Business Risk Management Research Articles

Measuring business impacts on the sustainability of European-listed firms

The Environmental, Social, and Governance (ESG) themes assume a central position in the foundation of business strategies and risk management for both private managers and financial institutions. Measuring the sustainability commitment of listed companies is required by regulators and Monetary Authorities and plays a pivotal role in the selection process for asset management companies. ESG ratings are used to assess the company’s commitment to sustainability. This paper explores how a firm business, measured by balance sheet data, influences the ESG rating. In particular, we focus on Europe, which countries first paved the way for the sustainable transformation of the economy through various policies and initiatives. We employ a Machine Learning approach to discern the non-linear relationships between ESG ratings and corporate data aiming to identify the prime factors influencing the ESG ratings. We can assess potential country or business sector-based discrepancies by selecting a sample containing firms listed on the major European indices (AEX, BEL, CAC, DAX, FTSE, FTSE-MIB, IBEX, OMX). We find that the firm size, measured by total assets, and the carbon intensity are the variables that most influence the ESG rating in countries where the economic sectors rely mainly on the business cycle and economic conditions. For companies operating in the technology, financials, and industrial sectors, the main ESG driver is the asset turnover ratio, which is a measure of the efficiency with which a company generates revenues, and the EBIT to revenue, which is a measure of the operating margin asset turnover and the Earnings Before Interest and Taxes (EBIT) to revenue ratio. We discover diverse factors affecting ESG ratings across various European countries, highlighting the impact of each nation’s policy on ESG commitment.

An empirical investigation into the enhancement of decision-making capabilities in corporate sustainability leadership through Internet of Things (IoT) integration

This research investigates the impact of Internet of Things (IoT) applications on decision-making capacity (DMC) development in Corporate Sustainable Leadership (CSL). The research focuses on how IoT enhances Environmental, Social, and Governance (ESG) practices within organizations, addressing key sustainability challenges and supporting Sustainable Development Goals (SDGs). Through quantitative and qualitative analyses, the study identifies three primary findings: (1) IoT applications directly enhance power source management in the environmental domain, improving Business Strategy and Long-term Growth (BSLG) and Measurement and Reporting (M&R) capabilities. This is achieved through real-time monitoring, smart building management, and predictive maintenance. In the social sphere, IoT strengthens supply chain transparency, bolstering Stakeholder Management (SM) through real-time tracking and blockchain-integrated systems for product authenticity verification. IoT comprehensively empowers performing risk management in the governance realm, improving Organizational Culture (OC) through early warning systems and predictive analytics for risk mitigation. (2) IoT integration facilitates Data-Driven Decision Making (DDDM), Real-Time Responsiveness (RTR), and Business Risk Management (BRM), key components of IoT-DMC. Furthermore, it supports the development of Effective Stakeholder Management (ESM), Resource Efficiency (RE), and Sustainable Competitive Outcomes (SCO) within IoT-CSL. (3) While highlighting the potential of IoT in advancing CSL, the research also acknowledges challenges such as initial investment costs, data privacy concerns, technological complexity, energy consumption of IoT devices, and electronic waste management. The study concludes that successful IoT implementation in CSL requires careful planning, robust data management, and a holistic approach considering both benefits and potential drawbacks.

Legal due diligence as a procedure necessary for creating a virtual enterprise

The article is devoted to the disclosure of legal due diligence as a system of business risk management when creating a virtual enterprise. Determining the full picture regarding the counterparty of the virtual enterprise is necessary in view of the importance of compliance with the requirements imposed by the regulatory and legal acts of Ukraine, adopted in connection with the large-scale military invasion, as well as the requirements of the EU regarding countering terrorism, illegal drug trafficking. The conducted research made it possible to come to the conclusion that due diligence is a systematic check of a business entity or certain assets, real estate objects based on professional analysis and assessment of information in order to identify and determine the degree of potential risks in order to make a decision on the feasibility of concluding the relevant contract and definition of its essential conditions. One of the types of such verification is legal due diligence, which consists in a legal verification of the legality of the company’s activities or the right to a certain asset of the opposite party. It is especially important to conduct it when creating a virtual enterprise, as it allows you to establish the identity of the future counterparty-participant of the virtual enterprise and, in turn, avoid the risk of establishing contractual relations with an improper counterparty. The stages of conducting legal due diligence are as follows: a) drawing up a plan for conducting an inspection with the definition of the necessary information and the procedure for obtaining it; b) obtaining information necessary for legal analysis; c) legal analysis and verification of the received information with the formulation of conclusions about the possibility of creating a virtual enterprise; d) formalization of the obtained results in the form of a written The legal basis for conducting this type of inspection can be a contract for the provision of consulting or legal services, as well as a contract between the company in respect of which legal due diligence is performed and the company that orders it.

