Makarova V. A. Formation of the risk management system at the enterprise / V. A. Makarov // Vestnik of PskovSU Series Economic and Technical Sciences 4. – 2014. – P.98-108.
  8. Kravchenko A. V. Basic principles and advantages of a risk management system integrated with business processes / A. V. Kravchenko, A. S. Yafasova // Management of economic systems. – 2013. ¹4 (25). – C.30-33.