Scenario Approach To Quantitative Assessment Of Financial Risks Of The Company

Abstract

There are many original and interesting works in the economic literature that describe the problems of the financial risk assessment of an enterprise. The financial risks of companies can be situational, because each market situation is highly volatile and unpredictable. According to the author, a scenario approach is needed to conduct a quantitative assessment of the company's financial risks. To take effective measures to manage financial risks, in particular interest rate risk, the company needs to simulate practical situations and quantify this risk for each situation. When the main risks accompanying the company's activities are identified and analysed, for their further quantitative assessment and planning of optimization measures, the risk prioritization procedure is carried out. Risk prioritization-risk analysis in order to determine the most critical in terms of probability and damage and, accordingly, the most priority for the company.The scenario approach is a tool that allows you to quantify each financial risk, establish the real capabilities of the company and select the best ways and mechanisms to reduce risks. Scenario approach is a flexible tool that provides an opportunity to choose development options. It allows you to configure the financial model of the company for specific tasks. With the help of the scenario approach, you can see different development options, choose optimal ways to achieve a strategic goal and conduct a sensitivity analysis in order to understand what factors affect the business.