Home  Journals  International Accounting  6(468) - 2020 June

A company's financial risk assessment and management: The practical aspects of implementation for small and medium-sized businesses

Received: 18 May 2020

Received in revised form: 28 May 2020

Accepted: 5 June 2020

Available online: 16 June 2020

Subject Heading: Managerial accounting

JEL Classification: M41, M49, D81, G32

Pages: 643–666

https://doi.org/10.24891/ia.23.6.643

Subject. This article deals with the issues of financial risk assessment and management of economic entities. It also considers the application and implementation of risk assessment techniques by small and medium-sized enterprises.
Objectives. The article aims to develop applied aspects of the original methodology of stepwise assessment of a company's total financial risk using mild conditions of software maintenance.
Methods. For the study, we used the methods of SWOT and scenario analyses, scoring, expert assessment, index numbers and ratio analysis methods, and the tabular, graphical, financial risk map, and event tree techniques.
Results. Using the SME subject as a case study, the article reveals the applied aspects of the implementation of the total financial risk assessment methodology steps. By analyzing the performance and operating conditions of the company, it identifies the main risk components of financial risk, assesses the probability and cost of losses from their implementation, and determines risk indices and total financial risk. The article presents certain proposals for the financial recovery of the organization on the basis of internal changes and standards of indicators that ensure financial stability. A subsequent assessment of the effectiveness of the proposed measures shows the positive dynamics of the forecast financial indicators.
Conclusions. Providing insight into the original methodology use at SMEs helps assess the potential for its practical application using relatively moderate data volumes and no specialized software.

Keywords: total financial risk, risk assessment, risk management, small and medium-sized business

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