Almost every business activity involves risk. Risk is an indicator of conditions or events that can lead to losses. It is proportional to the probability of occurrence of this event and the amount of damage it can cause.
The advanced conditions of human life are characterized by a constant increase in the amount of information, the increasing difficulty of relations both in the social system and with the environment. At the same time, the processes of globalization, scientific and technological development are accelerating, and the volume of consumption of natural resources is growing. This means that more and more causes influence the nature and direction of human work, and the unpredictability of this influence increases. As a result, the level of development uncertainty is constantly growing, it is becoming more and more difficult to predict indicators, formulate goals and implement activities to achieve them. All this means that special attention should be paid to risk research issues.
Risk concept
The risk doctrine is the basis for the theory of development and activity of various systems. Due to a huge number of reasonsabsolutely accurate forecasting of outcomes and states becomes unfeasible. This means that there is always the possibility of different scenarios that are actually a source of risk.
Based on the generalization of different formulations, the following definition can be presented: risk is uncertainty in the process of achieving the goal, the likelihood of losses, failure to achieve the planned plans.
In a broad sense, uncertainty is inherent in all areas, even if they do not specifically affect human activities. But on the basis of definitions, one can realize that the category of risk is associated not only with the probabilistic course of events, but also with the relation of a person's value to reality. In this case, we are talking not only about uncertainty, but also about probable losses, since a person is not worried about the possibility of this or that action if the implied outcome does not concern his interests. Therefore, in terms of the dominance of financial values, risk is treated mainly as an attribute of industrial and social-financial relations. In this connection, the concept of financial risk is usually used.
Risk causes
There are three main groups of reasons:
- incompleteness and uncertainty of information about the external and internal environment (the time factor plays a big role: the later the solution is calculated, the more opportunities for various unexpected events, as a result, the higher the risk);
- limited ability to receive and process information by the person responsible for receivingdecisions in the management system as a whole;
- random or purposeful effects of external forces and environmental objects that impede the achievement of goals.
In the end, it doesn't matter which financial activity is more or less affected by risk. In the modern economy, it is increasingly recognized that the process of managing activities is basically a process of managing risks and the choice of a solution consists in finding a rational level of them.
Uncertainty
The concept of risk is based on the concept of uncertainty. It is understood as the absence or lack of information about some phenomenon, process.
The difference between uncertainty and risk in economics is that in the first case, the probability of the outcome of a decision cannot be determined. In the second case, the probability of the future scenario is quite possible to determine.
Risks in the economy
His degree in economics is the possibility of negative consequences arising from the interaction of elements such as:
- uncertainty in achieving final goals;
- probability of outcome;
- possibility of deviation from the intended goal;
- probability of losses from the chosen alternative.
Each of these elements can appear both separately and in combination with the others.
The main features of economic risk in the economy are as follows:
- Controversy as a kind of activity. On the one hand, there isthe orientation of risk to achieve results in some innovative ways, on the other hand, it leads to the inhibition of progressive trends and the appearance of costs.
- Alternativeness is understood as the ability to choose between different forecast options.
- Uncertainty is understood as the lack of unambiguity and ignorance of reliable information.
An object of risk in the economy is an economic system whose performance is unknown.
A risk subject is an individual or legal entity that has permission to make decisions about an object.
Signs of risk in the economy is a set of the following characteristics:
- monetary expression of losses and their quantitative measurement;
- undesirability of losses;
- unpredictability of the scenario result;
- probability of negative scenarios.
Main species
Types of risks in the economy are groups that can be established according to the criteria for damage in monetary terms.
The table shows the main possible classifications of them in the economy according to criteria.
| Sign | Classification | Subclassification | Features |
| Structural | Property | Loss of property | |
| Production | Risk,related to the introduction of new technologies | ||
| Shopping | Product failures | ||
| Financial risks in the economy | Receive monetary damage | ||
| Price | Price changes | ||
| Credit | Risk of the borrower's inability to pay | ||
| Currency | Changes in exchange rates | ||
| Liquidity risk | The risk of selling a financial asset | ||
| Solvency risk | Risk of debt hardship | ||
| Operational | Help related | ||
| Inflationary | Change in macroeconomics in the country | ||
| A sign of a possible result | Net risk | Probability of losing and going to zero | |
| Speculative risk | You can get both positive and negative results | ||
| According to the main cause of occurrence | Natural-natural | Risks,related to the forces of nature | |
| Ecological | Consequences of environmental pollution | ||
| Political | Related to changes in the political situation in the country | ||
| Transport | Related to shipping | ||
| Commercial | Linked to trade results |
Digital economy and the concept of risk
The development of the digital economy is causing some problems related to online threats. The surge in cybercrime coupled with information leakage is causing significant harm, which means that manufacturers must invest heavily in information security to address these risks.
Experts estimate the amount of damage from the risks of the digital economy from only one incident related to information security, in the amount of 1.6 million rubles (for the sector of small and medium-sized companies) to 11 million rubles (for large Russian companies). The national economy is struggling with a shortage of cybersecurity professionals that the government must take over.
Significant losses in business in the past few years are associated with the spread of spyware that penetrates the computer and encodes important data. Some of the threats and risks posed by the digital economy are having an impact on the development of the labor market and are linked to the challenge of large layoffs. Extensive automation of industrial operations, combined with standardization of major operations, can successfully replace human work with a robot. Currently, robots solve a number of technical problems in a savings bank, for example, the decision to issue loans to individuals.