Abnormal CSR Performance and Auditor Litigation Risk

Recent studies provide evidence that corporate social responsibility (CSR) conscious firms are less likely to engage in high-profile corporate misconduct and be subject to SEC investigations, suggesting that auditor litigation risk may be lower for better CSR performers. However, we argue that the association between CSR performance and auditor litigation risk may not be linear for two reasons. First, for a given level of audit risk, the lower the perceived risk of material misstatement, the higher the actual detection risk. Second, ceteris paribus, an incorrectly assessed low audit risk acceptable for abnormally high CSR performance would also increase auditor’s actual detection risk. Using a matched sample analysis for the period of 2004 to 2013, this study finds that the propensity for auditors to be sued first decreases as CSR performance improves, but then increases with excessively high abnormal CSR performance. Further analyses indicate that the convexity of CSR performance on auditor detection risk arises from the inherent risk channel (client business risk, financial misreporting, and earnings management), but not from the control risk channel (internal control material weaknesses). This study provides new insights on the signaling value of CSR performance on an auditor’s litigation risk.

Business Risk Management Strategy in Adaptation of Beef Caft Businesses to the Impact of Climate Change in Sumenep District

Business Risk Management Strategy in Adaptation of Beef Caft Businesses to the Impact of Climate Change in Sumenep District

Relationship between Climate Change and Business Risk: Strategies for Adaptation and Mitigation: Evidence from a Mediterranean Country

Global corporate operations are facing significant challenges as a result of climate change. Businesses are exposed to a variety of dangers because of their effects, which might include anything from changing regulations to excessive weather. The objective of this research is to examine the connection between business risk and climate change, with a particular emphasis on the success of different adaptation and mitigation tactics used by Greek companies. A cross-sectional study was carried out among 345 enterprises in Greece using a quantitative research methodology. To investigate the relationship involving company risk management, adaptation, and mitigation plans with climate change risks, descriptive, correlational, and regression analyses are employed. Businesses are most distressed about the financial risks associated with climate change, followed by supply chain disruptions and physical hazards. Moreover, developing climate-resilient infrastructure and enhancing catastrophe preparedness have evolved into vital adaptation tactics. Also, converting to renewable energy sources is the most preferred approach to mitigation initiatives. Furthermore, the study demonstrated a significant positive correlation between climate change mitigation strategies and effective business risk management. Nevertheless, as perceived climate change risks increased, business risk management effectiveness decreased. The study suggests that Greek businesses are actively engaging in climate change risk management strategies that embrace both adaptation and mitigation strategies. Yet, the study recommends a continued focus on developing resilient infrastructure and collaborative efforts with local communities, governments, and NGOs. Businesses should also prioritize the shift to renewable energy sources to better mitigate their carbon emissions. This research contributes significantly to understanding how companies can strategically address the challenges of climate change. Furthermore, the study provides valuable insights into the dynamics of climate change adaptation and mitigation in a specific geographical area, thereby enhancing the global dialogue on climate resilience and sustainable business practices.

