Influence of Financial Instability on Exchange Risks of Port Sector Enterprises

Abstract

The increase of the degree of impact of financial risks on the results of operations and financial stability of the company is associated with a number of factors. They are the rapid volatility of the economic situation in the country and the financial market, the expansion of the sphere of financial relations of economic entities, the emergence of new financial technologies and tools, as well as a number of others factors. Therefore, the identification of the economic nature of financial risks and the establishment of their forms of influence on the results of the enterprise has become one of the most urgent tasks of the financial management system. In the context of financial instability, the problem of effective management of foreign exchange risks of the company becomes particularly relevant. This management plays an active role in the overall system of financial management, ensuring the reliable achievement of the main objectives of financial activity of the enterprise. The purpose of currency risks management is to ensure the financial security of the company in the process of its development and to prevent the possible reduction of its market value. Currency risk management can be divided into the following steps: awareness of the risk, determining the causes of its occurrence; measurement, analysis and risk assessment; reduction or limitation of risks by means of appropriate management methods; constant monitoring of the level of risk. In today's conditions, the further devaluation of the national currency, which in the past three years depreciated by 3.5 times in relation to the US dollar, one of the main tasks facing domestic subjects of foreign economic activity is the formation of effective tactics and strategies for managing currency risks. Activity of port operators, as subjects of foreign economic activity, is predisposed to financial instability and currency risk, which are caused by the variability of the environment of their functioning. Ukrainian ports, which investigate in imported equipment, plan to buy in foreign currency. The fluctuation of the exchange rate may contribute to both the improvement and the deterioration of the financial condition of the enterprise. Therefore, in the course of doing business, you must take into account the risks and apply appropriate methods of managing them. Financial instruments are the available tools for managing currency risk in enterprises. In this paper, hedging is considered as a way to reduce currency risk when purchasing equipment for a currency. In order to eliminate the effect of financial instability on currency risks of enterprises in the port industry, when purchasing equipment for currency, we suggest using a hedging instrument. This will either eliminate or partially neutralize the risk of possible losses.

Identification of Enterprise Financial Risk Based on Clustering Algorithm

“…Most Chinese companies still need to incorporate financial risk management into their daily management, the corporate financial risk is not yet widely managed, which was put forward at the first insurance conference of the American Management Association [ 5 ]. Ilchuk and Shyshkina found that later, with the continuous development and improvement of risk management theory and practice, people began to gradually introduce these theories and practices into enterprise financial risk management [ 6 ].…”