Financial Risk Management Practices Research Articles

Analysis of ABSL Multicap Fund and Textile sector with Innerwear and Hosiery as a Subsector with reference to Lux Industries Ltd

The internship project entitled "Analysis of ABSL Multicap Fund and Textile Sector with Innerwear and Hosiery as a subsector with reference to Lux Industries Ltd." was taken up at Aditya Birla Sun Life Ltd. by Rohan Ganesh Kolhapure. The project would involve assessing the performance, strategies, and market positioning of the ABSL Multicap Fund for the period between June-August 2024. This also included assessing the textile sector dynamics, with special inward titude toward the innerwear hosiery subsector, using Lux Industries Ltd as a case study. The main tasks were related to the assessment of historical performance of ABSL Multicap Fund and its investment strategies, as well as the analysis of sectoral trends influencing the innerwear market. Specific methodologies included quantitative analysis of financial statements, asset allocation, and risk management practices, in addition to strategic frameworks like SWOT, PESTEL, and Porter's Five Forces.

The Financial Risks in Toll Road Development in Indonesia: Challenges and Development Strategies for the Probowangi Toll Road

Probolinggo-Banyuwangi toll road, which crosses mountainous areas in East Java. Toll road construction in areas with varying topography often faces significant technical and environmental challenges, which can affect costs, completion time, and project sustainability. This study uses a quantitative approach with a descriptive method to evaluate risk factors that impact project finances, such as construction costs, dependence on funding sources, interest rate fluctuations, and traffic volume predictions. Primary data was collected through questionnaires, while secondary data was obtained from financial planning documents and related project topography. Data analysis was conducted using multiple linear regression with a path analysis model. The results of this study are expected to identify key variables that influence financial risk and provide recommendations for effective mitigation strategies. This research is expected to contribute to the development of policies and financial risk management practices for similar infrastructure projects in the future.

Research on the Application of Blockchain Technology in Financial Risk Management

This paper explores the application of blockchain technology in financial risk management. By analyzing foundational blockchain concepts such as public and private chains, smart contracts, and consensus mechanisms, the paper first illustrates how blockchain is transforming financial risk management practices. Additionally, it highlights challenges related to scalability, interoperability, and regulatory/legal barriers. Finally, the paper discusses innovative opportunities that blockchain presents for financial risk management, aiming to provide financial institutions with new strategies and insights to tackle modern financial challenges.

Managing Financial Risks of Global Companies Through Corporate Social Responsibility: The Specifics of Sustainable Employment in Developed and Developing Countries

The motivation for this research was the desire to disclose the social nature of the financial risks of global companies: the authors attempted a scientific explanation of the influence of corporate social responsibility, which is manifested through the preservation and creation of additional jobs, on the financial risks of global companies. The research aims to establish the interdependence between financial risks and sustainable employment in global companies. This goal is achieved using the SEM (structural equation modeling) method based on corporate statistics from the Fortune “Global 500” rankings for 2021–2023. As a result, the consequences of global companies’ CSR (corporate social responsibility) practices in personnel management and financial risk management are modeled and described through quantitative and qualitative patterns. The established regularities proved that for developed and developing countries, the larger the number of employees, the lower the financial risks of global companies—the risk of a decrease in profitability, the risk of loss of profit, and the risk of depreciation of assets. The main conclusion is that there is a close systemic relationship between the financial risks of global companies and their workforce size, suggesting that CSR is key to highly effective financial risk management. A clear distinction between the practices of financial risk management through CSR in developed and developing countries forms the basis of the theoretical significance of the research results. The authors provide recommendations to improve the current practice of financial risk management in global companies by integrating it more closely with personnel management practices, highlighting their managerial relevance. It is proposed that corporate strategies for global companies in developed countries should focus on reducing the risk of declining profitability, as CSR has the most pronounced and consistent impact on this particular financial risk. In developing countries, corporate strategies are recommended to be structured by diversifying the areas of CSR application, with the most promising in financial risk management being the reduction in asset depreciation risk and the reduction in profitability risk. The findings of this research have practical significance because they enhance the predictability of CSR activities of global companies and open up opportunities for highly accurate forecasting of the financial risk implications of ensuring sustainable employment by global companies, considering the specificities of developed and developing countries.