Business Risk Management Ideology and Entrepreneurial Development of Students in Tertiary Institutions in Southwestern, Nigeria

This study investigated the relationship between Business Risk Management (BRM) ideology and the entrepreneurial development of students in tertiary institutions within Southwestern Nigeria. A quantitative research design was employed, with data collected from a sample of 1918 students across five federal universities in the region. The research instrument was a structured questionnaire designed to gather information on risk identification, risk assessment and evaluation, risk mitigation and control strategies, entrepreneurial intentions, self-efficacy, and entrepreneurial behavior. The findings suggest a positive relationship between BRM ideology and the entrepreneurial development of students. Specifically, risk identification was found to significantly influence entrepreneurial intentions (p < 0.01) and self-efficacy (p < 0.05). Risk assessment and evaluation also demonstrated a significant positive impact on entrepreneurial intentions (p < 0.01), self-efficacy (p < 0.01), and entrepreneurial behavior (p < 0.05). Additionally, risk mitigation and control strategies were found to significantly contribute to entrepreneurial intentions (p < 0.01), self-efficacy (p < 0.01), and entrepreneurial behavior (p < 0.01). These findings highlight the importance of integrating BRM education into the curriculum of tertiary institutions in Southwestern Nigeria. By equipping students with the knowledge and skills to identify, assess, and mitigate potential risks, they are better prepared to navigate the challenges and uncertainties inherent in entrepreneurial ventures. This, in turn, can contribute to the growth of a vibrant and resilient entrepreneurial ecosystem in the region.

Methods of constructing integral indicators for assessing entrepreneurial potential of the rural population

Purpose - methods of analyzing quantitative and qualitative indicators of the research results on entrepreneurial potential in rural areas, formation of methodological tools for integral assessment of the state of business activity in the regions of Kazakhstan are considered. Methods - statistical, ranking, rating system - reveal the main factors affecting the business initiative of entrepreneurs, contribute to the determination of indices of entrepreneurial activity, which makes it possible to achieve specific objective decisions. Results - it is shown that these regulatory materials comprehensively assess the state of small and medium-sized agribusiness in the republic and can be used in the development and adjustment of government programs, national projects, and further scientific research, taking into account trends in innovation and environmental friendliness of agro-industrial production. Conclusions - development of entrepreneurship in agricultural sector determines economic and social situation, creates favorable conditions for production of competitive agricultural products and food. Small and medium-sized businesses are able to raise the status of social sustainability of the village and support diversification. Effective measures are needed to effectively manage business risks. The necessity of forming optimal parameters when monitoring business processes at enterprises is substantiated as a basis for solving such problem as identifying their potential resource capabilities and using them in the future. The purpose of this approach is to timely identify “critical points” and apply modern methods to improve the efficiency of small agricultural businesses. The proposed methodology is especially important in the field of strategic planning and forecasting, for the implementation of results-oriented management procedures, program-target budgeting when implementing large innovative projects in the regions.

Features of risk management in the enterprise under the conditions of martial law state

The paper is devoted to the strategic direction of risk management to improve the efficiency of the enterprise in wartime. Justification of the peculiarities of the formation and improvement of risk management at the enterprise in the conditions of martial law. The main aspects of risk management according to Strategy Execution are presented. The key principles of risk management optimization are considered, including features of strategy development, integration into business processes, improvement of management functions and control processes. In particular, the importance of introducing risk management into the main phases of business planning of an enterprise is presented. It has been proven that effective risk management in modern business is of great importance, especially for ensuring the success of the organization in a competitive environment. One of the key advantages of such management is the preservation of the company's reputation, by preventing possible incidents that may negatively affect the reputation, the organization protects its name and, accordingly, maintains the trust of consumers and partners. The main aspects and general approach to risk-oriented management in the economic security of the enterprise are presented. It has been proven that instability in the labor market and loss of confidence in the internal economic environment in the market can lead to a reduction in investment and lack of development of new sectors of the economy. It is justified that in order to improve the effective operation of the enterprise in the management system, it is recommended to carry out strategic direction of risk management based on such principles as: strategy development; integration of risk management into business processes; improvement of management functions; improvement of control processes and measures; Measures that will help enterprises reduce costs, increase risk coverage and ensure sustainable development are considered.

