Risk assessment and hedging as the basis of financial security of the enterprise

Abstract

Financial security is the basis for the effective development of any economic agent; it is especially important for enterprises, since their financial security underlies the security of both households and the state. This article examines the risks that can lead to the loss of the financial security of an enterprise, which the author classified into: general economic, industry- specific and risks of a particular enterprise. Hedging financial security risks will be most effective if the management of the enterprise evaluates the risks, using the classification proposed by the author. The financial security of an enterprise depends on the financial resources necessary for its normal condition, ensuring their placement and efficient use, financial stability with other legal entities and individuals, solvency and financial stability, as well as on the efficiency of the operating, financial and other activities of the enterprise. By the financial condition one can judge the solvency, liquidity and financial stability of the enterprise. In a market economy, defining the boundaries of an enterprise's financial security is one of the most important economic problems, since insufficient financial stability can lead to a shortage of funds for enterprises, and to their insolvency and, ultimately, bankruptcy, as well as "excessive" stability will slow down development, burdening the enterprise with excess inventories and reserves. Financial security should be considered taking into account the risks that arise both at the level of the economy as a whole, and at the level of the industry and at the level of the enterprise itself. UDC: [330.131.7:336]:334.72. JEL: D61, G32. DOI: https://doi.org/10.53486/escst2023.12.