The impact of predictive analytics on financial risk management in businesses

This paper examines the impact of predictive analytics on financial risk management in businesses. Predictive analytics involves the use of statistical algorithms, machine learning, and data mining techniques to analyze historical data and predict future outcomes. In the context of financial risk management, predictive analytics plays a critical role in identifying, assessing, and mitigating potential financial risks. This paper explores various machine learning algorithms, including neural networks, decision trees, and support vector machines, and their applications in risk management. It also discusses data sources, preprocessing techniques, and the challenges associated with data privacy, model interpretability, and prediction accuracy. The review highlights successful implementations of predictive analytics in financial risk management and provides recommendations for future research and practical applications. As predictive analytics continues to advance, its integration with emerging technologies such as artificial intelligence and blockchain promises to enhance financial risk management practices.

Financial Risk Management in Healthcare in the Provision of High-Tech Medical Assistance for Sustainable Development: Evidence from Russia

The research determines the level of financial risk in the Russian healthcare system and identifies prospects for improving the current Russian practice of financial risk management in healthcare when providing high-tech medical care for sustainable development (using Russia as an example). The author summarizes the advanced experience of the top 20 largest healthcare organizations in Russia by revenue in 2022. Based on this experience, the author developed an SEM model of the financial risks in healthcare during the provision of high-tech medical care in Russia from a sustainable development perspective. The theoretical significance of the developed model lies in uncovering the previously unknown causal relationships between the implementation of the ICT, sustainable development support, and financial risks in healthcare. The model reveals a new market dimension of financial risks for healthcare organizations in Russia. The main conclusion is that implementing the ICT and support for sustainable development helps to reduce the financial risks in healthcare. The identified potential for reducing financial risks in providing high-tech medical care in Russia until 2026 is practically significant. This prospect can be practically applied as a roadmap for the digital modernization and sustainable development of healthcare until 2026, enhancing the state healthcare policy in Russia. The established systemic relationship between ICT implementation, sustainable development support, and financial risks in healthcare is of managerial importance because it will increase the predictability of the financial risks in the market dimension of healthcare in Russia. The newly developed approach to risk management in healthcare during the provision of high-tech medical care in Russia has expanded the instrumental framework of risk management for healthcare organizations in Russia and revealed further opportunities for improving its efficiency.

LEVERAGING ARTIFICIAL INTELLIGENCE (AI) IN PUBLIC SECTOR FINANCIAL RISK MANAGEMENT: INNOVATIONS, CHALLENGES, AND FUTURE DIRECTIONS

This paper examines the transformative role of Artificial Intelligence (AI) in enhancing financial risk management practices within the public sector in different context. With the increasing complexity of financial markets and the growing demand for transparency and efficiency in public finance management, traditional methods of risk identification and mitigation are proving to be inadequate. AI and machine learning technologies offer a promising alternative, with their ability to process vast amounts of data, recognize patterns, and predict future trends with a high degree of accuracy. We delve into the application of predictive models for identifying various financial risks, including credit, market, liquidity, and operational risks, and explore how AI algorithms can optimize decision-making processes through scenario analysis, resource allocation, and policy impact analysis. The paper also addresses the challenges associated with integrating AI into public financial management systems, such as data privacy concerns, the need for skilled personnel, and the importance of developing regulatory frameworks that ensure ethical use and transparency. By presenting case studies and real-world applications, this study highlights both the successes and failures of AI implementations in the public sector, providing valuable lessons learned and best practices. As AI technologies continue to evolve, this paper underscores the need for ongoing research and adaptation to fully realize their potential in making public sector financial risk management more proactive, efficient, and resilient.