Characterization of risks in the study of the national economy
The risks of the national economy are macroeconomic. These can include those types that are felt by the main part of the country's population.
Among them are:
- cessation of the macroeconomic system;
- formation of disproportions in industries;
- negative changes in the national economy;
- risks of the globalization process.
In the current crisis, the measures taken by the Russian government to maintain financial activity in the state are extremely necessary.
Changes taking place in the economy of the Russian Federation at the present stage make the highest risk background for any financial work.
The current crisis in the global economy has covered all spheres of life of the Russian society and the country, which caused the emergence and increase of risks of various types, including the macro level. They affect the productivity of business entities and the level of development of the economy and the social sectorcountries in general.
Characteristic risks of the Russian national economy today:
- lack of funds and slowdown in investment processes;
- capital flight;
- decrease in lending;
- banking sector.
Risk assessment methods
Managers can influence the creation of value for business owners through proper risk management. The main task is to determine which types of them will be more profitable for the enterprise. Risk management concepts change relatively dynamically. This is especially true for companies operating in the markets of different countries. The methods most commonly used in risk assessment operated, until recently, with economic and financial analysis. However, deviations from expected values are increasingly being used to measure them. The most popular risk assessment methods in the economy today:
- analysis of yield variances;
- price deviations;
- security level - based on the calculation of the probability of the rate of return falling below the expected level;
- analysis of the level of aspiration is based on the calculation of the probability of achieving the expected rate of return;
- Value at Risk is the measure by which the market value of an asset or portfolio of assets can decrease under certain assumptions, at a specified time and with a certain probability.
VAR calculation
Risk Value (VaR) is the most commonly used risk measurement method. VaR wideused by banks, insurance companies and businesses involved in international trade. This method allows you to measure the risk at a certain moment and provides relevant information when making decisions. VaR is a measure created during the development of risk measurement at JP Morgan in the early 1990s. It consisted in measuring the risks in all departments of the organization and converting them into one value. This measure was based on an analysis of income variances from these financial instruments and their dependencies. Since the publication of RiskMetrics by JP Morgan, VaR has become a widely used measure in risk management, not only in financial institutions. The term Value at Risk can mean the following:
- the maximum amount of funds that an enterprise can lose at a certain point in time with a certain probability;
- a set of statistical and mathematical procedures to calculate the amount of risk;
- set of procedures used for integrated hazard assessment;
- VaR as a measurement tool for risk management.
Despite the relatively high accuracy of this method, its limitation is that it uses data from past events to estimate future events. With this assumption, large market movements (such as price changes) can result in much larger losses than VaR suggests.
Methodology for risk analysis in economics
Among their main components in the economy are:
- Description of job, object or process and definitionscope of analysis.
- Hazard identification is the most important step.
- Assessment - determining, in accordance with an accepted standard, the level of risk corresponding to the expected probability and severity of the consequences of a threat.
Among the main methods of analysis are:
- inductive - starts by identifying threats and anticipates the risks associated with them;
- deductive - determining the causes of threats.
Most analyzes are performed using induction methods.
They can be classified as follows:
- Occupational safety analysis - used to identify threats associated with tasks performed in the workplace.
- Analyze “what if…” - using the brainstorming method, team members analyze an object, process or position, answering questions beginning with the words “what will happen if”, and thus predict possible interference and their consequences.
- The method of preliminary threat analysis allows you to first of all compile a list of dangers that are already known. In addition, in order to detect as many new threats as possible, the work of an object or process and its environment is analyzed.
- Analysis using checklists - they are a set of questions regarding the properties of the human-technical object system. They can be developed based on the requirements of applicable regulations, while at the same time taking into account problems specific to a given facility or process.
- HAZOP method - it consists in a systematic analysispossible deviations from the planned course of the process. Each of these deviations can pose a threat to safety, product quality or the environment.
- FMEA method - used to analyze the risks associated with technical means. The analyzed object is divided into elements, each of them is analyzed separately.
Deductive methods are represented by the following options:
- The error tree method is used to determine the sequence or combination of factors and conditions that cause a threat. They can be detected in other ways mentioned above. Each of these threats is in the peak event analysis conducted by this method, the causes of which must be determined. An error tree is a graphical representation of the logical combinations of events that can lead to a particular peak event.
- Event tree method - analysis rules are similar. The direction is different - it starts with the identification of possible causes (threat factors) and leads to the definition of the consequences resulting from threats.
Conclusion
Risk in the economy is a certain probability of loss or loss of profit, in contrast to the expected result. Its main feature: danger and failure.
A risk situation arises when three circumstances coincide:
- probability of uncertainty;
- selection of forecast options;
- opportunity to assess the future of the chosen oneoption or alternative.
Market economy and risk are now closely interrelated concepts. Market trends today are closely linked to the situation of uncertainty, which in turn implies risk.
The market is a financial environment in which the cooperation of buyers and sellers is relatively slow. To take and sell products and services, operators alone make buying and selling decisions, setting prices, purchase volumes, types of transactions, and so on. There is a price to pay for financial freedom. Equal economic freedom of market participants generates economic risk.
