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THE RATIONALE OF PROTECTION OF RISK IN MODERN CONDITIONS
Irina Gadd
1713 Woll-street, suite 416 Phoenix, Аризона, 10120, kolleg MPA, 2/12, USA
Abstract: In modern conditions enterprises need to develop relevant means of protection against risks.
Key words: Risk, efficiency, design, innovation, profit.
When protection against risks of innovation projects in the food industry, the highest efficiency is achieved by the use of tools active risk management. Such arrangements imply the need for periodic implementation of certain protective measures (in the case of "passive" protection), or adjustment of their parameters (for example, the volume of hedging). However, risk management is associated with certain costs (payment of commissions, etc.), and in some cases these costs may exceed the potential damage from adverse events. As a consequence, an important task is the definition of criteria for making decisions on implementation of protective measures, and identify methods of evaluating their effectiveness.
Another important aspect of risk management of innovation projects in the food industry, it is the necessity of building a comprehensive risk management system covering all the steps from identification to implementation of protective measures, the subsequent make any necessary adjustments and assess the effectiveness of protection. The importance of such a system is due to the need for rapid response to changes in the economic environment of the project, which have an extremely high dynamism.
On the basis of the above-described methodological approach researchers have proposed two main methods of evaluation of investment efficiency, the appropriateness of which is causing hot debate:
1. Method NPV (Net Present Value - NPV);
2. Method of internal rate of return (Internal Rate of Return - IRR).
In the conditions of uncertainty inherent in almost all innovative projects (implemented in the food industry and in other sectors of the economy), the task of assessing the effectiveness of investments by the NPV can be solved in one of two ways:
1. By adjusting the discounted cash flows;
2. By increasing the discount rate.
In assessing potential efficiency, the subject of risk management needs to compare two alternatives of the project without the implementation of protective measures and the implementation thereof. Given the above findings regarding the methodological bases of such evaluations, the appropriate procedure should, in the opinion of the author, as follows.
The results of the study allowed to construct a comprehensive system of risk management of innovation projects in the food industry. This system is a set of management procedures, including risk management planning, identification, risk analysis, decision-making about the protection, and further monitoring and risk assessment of the final efficiency.
The proposed system should apply in respect of each of the identified risks of the project during the term of the relevant risk. If the project is subject to several risks at the same time, they will be managed in parallel.
The use of an integrated system of risk management can significantly improve quality at the expense of formalization of decision-making procedures, elimination of subjectivity of the estimates and reduce the likelihood of errors in management. As a consequence, it allows to
significantly improve the financial results of the innovative project, which is especially important for food companies in modern conditions.
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