A Study on Financial Risk Management Practices of Micro Finance Institutions

A Study on Financial Risk Management Practices of Micro Finance Institutions

Fınancıal sustaınabılıty and rısk in antı-agıng startups

Abstract The anti-aging industry has experienced rapid growth driven by significant advancements in biotechnology, consumer interest in longevity, and substantial investment. This study explores the financial sustainability and risk management practices of anti-aging startups, highlighting key challenges and opportunities. Through case studies, the research examines funding strategies, regulatory hurdles, and market dynamics. Successful startups demonstrate robust financial planning, strategic partnerships, and innovative technological approaches, while unsuccessful ventures reveal the high risks associated with clinical development. The findings underscore the importance of comprehensive risk management and strategic financial planning in achieving long-term sustainability. This research provides valuable insights for entrepreneurs, investors, and policymakers aiming to navigate the complex landscape of the anti-aging market.

EXAMINING THE FINANCIAL RISK MANAGEMENT OF DONOR FUNDS: CASE OF MINISTRY OF HEALTH IN ZAMBIA

<p>This study examines the financial risk management of donor funds using the Ministry of Health (MOH) in Zambia as a case study. The study employs an exploratory case study methodology on a sample of 224 MOH employees. Zambia, being a developing country, significantly relies on donor funds to support its healthcare sector. Prudent management of donor funds is crucial for the sustained delivery of quality healthcare services. However, there has been concerns regarding the financial risk management practices at the MOH in the efficient utilization and accountability of donor funds. From the literature review, it seems no study has been done regarding the financial risk management of donor funds focusing on the MOH in Zambia. Therefore, this study fills this gap. The study findings seem to show evidence of the misappropriation of donor funds exhibited by misallocation of donor funds to unplanned projects or activities. The misappropriations of donor funds seem to be amplified by a lack of strategic planning, lack of coordination, and the absence of effective monitoring and evaluation systems. Additionally, fraud and corruption posed significant risks to donor funds at MOH. Therefore, to mitigate the risks, the study recommends that robust anti-misappropriation measures, enforcement of due diligence on implementing partners, a thorough review of procurement processes, and regular monitoring and evaluation of donor-funded projects be strengthened at the MOH in Zambia. Whistleblower protection and reporting mechanisms should be promoted to help detect and deter fraudulent activities at this Ministry.</p><p><strong> </strong></p><p><strong>JEL:</strong> H51, I18, O23</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0787/a.php" alt="Hit counter" /></p>

Efficiency and financial risk management practices of microfinance institutions

AbstractMicrofinance institutions (MFIs) have evolved in different and complex ways to solve various market frictions, with some of them providing a wide range of financial products and using different lending technologies to reach poor and underserved populations. As a result, some MFIs are more efficient than others, but are efficiency gains aligned with risk management practices? The specific characteristics of the microfinance industry make the answer to this question less obvious than that of commercial banks. This paper tries to shed light on these issues by analysing the efficiency and risk management of MFIs and describing the potential implications of these relationships for the microfinance industry. After considering several measures of financial risk management ratios commonly used in the microfinance literature, our results show that cost efficiency improves asset quality and solvency of MFIs, but also reduces the need for holding idle cash or liquid assets. The results of this paper can help academics, policymakers, and regulators to better understand the impact of cost efficiency on financial risks management practices in the microfinance industry.

Influence of Audit Committee Competence on Financial Performance of Deposit-Taking SACCOs in Nairobi County, Kenya