Инновационные инструменты и модели управления предпринимательскими рисками в современных условиях

в нынешних условиях актуальность исследования применения инновационного инструментария и моделей, позволяющих управлять предпринимательскими рисками, обусловлена множеством факторов. Один из них связан с высокой степенью неопределённости и невозможностью доведения конструкторских и технологических разработок до практического внедрения. Другой сопряжён с недостаточностью финансирования инновационной деятельности предприятиями (из-за высокой стоимости внедрения и освоения нововведений). Помимо этого, аргументация значимости обращения к теме выстраивается из соображений наличия феномена сопротивления новациям, нехватки квалифицированных кадров, способных управлять соответствующими процессами, трудностей в проведении маркетинговых исследований, необходимости функционирования в компаниях соответствующей организационной структуры управления, недооценённого человеческого капитала. Успешное разрешение этих проблем содействует созданию, финансированию, распространению новых технологий, а также активному процветанию. С учётом обозначенного, в качестве цели автором ставится исследование современных представлений о специфике инновационных инструментов и моделей управления предпринимательскими рисками. Новизна заключается в том, что предложено авторское понимание содержательных сторон модели (блоков), а также алгоритма её формирования и реализации. in the current conditions, the relevance of the study of the use of innovative tools and models that allow managing business risks is due to many factors. One of them is associated with a high degree of uncertainty and the inability to bring design and technological developments to practical implementation. The other is associated with insufficient financing of innovative activities by enterprises (due to the high cost of introducing and mastering innovations). In addition, the argumentation of the importance of addressing the topic is based on considerations of the phenomenon of resistance to innovations, a shortage of qualified personnel capable of managing relevant processes, difficulties in conducting marketing research, the need for companies to operate an appropriate organizational management structure, and underestimated human capital. The successful resolution of these problems contributes to the creation, financing, dissemination of new technologies, as well as active prosperity. Taking into account the above, the author sets as a goal the study of modern ideas about the specifics of innovative tools and models of business risk management. The novelty lies in the fact that the author's understanding of the content aspects of the model (blocks), as well as the algorithm of its formation and implementation, is proposed.

Climate change disclosure performance and audit fees: evidence from Australia

Purpose This study aims to examine the relationship between climate change disclosure performance (CCDP) and audit pricing. The moderating effect of corporate governance characteristics on that relationship is also investigated. Design/methodology/approach Using a sample of top 300 Australian Securities Exchange listed non-financial firms over the period 2008–2019, this study investigates the association between CCDP and audit fees. The findings are robust to a difference-in-difference test thereby alleviating potential endogeneity concerns. Findings CCDP is found to be significantly positively related to external auditor fees. Research limitations/implications The findings show some important implications for firm management, regulators, investors and auditors. This study presents empirical evidence that climate change, as a factor of external risk, influences audit fees. Practical implications Firms with governance structures characterized by larger more independent boards, larger audit committees and audit committees with a higher level of independence significantly moderate the relationship between CCDP and audit fees. Social implications Investors’ demand for firm transparency and disclosure of information regarding the risks of climate change, effects and opportunities has increased significantly over the past decade, as these factors could have a significant effect on valuation and investment decisions. Originality/value Importantly, stakeholders need to be aware of the costs of climate change, the quantification of climate change impacts and how firms address climate change in their business risk management processes. This study quantifies the impact of CCDP on auditor risk assessments via audit fees.

The Dynamics of Social, Economic, and Cultural Changes and the Role of Institutions in Supporting Agribusiness Development in The Oil Palm Plantation Area

The purpose of this research is to reveal the dynamics of social, economic, and cultural changes in agribusiness institutions in oil palm development locations. Then reveal the role of each agribusiness institution in the location of oil palm development. Using a qualitative approach to build a post-positivism approach. The research location is limited to the community (in this case farmers), consisting of independent farmers and plasma farmers. The results of the study found that there were changes in demographic patterns around oil palm plantations that other researchers had not uncovered (the findings of this study), namely social stratification, patterns of indirect (easier) interactions, and improved health status. The role of institutions in supporting agriculture is very vital in accommodating the interests of farmers. The farmer groups formed are capable of acting as learning vehicles, production units, and collaboration vehicles. In terms of increasing the capacity of farmers, extension agents also play an important role in supporting farming. Specifically, Cooperatives do not only partner, providing production, transportation, and Marketing Facilities, besides that there is risk management. Risk management covered by cooperatives is engineering business, financial, social, and legal risk management.

