ENTERPRISE RISK MANAGEMENT

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.

Purpose: The purpose of this study was to investigate how financial risk management strategies lead to growth of MFI sector in Kenya.Methodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that MFIs had effective financial risk management strategies such as effective credit risk management practices, liquidity risk management practices, interest risk management practices and price risk management practices. In particular, MFIs took into consideration the conditions, characters, capacity, collateral and capital of borrowers. Strict debt collection practices were widely adopted by MFIs. In addition, the concept of Know Your Customer (KYC) policy, seem to have been adopted by MFIs. The relationship between financial risk management strategies and growth was positive and significant. It also shown that sources of funds for MFIs include external sources and internal sources and the most frequently used source of funds are bank loans. The use of banks loans may present various risk exposures to MFIs, the most significant being interest rate risk. However, the ability of MFIs to source funds from various sources indicates that MFIs can apply the pecking order by first exploiting internal sources of funds since they present a lower financial risks and then move on to external sources. However, despite the financial risk exposure accompanied by leverage from external sources, MFIs may also benefit as they may experience higher growth driven by the leverage. It was also found that MFIs had put in place a number of good practices that had emerged to promote responsible and inclusive lending. These include loan size limits, standardized (simple) loan terms, zero tolerance on delinquency, group-based lending. This finding implies that MFIs have put in place effective credit risk management policies which are part of an overall financial risk management strategy. The existence of effective financial risk management practices may have influenced the growth of MFIsUnique contribution to theory, practice and policy: The study recommends that the MFIs to continue practicing effective financial management practices as this would improve the growth of MFIs.

In the globalized business world, financial information security management (FISM) and corporate risk management (CRM) have become critical elements for ensuring business sustainability and gaining a competitive advantage. The security of financial information not only protects the financial integrity of businesses but also supports long-term success by enhancing reputation management, regulatory compliance, and stakeholder trust. However, the necessity of addressing the relationship between financial information security and corporate risk management within a holistic framework has not been sufficiently emphasized in the literature, especially with the increasing threats in cybersecurity. This gap creates uncertainties regarding how businesses should integrate financial information security into their risk management strategies. The purpose of this study is to analyze the interaction between financial information security management and corporate risk management and to provide a practical and applicable framework for integrating financial information security into business risk management strategies. The study examines how financial information security management is integrated into corporate risk management processes (risk identification, assessment, response, and monitoring) and its impact on organizational performance (cost reduction, efficiency improvement, and competitive advantage). Considering major financial crises and cyberattacks, the global impact of financial information security threats on businesses, national economies, and the global financial system is increasingly being discussed. In this context, the study highlights the critical importance of FISM and CRM for businesses and presents concrete examples of the risks that may arise if these two concepts are not considered together (data breaches, financial losses, reputational damage, legal sanctions). The study systematically reviews existing approaches in the literature (such as ISO 27001 and the NIST Cybersecurity Framework) to contribute to the development of effective financial security and risk management policies for businesses.This study employs qualitative research methods, including a literature review and expert opinions. By analyzing current studies and industry reports, the relationship between financial information security and corporate risk management is examined in depth.In conclusion, integrating financial information security management with effective corporate risk management policies plays a crucial role in enhancing business sustainability, gaining a competitive advantage, and reducing costs. Businesses must adopt a holistic management approach that incorporates cybersecurity measures, financial risks, and regulatory requirements. This comprehensive approach is essential for ensuring long-term success and maintaining a competitive edge in today's dynamic business environment.

With rapid development of China's market economy, business activities face many risks. The core of the overall management and control of risk is the company's financial risk management. In order to prevent financial risks caused by business management crisis and promote corporate healthy steady sustainable development, the focus on financial risk management and control is a possible series of financial problems and risk to predict and control in the future. In this paper, based on the financial risk characteristics of Chinese enterprises and the management and control situation, in the new period, we strengthen risk awareness, improved scientific financial decisions and build financial risk management and control system by analysing impact factors of financial risk in China to put forward the corresponding management and control strategies.