There is a continued trend of fraud and poor performance in most SACCOs in Kenya. Despite the presence of audit committees in SACCOs, members'/shareholders' savings have been left at risk of fraud and mismanagement. None of the studies reviewed has focused on the manner in which audit committee competence affects financial performance in DT-SACCOs in developing countries such as Kenya. This study aims to establish the influence of the competence of the audit committee on the financial performance of deposit-taking SACCOs in Nairobi County, Kenya. This study was based on the Lending Credibility Theory. This study used a correlational research design. The study targeted all the 47 deposit-taking SACCOs in Nairobi County, Kenya. Two audit committee members, the CEO, Internal Auditor, Finance Officer and two members in each deposit-taking SACCO formed the unit of observation. Therefore, the target population was 329 respondents. The study adopted census sampling techniques. The researcher used questionnaires for data collection. The study piloted the questionnaire on 25 SACCO members from 5 SACCOs in Kiambu County, representing 10% of the 47 deposit-taking SACCOs in Nairobi County. Qualitative data were analyzed using content analysis and presented in prose form. Quantitative data collected were analyzed using SPSS version 26. To determine the direction and how strongly the variables are related, the study computed Pearson correlation. The influence of independent variables (audit committee competence) on the dependent variable (financial performance of DT-SACCOs in Nairobi County, Kenya) was determined by computing multiple regression analysis. The findings were presented in tables and figures. The study concludes that audit committee competence has a positive and significant effect on the financial performance of deposit-taking SACCOs in Nairobi County, Kenya. The study recommends that the management of Deposit-taking SACCOs in Nairobi County, Kenya, should provide training and capacity-building programs for audit committee members to enhance their skills and knowledge. This should focus on areas such as financial literacy, risk management, and governance practices.

Navigating Uncertainty: Assessing the Impact of Financial Risk Management on Organizational Performance: Evidence from Insurance Companies in Pakistan

In an era marked by economic volatility and global uncertainties, the effectiveness of financial risk management strategies is crucial for businesses, particularly in the financial services industry. This research investigates the relationship between financial risk management (FRM) practices and organizational performance, specifically within the insurance sector in Pakistan. Moreover, the study aims to explore the role of financial risk management in enhancing the performance of insurance companies operating in the Pakistani market. It establishes a research model based on Financial Risk Management (Market Risk, Operational Risk, Liquidity Risk, and Legal Risk) and Organizational Performance (ROE). Researchers surveyed 13 insurance companies in Pakistan using non-probability and convenience sampling techniques and analyzed the data using EViews. The results indicate a significant and meaningful link between organizational success and financial risk management. This study seeks to incorporate best practices and focuses on developing a comprehensive understanding of the influence of organizational performance and financial risk management strategies.

Effect of Financial Risk Management Practices on Profitability of Listed Companies in Rwanda: A case of CIMERWA PLC (2020-2022)

Effect of Financial Risk Management Practices on Profitability of Listed Companies in Rwanda: A case of CIMERWA PLC (2020-2022)

Fractional Brownian motion in option pricing and dynamic delta hedging: Experimental simulations

This research examines the impact of fractional Brownian motion (fBm) on option pricing and dynamic delta hedging. Through experimental simulations, we analyze the influence of the Hurst exponent on option price prediction. Our findings highlight the necessity for continuous calibration of the Hurst exponent for a specific market dataset. By estimating option prices using fBm, we evaluate price prediction accuracy and explore fBm’s benefits in option pricing models. We also investigate dynamic delta hedging strategies for call options within the fBm framework, providing an algorithm and code that consider the Hurst exponent. The study’s insights contribute to advancing financial modeling and risk management practices, illuminating the dynamic nature of market phenomena and underscoring calibration’s significance in capturing market dynamics. The findings emphasize the dynamic interplay between the Hurst exponent and option pricing, offering valuable implications for effective risk management strategies.

The Strategic Imperative of Treasury and Financial Risk Management in a Volatile Economic Landscape

Purpose: This study investigates the strategic imperative of treasury and financial risk management in volatile economic landscapes. It focuses on the importance of robust risk management practices in navigating market uncertainties, technological disruptions, and regulatory changes to enhance organizational stability and value creation. Research Design and Methodology: Employing a quantitative descriptive approach, this research analyzes existing literature and empirical data on treasury and financial risk management practices. It involves thematic analysis and synthesis of key themes and trends, with data collected from academic journals, books, and reputable databases. Findings and Discussion: The study reveals that effective risk management practices are crucial for mitigating market, credit, liquidity, and operational risks in volatile economic environments. Advanced technologies like AI and blockchain, alongside regulatory compliance, play pivotal roles in enhancing risk assessment and management capabilities. Also, fostering a risk-aware culture and promoting employee risk management literacy is essential for organizational resilience and agility. Implications: The findings underscore organizations' need to integrate advanced risk management strategies and technologies into their treasury functions. Policymakers and practitioners should enhance regulatory frameworks and foster innovation to ensure robust risk management. Future research should explore the interplay between organizational culture, governance structures, and regulatory environments in shaping effective risk management outcomes.