Bank performance and financial stability during the COVID-19 pandemic: lessons from the MENA region

PurposeThis study investigates the role of market concentration and efficiency in banking system stability during the COVID-19 pandemic. We empirically test the hypothesis that market concentration and efficiency are significant determinants of bank performance and stability during the time of crises, using a sample of 575 banks in 20 countries in the Middle East and North Africa (MENA).Design/methodology/approachThe main sources of bank data are the BankScope and BankFocus (Bureau van Dijk) databases, World Bank development indicators, and official websites of banks in MENA countries. This study combined descriptive and analytical approaches. We utilize a panel dataset and adopt panel data econometric techniques such as fixed/random effects and the Generalized Method of Moments (GMM) estimator.FindingsThe results reveal that market concentration negatively affects bank profitability, whereas improved efficiency further enhances bank performance and contributes to the banking sector’s overall stability. Furthermore, our analysis indicates that during the COVID-19 pandemic, bank stability strongly depended on the level of market concentration, but not on bank efficiency. However, more efficient banks are more profitable and stable if the banking institutions are Islamic. Similarly, Islamic banks with the same level of efficiency demonstrated better overall financial performance during the pandemic than their conventional peers did.Research limitations/implicationsThe main limitation is related to the period of COVID-19 pandemic that was covered in this paper (2020–2021). Therefore, further investigation of the COVID-19 effects on bank profitability and risk will require an extended period of the pandemic crisis, including 2022.Practical implicationsThis study provides information that will enable bank managers and policymakers in MENA countries to assess the growing impact of market concentration and efficiency on the banking sector stability. It also helps them in formulating suitable strategies to mitigate the adverse consequences of the COVID-19 pandemic. Our recommendations are useful guides for policymakers and regulators in countries where Islamic and conventional banking systems co-exist and compete, based on different business models and risk management practices.Originality/valueThe authors contribute to the banking stability literature by investigating the role of market concentration and efficiency as the main determinants of bank performance and stability during the COVID-19 pandemic. This study is the first to analyze banking sector stability in the MENA region, using both individual and risk-adjusted aggregated performance measures.

Hedging price risk through commodity derivatives: a case of Sethi Jewellers

Learning outcomes After completion of the case study, the students will be able to understand the different risks associated with a business, focusing on price risk and the importance of price risk management in business; understand and evaluate the products available for hedging price risk through exchange-traded derivatives in the Indian scenario; and understand and evaluate the different strategies for price risk management through exchange-traded derivatives in the Indian scenario. Case overview/synopsis The case study pertains to a small business, M/s Sethi Jewellers. The enterprise is being run by Shri Charan Jeet Sethi and his son Tejinder Sethi. The business is located in Jain Bazar, Jammu, UT, in Northern India. The business was started in 1972 by Charan Jeet’s father. They deal in a wide range of jewelry products and are well-established jewelers known for selling quality ornaments. Tejinder (MBA in marketing) was instrumental in revamping his business recently. Under his leadership, the business has experienced rapid transformation. The business has grown from a one-room shop fully managed by Tejinder’s grandfather to a multistory showroom with several artisans, sales staff and security persons. Through his e-store, Tejinder has a bulk order from a client where the client requires him to accept the order with a small token at the current price and deliver the final product three months from now. Tejinder is in a dilemma about accepting or rejecting the large order. Second, if he accepts, should he buy the entire gold now or wait to buy it later at a lower price? He is also considering hedging the price risk through exchange-traded derivatives. However, he is not entirely sure, as he has a few apprehensions regarding the same, and he is also not fully aware of the process and the instruments he has to use for hedging the price risk on the exchange. Complexity academic level The case study is aimed to cater to undergraduate, postgraduate and MBA students in the field of finance. This case study can be used for students interested in commodity derivatives, risk management and market microstructure. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and finance.

