Academic journal article European Research Studies

Tools of Financial Management of Reputational Risks

Academic journal article European Research Studies

Tools of Financial Management of Reputational Risks

Article excerpt

1. Introduction

In terms of modern economy, one of the company's main problems is to maintain its rating and reputation. Moreover a risk is an integral part of the economic entity functioning. This category is very ambiguous, which is expressed in its presence in all spheres of human life. That is why theoretical aspects of the "risk" category will be different for each area of its existence.

Keen interest to corporate reputation from the side of business arose in the last decades of the XX century. The reason for this was the transformation of the intangible concept of "goodwill" (business reputation) into financial one, which became the most important intangible asset of the company, evaluated in its balance sheet. The second, not less important reason for interest to the reputation is associated with the increased attention of the world business to the positioning of its social policy.

The problems of sustainable business development and analysis of the company's value as a result of various unrelated factors influence on its functioning attract attention of many researchers. This circumstance moves reputational risks to the number of main concerns of the large companies' management staff.

Majority of Russian companies do not pay enough attention to assessment, analysis and management of the reputational component due to the fact that the category of reputational risk, its origin and manifestation has not been studied enough in domestic research and regulatory system. However, despite the fact that management of this risk has not received proper distribution in Russia, the issue of reputation maintaining and development of tools for the purposes of identification, evaluation, analysis, monitoring and financial management of reputational risks is quite acute.

2. Purposes, methodology, structure of the research

The methodology of this study includes a set of methods and techniques to implement in practice evaluation, analysis and financial management of the company's reputational risks. Methods of evaluation and analysis focus on timely reporting about unfavorable, critical changes, not contributing to the intended target of development; and methods of accounting modeling with application of different cost estimations, aggregated accounting records, and a zero transformed balance sheet are aimed at financial management of reputational risks (Suryanto, 2016; Pociovalisteanu and Thalassinos, 2008; Thalassinos and Liapis, 2014; Vovchenko and Panasenkova, 2013). As a result of application of the recommended methods, focused on effective management of reputational risks, it is possible to assess the impact of internal and external factors on the company's value, to organize an adequate evaluation of the company's goodwill based on the use of aggregated (net assets) and disaggregated (net liabilities) indicators of property obtained according to a zero balance sheet (Ivanova et al., 2017; Lado Gonzalez and Calvo Dopico, 2017; Anureev, 2017; Kosinova et al., 2916; Robertie, 2016; Theriou, 2015; Epifanova et al., 2015;

3. Results

The issues of financial management of reputational risks were studied by many domestic and foreign authors. Due to lack of a uniform methodology for determining external and internal factors influence on the company's goodwill, each author contributes his additions. The authors suggest new hypotheses, which serve as a basis for the research, and approaches to an objective assessment of changes in the company's goodwill.

Based on the achieved results, the authors designed a structural and logical scheme of the process of analyzing the factors influencing the company's goodwill and its evaluation, which includes a series of sequential stages.

The proposed structural and logical scheme combines the methods of analysis and accounting methodology, allows presenting accounting and analysis of the company's goodwill and reputational risks as an integral system that complements existing methods for determining external and internal factors influence on the company's goodwill, corrects evaluation of the company's goodwill changes and allows estimating reasonably the company's value. …

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