The impact of financial technology and risk management practices on corporate financial system profitability: evidence from Kuwait

A vital element of the stability of banking institutions is the presence of an effective risk management system, as well as the financial stability of the corporate sector of the economy in terms of the fulfilment of assumed credit obligations. This study investigates the relationship between financial technology (Fintech) adoption, risk management practices and corporate profitability in Kuwait. The object of the study was 62 industrial enterprises registered on the stock market of Kuwait as of 2022. Methods of descriptive statistics, least squares method for estimating regression model parameters, and correlation analysis served as methodological tools of this study. This study aims to overcome the gaps in theoretical justification and empirically prove the existence of a relationship between the implementation of financial technologies and risk management methods. The results showed a positive correlation between the development of financial technologies and return on assets (correlation coefficient 0.6540), which indicates that implementing innovative financial technologies will contribute to improving the efficiency of banking institutions. The strong and positive correlation between the effectiveness of risk management and the profitability of business entities emphasizes the importance of responsible risk management practices for increasing banking institutions’ profitability. Based on the results of building a regression model, it was established that fintech has a significant impact on indicators of the return on equity of economic entities (р<0.050, t = 1.7700). The originality of this study lies in its focus on Kuwait and the Middle East as a whole and in its exploration of the relationship between corporate financial system profitability, risk management strategies and Fintech adoption. The use of innovative technologies (advanced analytics, artificial intelligence and blockchain) increases the effectiveness of risk management, which contributes to rational decision-making and a better understanding of the banking institution’s potential risks and development opportunities. This study contributes significantly to the existing literature by highlighting the relationships between financial technology innovation adoption, risk management and business financial performance in a market environment in the Middle East.

The Effects of Risk Management Practices on Financial Performance: An Empirical Analysis on Islamic Banks

Risk is an inevitable reality for financial institutions, and once it is known, the main activity to be done is an effective risk management.The purpose of this study is to empirically analyze the effects of risk management practices on financial performance in Islamic banks. This study examines the effect of risk management practices on the financial performances of three Islamic banks operating in Türkiye through regression analysis. The data set of the study consists of a panel data containing 180 observations in total. Return on equity and return on assets, which are used as indicators of banks' financial performance, are dependent variables of the model. The financial ratios used to represent risk management are the independent variables of the model. The findings reveal that leverage ratio and asset utilization ratio have statistically significant effects on the performance of Islamic banks. The results of the study support the findings and arguments in the established body of previous literature. The findings obtained within the scope of this study could be used as guidance for the banks in their financial risk management practices and they will shed light on the future studies.

Financial Risk Management Practices on Financial Performance of Microfinance Institutions in Kiambu County, Kenya

