Academic journal article European Research Studies

Ensuring Financial Stability of Companies on the Basis of International Experience in Construction of Risks Maps, Internal Control and Audit

Academic journal article European Research Studies

Ensuring Financial Stability of Companies on the Basis of International Experience in Construction of Risks Maps, Internal Control and Audit

Article excerpt

JEL Classification Codes: G10, G32, M1, M4.

1. Introduction

Currently in terms of economic recession short-term priorities in financial activity of companies prevail over the long-term. The research of the Southern Federal District companies showed that in discussing the strategy about 70% of managers focus on period from one to three years. Only 9% of companies have enough confidence in perspectives for business development to predict a strategy for 5-10 years or more. In the course of the survey 35% of managers of the Southern Federal District companies noted that in 2015-2016 their companies faced serious risks and financial difficulties (Aksyonov, Sichev and Holina, 2016).

In 2016 35% of the responded executives out of 50 companies analyzed in the course of research expect deterioration of financial and economic indicators. 16% expect their improvement. Majority of directors (64%) believe that continuation of the Russian economy growth can be expected not earlier than 2017 (Aksyonov, Sichev and Holina, 2016). The list of main risks for Russian companies includes the following: geopolitical instability, change in consumers' behavior, expensive loans as well as lack of qualified managerial human resources.

Currently financial management implements tactical measures to the prejudice of strategic interests of companies' development. In conditions of crisis most companies revised their strategies under the influence of such factors as ruble devaluation, difficult access to the capital (first of all credit resources due to the lack of liquid pledge), reduction in oil prices and consequences of the sectoral sanctions introduction from the US and the European Union with regard to Russian companies. Management of a company is connected with delegation of the goals and tasks with which a manager faces (Thalassinos et al., 2013; Carstina et al., 2015).

Concentration of financial levers (rewards and limitations) in the manager's hands strengthens importance of these communications for the company's sustainable development. Control action from top is understood at the bottom as a signal related with the surrounding circumstances and processes. In the western culture of production high chances for a victory of the strongest are provided thanks to functioning of the uniform competitive field ("level playing field"), action of the general for all rules (Shpengler, 1995; Hamid and Won Kie, 2016).

According to A. V. Kuznetsov, "the operating influence from above is perceived below as the signal coordinated to surrounding circumstances and processes" (Kuznetsov, 2015). To ensure financial stability the companies must critically assess business processes and revise business models of development (Allegret et al., 2016; Grima et al., 2016).

Main direction of activities in modern management system is cost optimization, restructuring of core business processes of financial management on the basis of risk management programs, diversification of products and services. Management of the company financial stability is connected with more flexibility of financial strategy of development and adaptability when it is important to provide business development with financial resources in related industries, e.g. construction and processing companies (Averina et al., 2016; Havlicek et al., 2013).

Currently some Russian companies have stopped large investment projects. In order to ensure financial stability in conditions of increasing limiting factors Russian companies have started reformatting business processes, because they have not formed anti-crisis strategies of development as well as efficient business processes. Digital business transformation can be assigned to modern problems of modern system of the company financial management. To ensure financial stability modern companies need to introduce new information technologies not only in production but also in the risk assessment system. …

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