MANAGEMENT OF FINANCIAL RISKS IN THE MARKET ECONOMY

Abstract

The purpose of the article is the modern conditions of a market economy, financial risk management is one of the most critical components of strategic enterprise management. The uncertainty of the external environment, rapidly changing economic conditions, currency fluctuations, political instability, and other factors create additional threats to the stable financial position of enterprises. Under globalization and the integration of financial markets, companies face the necessity of effective risk management to ensure financial stability and adaptability in a dynamic environment.

The relevance of financial risk management is growing amid continuous economic shocks accompanied by heightened market instability. Companies lacking adequate risk minimization mechanisms are at significant financial loss risk, impacting their competitiveness and ability to fulfill obligations to partners and creditors. Therefore, the strategic role of risk management becomes crucial in building a system that enables timely responses to external environment changes and minimizes potential threats.

This article aims to analyze existing approaches to financial risk management in enterprises, assess their effectiveness under modern market conditions, and develop practical recommendations for improving risk management methods to ensure financial stability and competitiveness.

The scientific novelty of the study lies in the comprehensive analysis of current challenges in financial risk management, the evaluation of qualitative and quantitative approaches, and the identification of combined methods that integrate diverse strategies for optimal results. The research also highlights the implementation of advanced financial tools, such as derivatives and hedging mechanisms, tailored to mitigate specific risks effectively.

Conclusions. The study identifies key financial risks, such as credit, currency, market, operational, and liquidity risks, providing a classification and detailed analysis of their potential impact on enterprises. It emphasizes the importance of combining qualitative methods, such as expert assessments and SWOT analysis, with quantitative techniques, like Value at Risk (VaR), to enhance accuracy in risk evaluation and mitigation. Additionally, the article explores diversified strategies, including asset diversification, risk insurance, and leveraging financial derivatives, to mitigate market uncertainties and sustain long-term business stability.

The findings demonstrate that effective financial risk management extends beyond reducing potential losses—it enables companies to adapt flexibly to external and internal market changes, ensuring sustained growth and competitiveness. The study recommends a balanced approach to implementing risk management strategies, integrating qualitative, quantitative, and combined methods to create a robust risk mitigation framework.