The agribusiness sector is a cornerstone of national and global economies, encompassing the production, processing, marketing, and distribution of agricultural goods. Effective financial management within agribusiness is critical, as it directly influences resource allocation, investment decisions, risk mitigation, and overall enterprise sustainability and profitability. This study conducts a comprehensive literature-based analysis to examine how financial management practices bridge finance and farming, focusing on cost management, working capital management, financial risk management, investment appraisal, digital finance adoption, financial literacy, and corporate social responsibility (CSR). Evidence from diverse geographic and operational contexts demonstrates that structured financial practices significantly enhance profitability, operational efficiency, and resilience in the face of seasonal cash-flow fluctuations, price volatility, and environmental risks. Cost management aligns operational efficiency with strategic financial planning, while working capital management ensures liquidity and continuity during peak production periods. Financial risk management and CSR integration mitigate exposure to market and environmental uncertainties, promoting sustainable practices and stakeholder trust. The adoption of digital finance tools and platforms further strengthens the interface between financial planning and farm operations, although constraints such as low digital literacy and infrastructure limitations persist. Moreover, financial literacy among small-scale farmers emerges as a key enabler, facilitating the effective utilization of financial tools and resources. Investment decision-making frameworks incorporating scenario analysis and real-options valuation support informed capital allocation and long-term growth. Overall, the study underscores that bridging finance and farming is operationally vital, multi-dimensional, and strategically essential for achieving sustainable agribusiness growth. Insights from this analysis inform policymakers, practitioners, and researchers seeking to optimize financial management strategies in agribusiness contexts.

The article explores the terminological apparatus of such categories as "law" and "regularity" and establishes links between them. It has been proved that it is impossible to disclose the content of the methodology of financial risk management of industrial enterprises without applying the laws of different levels of knowledge (universal, general, and partial). In this connection, it has been disclosed the substantive essence of universal, general, and partial laws, the laws that are descriptive and explanatory, the laws that are statistical and dynamic, the laws that are fundamental and applied, the laws that are phenomenological and essential, and the laws of systems formation, functioning and development. The role and place of management laws in the system of laws have been determined and the role of financial risk management laws has been formulated. The basic methods of the research of problems of financial risk management of industrial enterprises have been summarized and the content of the basic laws and regularities of financial risk management of industrial enterprises has been formulated.

The article examines the theoretical and methodological aspects of financial risk management, which is one of the key factors in ensuring the stability and effective functioning of enterprises in modern conditions of uncertainty. The main concepts of financial risk and approaches to its classification are highlighted, in particular, systemic and non-systemic risks are distinguished, internal and external factors of their occurrence are distinguished. The main types of financial risks are analyzed, including credit, interest, currency, operational, investment, inflation risks and liquidity risk. Their impact on the financial and economic activities of enterprises and factors that cause an increase or decrease in the level of financial risks are considered. Special attention is paid to political and macroeconomic aspects that can cause the emergence of new risks or exacerbate existing threats. The work systematizes scientific approaches to determining the essence of financial risk, and provides interpretations of this concept by various researchers. Key methods of financial risk management are identified, including diversification, insurance, hedging, limiting, creating reserves, using financial derivatives and avoiding excessively risky transactions. Mechanisms for assessing financial risks based on fundamental indicators, macroeconomic indicators, financial ratios and market multipliers are outlined. The main stages of financial risk management are considered, including identification, analysis, assessment, development and implementation of a risk minimization strategy, as well as constant monitoring and adjustment of risk strategies in response to changing market conditions. The importance of using financial regulations as a tool for controlling the level of risks, as well as the introduction of effective methods for predicting possible threats in the financial sector, is particularly emphasized. It is concluded that effective financial risk management contributes to strengthening the financial stability of enterprises, increasing their competitiveness and ensuring long-term development in an unstable market environment. A financial risk management model has been developed.