Evaluating Public-Private Partnership Dynamics: the Kazakhstan Toll Road Case

The holistic collaboration between the government and business through public-private partnerships (PPPs) is crucial in developing economies in transition. With the help of the PPP mechanism, emerging economies realize new and maintain existing social and economic infrastructure projects in education, energy, transportation, and healthcare. This lessens the funding burden on the state budget and attracts private investment and expertise into the economy. However, one of the critical tasks is to engage a suitable private partner with whom a long-term relationship can be built for mutual benefit. The most vital issue in establishing and maintaining the PPP collaboration with such a partner is related to the appropriate management of business risks. This study focuses on the success of an infrastructure project for a private partner by analyzing the critical risks inherent in PPP projects. The research uses system dynamics (SD) modeling, which qualitatively and quantitatively determines how each risk affects the project realization. The study examines the largest PPP project in Central Asia, the Big Almaty Ring Road. This toll road project is taken as a case to demonstrate the impact of the most critical risks on the success of the PPP projects. For the simulation, the “hard tolls” form, which is one of the popular payment mechanisms in the global PPP practice, is considered where the private partner bears most of the risks. The findings show the riskiness of such a payment mechanism in implementing toll road projects with existing traffic and tariffs under conditions of uncertainty typical for Kazakhstan and other similar developing countries.

Impact of Microfinance Institutions Lending on SMEs Growth in Zimbabwe

This study investigated on the impact of microfinance lending on Small to Medium enterprises (SMEs) growth. This study adopted pragmatism philosophy wherein both positivism and interpretivism approaches were deployed. This study also adopted descriptive and explanatory research designs; the explanatory design for quantitative research and the descriptive survey for qualitative research. Proportionate stratified random sampling was used to select respondents that participated in questionnaires and judgemental sampling to select respondents who participated in interviews. Data was collected through the use of questionnaires with closed ended questions and interview guide instruments. Data was analyzed using Statistical Package for Social Sciences (SPSS), Thematic Approach, Microsoft Excel, and Microsoft Word packages. The study found that MFIs sell financial and non-financial products to clients. MFIs provide basic business skills, help with capital investment decisions, general business management and risk management. This finding extends the current body of knowledge on microfinance institutions lending impacts on SME growth. The study recommends that leadership strategy is one of the important strategies that can be embraced by MFIs to enable them survive competition in the market. MFIs need to increase flexibility, use holistic and innovative financing, employ research, take advantage of technology and make lending personal to SMEs. Because the transactions are frequently small and the clients are mostly from difficult-to-reach locations, most formal financial institutions regard the poor as high risk and high cost. Microfinance institutions must break these barriers. This allows low-income families (SMEs) to stabilize their income flows and save for future needs. MFIs need to keep on providing their services to SMEs. MFIs also need to keep providing business training to equip SMEs with requisite skills in savings mobilization and micro enterprise investment options. Policymakers and other social partners must develop and implement strategies to boost SME growth in their respective countries. To build a knowledge base for SME growth, authorities at the local, national, and regional levels must conduct evidence-based analysis to feed social dialogue and policymaking processes.

Implementation of international standards of risk management in ukrainian business environment: benefits and drawbacks

Introduction. Risk manageрment is an integral part of effective execution of any project. By applying international standards of risk management, project managers can improve the effectiveness of risk management in a project-oriented business, maximizing opportunities to achieve project goals and minimizing costs. The purpose of the paper is to clarify the essence of the concept of "risk management", to analyze the main international standards of risk management and to determine the main advantages and obstacles on the way to its implementation in Ukraine. Results. World experience and international risk management standards recommend that companies develop best practices, in particular, risk management policies and standards. Policies and standards are key elements that determine the consistency of risk management in a company. They are official documents developed and approved at the top management level. According to the risk management policy, companies must ensure the implementation of risk management to eliminate potential sources of non-compliance. A risk management standard describes how to assess risks and opportunities in an organization and the actions to be taken in response to identified risks and opportunities. The standard stipulates that all risks identified by company employees, regardless of their role or position, must be registered and assessed. Implementation of risk management systems at enterprises is one of the key elements of effective modern corporate management. Conclusion. The main advantage of implementing of international standards of risk management in the organizations is that they encourage companies to study their business processes in detail and focus on their constant optimization. However, it is worth noting that the implementation of international risk management standards in Ukraine has a multifaceted nature and faces a number of problems associated with the adaptation of these methods at domestic enterprises. It should be taken into account that the implementation of the risk management system will not bring immediate results. This process should be approached from the perspective of a long-term perspective and is aimed at achieving further competitive advantages in the future.

