Research on Enterprise Financial Risk Conduction Mechanism Based on System Dynamics

Abstract

Affected by the COVID-19 pandemic and the economic situation, many enterprises have fallen into financial crisis. In order to explore the causes of enterprise financial risk and the conduction path of risk sources, this paper starts from the theory, characteristics, and path of financial risk conduction, combines Hall three-dimensional structure and system dynamics models, establishes the path of enterprise financial risk conduction (causality graph), and combines the value-at-risk VaR model to measure the risk. Based on this methodology, a three-dimensional multiple risk interaction and dynamic–static combination of an enterprise financial risk conduction model is established, aiming at identifying the sources of financial risk in different periods and providing timely risk control countermeasures to avoid financial crises. This paper does not refine some of the indicators and takes into account the probability of different scenarios and/or the number of trigger strategies to avoid or reduce risk. In the future, refining the indicators to include considerations such as production technology will enable a more robust model of corporate financial risk conduction.