The rapid advancement of artificial intelligence (AI) technologies, particularly generative AI and large language models (LLMs), has ushered in a new era of possibilities for the financial sector. This paper explores the integration of these cutting-edge technologies into financial sector risk management, examining both the potential applications and the necessary regulatory frameworks. We provide a comprehensive analysis of how generative AI and LLMs can revolutionize risk assessment, fraud detection, market analysis, and regulatory compliance. The study delves into the technical aspects of these AI models, their implementation challenges, and the implications for existing risk management practices. Furthermore, we propose a novel framework for the responsible adoption of AI in financial risk management, addressing concerns related to model interpretability, data privacy, and algorithmic bias. Our findings suggest that while generative AI and LLMs offer unprecedented opportunities for enhancing risk management capabilities, they also necessitate a recalibration of regulatory approaches to ensure financial stability and consumer protection. This research contributes to the growing body of literature on AI in finance and provides actionable insights for practitioners, policymakers, and researchers in the field.

This article examines the future trends and problems of financial risk management. The assessment focuses on the historical advancements and present state of financial risk management. Next, the essential characteristics of the financial sector in the digital economy are examined. The ongoing advancements in technology, namely in computing and telecommunications, are believed to significantly impact the future progress of financial risk management. The utilization of evidence and economic analysis in the formulation of policies is increasing, and this trend is also observed in the establishment of accounting standards and financial regulation. This article explores the potential of evidence-based policymaking in accounting and financial markets, as well as the obstacles and prospects for research that supports this effort. Utilizing sound theoretical principles and strong empirical evidence should ideally result in improved policies and regulations. However, despite its clear attractiveness and significant potential, implementing evidence-based policymaking is more challenging than just requesting it. This text discusses the future trends and problems of financial risk management in the digital economy, taking into account the historical and current practices of financial risk management and the overall trends in the financial industry. Lastly, this section has implications for financial institutions, enterprises, and emerging economies.

Under the wave of digital transformation, financial risks have shown unprecedented complexity and dynamism, which not only brings new challenges but also highlights the urgency of building a cognitive and evolving financial risk monitoring and early warning security system. Financial risk management, as the key to maintaining financial market order, safeguarding consumer rights, and promoting financial innovation, its core value lies in ensuring the stable operation of the financial system and the sustainable development of the economy. With the rapid growth of artificial intelligence (AI) and big data technology, these advanced technologies are profoundly changing the management mode of enterprises, especially showing significant advantages in improving the level of financial risk management. This article innovatively designs an enterprise financial risk prediction model that integrates AI and big data technology. The model aims to provide more accurate risk avoidance strategies for enterprises by deeply mining and analyzing massive transaction data. The results show that the model not only improves the accuracy of risk prediction, but also provides strong support for enterprises to move forward steadily in the complex and ever-changing financial market.

Chinese financial market environment has also undergone a series of changes. How banks can identify and effectively prevent and control financial risks has become the focus of their research. For this reason, this paper makes a careful study on the management ideas of bank financial risk, first introduce the relevant content and characteristics of bank risk identification and management, explaining the new requirements and challenges brought about by the bank's financial risk management under the current background, and focus on analyzing the relatively representative issues in the financial risk management of banks in various regions, finally, it puts forward the strategies and improvement ideas on how to improve the quality and efficiency of bank risk management.

Aim. Development of the author’s concept of increasing the efficiency of financial risk management on the basis of application of the technology of creating and using the digital twin of the enterprise.Objectives. To formalize the problems of existing approaches to solving the problems of financial risk management of enterprises of the real sector of economy; to identify trends in the development of digital twins, to formulate the advantages of their practical application and to give the author’s interpretation of the concept of “digital twin of the enterprise”; to build and substantiate a multilayer system of indicators of the digital twin of the enterprise in the context of improving the efficiency of financial risk management; to develop the principles of building a digital twin of the enterprise, focused on solving the problems of financial risk management.Methods. The research was carried out on the basis of system approach, in the process of realization of which the methods of synthesis, logical comparative, factor and graphical analysis, basic provisions of financial risk management and the results obtained in domestic and foreign scientific literature on the problems of realization of approaches and methods of financial risk management were used.Results. The author’s concept of increasing the efficiency of financial risk management based on the application of new technologies for creating digital twins is proposed. In particular, by means of formalizing the problems of existing approaches to solving the problems of financial management, identifying trends in the development of methodology and technologies for creating digital twins, the idea of increasing the efficiency of financial risk management on the basis of creating a digital twin of the enterprise is outlined. The multilayer system of indicators defining the structure of this digital twin is proposed and substantiated, the tasks are defined and the principles of its construction oriented to solving the tasks of financial risk management are developed. The financial kernel of the digital twin of the enterprise is constructed, containing the contours of formation of financial indicators common for different enterprises, determining the achievement of the objectives of financial risk management and its efficiency. The qualitative substantiation of increasing the efficiency of financial risk management with the application of the methodological basis for the creation and use of digital twins proposed in the article is given.Conclusions. Conceptual provisions of creation and use of digital twins for the purposes of financial risk-management, given in the article, create a theoretical and methodological basis for increasing the efficiency of financial risk-management taking into account the use of new digital technologies and can serve as a basis for practical construction of effective systems of financial risk-management at enterprises of the real sector of economy.