Alternative model of Islamic deposit insurance for the Islamic banking system

Purpose This paper aims to develop a novel approach to Islamic deposit insurance, specifically addressing the deficiencies in the current prevailing models of Islamic deposit insurance. Design/methodology/approach The analysis in this paper adopts a qualitative content analysis approach to review the existing literature on Islamic deposit insurance and propose a new model. Findings The proposed model includes a revised scheme. In the event of a bank failure, the funds used to reimburse depositors of the failed bank are divided into two distinct categories. The first category includes nonrepayable premiums that have been previously paid by the failed bank and managed by the Islamic deposit insurance agency or Islamic deposit insurance corporation. The second category comprises qard hasan, an interest-free loan provided by the Islamic deposit insurance agency or Islamic deposit insurance corporation using the deposit insurance funds from the collective pool of premiums of other banks. Practical implications The proposed model ensures that well-managed banks are not unfairly burdened by the failures of their poorly managed counterparts, thus preventing a sense of unfairness and inefficiency. Implementing the proposed model may result in higher business practices and risk management standards, ultimately leading to better depositors’ protection and banking system’s stability. Originality/value This paper offers a significant contribution to the limited literature on Islamic deposit insurance. The proposed model enriches the discourse and offers valuable insights for the future development of Islamic banking.

Significance and perspectives for development of commodity exchange trade in agricultural products

Exchanges are intermediaries in the trade of commodities, financial instruments that have commodities in their base or credit instruments that are secured by commodities. Commodity exchanges have gained in importance in recent decades. Commodity exchanges have evolved from the place where the physical purchase and sale of goods takes place to trade in commodity derivatives where standardized contracts−futures and options−are traded. The role of commodity exchanges in the development of the agribusiness sector has changed significantly from the initial stage of development when in the beginning the main role was to ensure efficient and transparent exchange of commodities, until the early 1970s when instruments were developed to enable risk management in the agribusiness sector. The largest volume of tradе on modern commodity exchanges is realized in standardized derivative contracts. Financial derivatives are one of the most successful financial innovations, with the volume of turnover increasing significantly. Within this chapter, special attention is paid to the analysis of the situation in the field of commodity exchange trading in the Western Balkan region. According to the results of the analysis, developed agricultural commodity exchange trade is not available to the farmers in these countries, nor are business risk management instruments available to participants in countries with developed commodity exchange systems. Analyses have shown that the sole commodity exchange with a significant volume of trade in the countries of the Western Balkans is the Novi Sad commodity exchange, trading on the spot and non‒standardized term market. In terms of the directions of development of regional commodity trade, the experience so far shows that high trading volume is a paramount for well‒developed commodity exchange. Therefore, the path to the development of commodity exchange trading is the establishment of a regional commodity exchange that would be a place of trade for all of the Western Balkan’s countries. By establishing a regional commodity exchange, participants in the agricultural sector would have the opportunity to securely and transparently trade and manage the price risk that have a pronounced volatility in recent years.

Relevansi Strategi Manajemen Risiko Pembiayaan dalam Konteks Perbankan Syariah

Financing risk management in Islamic banking is a crucial aspect related to the identification, measurement, control and monitoring of risks that may arise in financing provided by Islamic financial institutions. challenges faced by sharia financial institutions in managing financing risks. One of them is risks related to financing that arise due to the complexity of transactions and fluctuating economic conditions. This research aims to analyze the types of sharia business risks, sharia business models, measurement processes and monitoring processes of financing risk management in sharia banking. The research method used in this study is qualitative research with a descriptive approach. A qualitative approach is used in this research because this study aims to describe and understand the complexity of financing risk management strategies in Islamic banking. The results of this research show that in sharia business risk management, there are several categories of business risk, including financing risk, market risk, liquidity risk and operational risk. Financing risk focuses on the customer's capability to repay the financing provided by sharia financial institutions. Sharia business models include a variety of business strategies rooted in Islamic sharia principles, such as fairness, honesty and impartiality. These sharia business models include manufacturing, distributors, retail, franchising, sharia banking, and sharia microfinance, each of which emphasizes products and services that comply with applicable sharia principles.