Purpose: MFIs are subject to financial risks, just like all other financial institutions. This is intimately tied to their primary businesses of managing credit and accepting deposits. Therefore, risk management is crucial for MFIs in order to maximize their return on investment. The current study sought to establish the effect of financial risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The study focused on establishing the effect of liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The theories anchoring the study comprised of Risk Management Theory, Extreme Value Theory, Credit Risk Theory, and Capital Market Theory.
 Methodology: A descriptive survey research design was adopted in the study. The target population comprised of 31registered microfinance institutions operating in Kiambu County. The unit of observation comprised of Risk and Compliance Manager, Finance Manager, Operations Manager, Credit Manager, and Business Development Manager from each of the microfinance institution making a total of 155 respondents. A census approach was adopted in the study where all the registered microfinance institutions were involved in the study. Both primary and secondary data was employed in the study where 5-point Likert scale questionnaires were employed to gather primary data while a secondary data collection sheet was utilized to gather secondary data. Both descriptive and inferential statistics were used to analyze the collected data. The statistics were generated by help of Statistical Package for Social Scientist and MS Excel.
 Findings: The results of the analysis revealed that Liquidity Risk Management Practices, Operational Risk Management Practices, Credit Risk Management Practices, and Market Risk Management Practices positively and significantly affects financial performances of microfinance institutions in Kiambu County, Kenya as shown by beta values of 0.401, 0.309, 0.497 and 0.351 and significant values of 0.000. 0.001, 0.000 and 0.006 respectively.
 Unique contribution to theory, practice and policy: The results implies that when each of the independent variable is increased with one unit, financial performance of the microfinance institutions increases with the respective beta value of the independent variable. The results led to conclusions that liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices bears appositive and significant effect on financial performance of microfinance institutions in Kiambu County. The study provided recommendations to the management of the microfinance institutions to enhance their practices in areas of liquidity risk management, operational risk management, credit risk management, and market risk management to improve financial performance to a positive and significant level.

RESEARCH OF THE EPISTEOLOGY AND DEVELOPMENT OF FINANCIAL RISK MANAGEMENT: ORIGIN, CONCEPTS, PROSPECTIVE DIRECTIONS

Goal – research of financial rhysicology from the standpoint of modern theoretical and practical requirements, identification of existing problems in the theory and practice of financial risk management and determination of directions for its further development in order to increase the effectiveness of practical financial management of enterprises in conditions of increased uncertainty of the environment in which they (enterprises) operate. Method. To achieve the goal, analytical studies were performed and scientific methods were used, in particular: content analysis of modern views and positions of domestic and foreign scientists regarding the definition and classification of entrepreneurial, economic and financial risks; the method of system analysis and portfolio factor analysis for structuring and determining the hierarchy in the risk system, a systematic approach in substantiating the unity of strategic, tactical and operational risk management; assessment of quantitative and qualitative methods of financial risk analysis, as well as methods of behavioral economics. The results. Considering the relevance of the topic, the main attention is paid to the analysis of financial rhysicology with an in-depth study of the complex of theoretical, scientific and practical aspects of this topic. The objective prerequisites for the formation and history of the development of financial rhysicology and its scientific connections with other related fields of scientific knowledge have been studied. The content analysis of the publications of domestic and foreign scientists in the field of financial risk management and those related to it made it possible to identify the main problems and unresolved issues that are currently inhibiting the development of financial management. It has been proven that such obstacles include, in particular: the vague definition of the specifics of financial risks and the lack of research into their systemic synergistic relationships with other risks; a certain disregard of the objective relationship between strategic, tactical and operational financial risk management and the absence of indicators of strategic, tactical and operational financial risks adapted to the conditions and features of a specific industry, enterprise, situation, etc.; insufficient development of financial risk assessment methods for the most risky types of activities or financial transactions; the need to develop and apply the manager's risk appetite in financial risk management; inadequate use of outdated, including foreign, methods and models in the methods of financial analysis and bankruptcy forecasting; excessive, sometimes unjustified, use of complex mathematical methods and models in financial risk management, which reduce the effectiveness of risk management. Scientific novelty. The conducted research has a scientific result: a system of portfolios of modern economic and economic risks that affect financial risks; substantiating the combination of strategic, tactical and operational financial risk management as a complete system – the triad of financial management; pragmatically priming transition from classical to neoclassical rhysicology; justification of changes in the methods of financial analysis and bankruptcy forecasting and the principled rejection of the use of outdated and therefore inadequate methods and models; substantiation of the application of elements of behavioral economics, in particular – the risk appetite of the financial manager, when making management decisions, which in the complex made it possible to form a list of the most relevant areas of further scientific research. Practical significance. The results of the study are aimed at improving the practice of making financial decisions and carrying out financial transactions taking into account the existing economic, economic and financial risks; should ensure the validity and improve the effectiveness of the relevant management actions. Key words: risk, classical and neoclassical rhysicology, content analysis, financial risk, financial management, system, financial analysis, risk appetite.