The article examines the features of using financial risk management and corporate social responsibility tools to ensure the sustainability of construction enterprises. The principles of business social responsibility in modern conditions of the construction industry are analyzed. The aspects of implementing risk management measures in construction enterprises are identified. The issues of using the principles of risk management and corporate social responsibility of business are formulated. The need to improve the tools for implementing the financial risk management and corporate social responsibility system to ensure the sustainability of construction enterprises in the context of sustainable development and Industry 4.0 is substantiated. It is argued that the study of the theoretical basis of financial risk management and corporate social responsibility of construction enterprises confirmed the importance of implementing such tools not only to support the competitiveness of the business, but also to ensure its sustainable development in the long term. It is proven that the construction industry has a significant impact on regional socio-economic development and well-being of the population, which requires an integrated approach to the implementation of social responsibility strategies. It is analyzed that the activities of construction enterprises in the field of social responsibility are aimed at reducing the negative impact on the environment, improving occupational safety, developing local communities and adhering to high standards of business ethics. It is proven that the implementation of risk minimization principles requires not only careful analysis and risk management, but also the transformation of corporate governance, adaptation to the requirements of new technologies and flexibility in making strategic decisions. It is substantiated that understanding and taking into account these key aspects of risk management and social responsibility helps enterprises increase their competitiveness, adaptability and sustainability in the global economic environment.

In the past, financial risk management has always faced a changing market environment and while there were several traditional predictive models available for use, they have limited capabilities in addressing non-linear or high-dimensional risk factors. Therefore, enhancing the foresight in risk identification as well as the accuracy of decision-making within financial institutions will require further exploration into the application value of artificial intelligence and big data technology. Consequently, the goal of this paper is to conduct a comprehensive evaluation regarding the integration pathways and effectiveness of implementing these two technologies into financial risk predicting and managing practices. Findings from the research indicate that AI algorithms offer a deeper understanding of complex, hidden relationships among large amounts of multiple sources of information, while the availability of big data platforms provides opportunities for continuously monitoring risk in real-time. The combination of the two not only significantly improves the timeliness and accuracy of risk prediction, but also promotes the intelligent transformation of risk management models from passive response to active intervention.

This article examines the adoption practices of Enterprise Risk Management (ERM) within US and European multinational corporations. It synthesizes academic literature and regulatory guidelines to identify the key drivers, benefits, challenges, and regional nuances influencing ERM implementation. Findings indicate that US adoption has historically been driven by financial regulations like Sarbanes-Oxley, emphasizing internal controls and financial risk management. Conversely, European adoption is increasingly integrating Environmental, Social, and Governance (ESG) risks, propelled by directives such as the Corporate Sustainability Reporting Directive (CSRD). While ERM demonstrably enhances firm value and performance by optimizing capital allocation and reducing earnings volatility, challenges persist in achieving full integration and moving beyond mere compliance. The discussion highlights the strategic imperative of ERM in a complex global landscape, emphasizing the need for agile and deeply embedded risk management practices, and considers the implications of various firm-specific and macroeconomic factors on ERM propensity and total firm risk.