Building the Risk Map of the Insurer Risk Management Methods Iryna Nyenno, Doctor of Economics, Odessa I.I. Mechnikov National University

Risk assessment Allows an organization to understand the scale of the impact of potential threats; Evaluation is made by: probabilities exposed to Involves the use of qualitative and quantitative assessments (a priori and a posteriori approaches) Requires an assessment of the economic efficiency of risk management Risk assessment is the process of identifying and analyzing risks in relation to the objectives and key performance indicators of an organization.

Risk map

Impact on risk - management method Attraction of new goods, expansion of the list of services provided, approval of markets in other regions, lobbying in the government, conclusion of long-term contracts, implementation of government orders. In accordance with World Bank recommendations, political and legal risks should be attributed to the government, providing guarantees to the private sector when necessary. This is possible in the form of a public- private partnership. Key risk indicator, risk assessment Risk Management Study Marsh Political Risk Map. - Electronic resource. %20in%20the%20Year%20Ahead%20and%20Beyond- Marsh's%20Political%20Risk%20Map% pdf Political risks Risk management methods

Impact on risk - management method Insurance, the formation of a plan of action in crisis situations with the regulation of actions of employees, in particular, the provision of evacuation and early restoration of efficiency, PR- events Key risk indicator, risk assessment Uniform distribution and income differentiation of the population Macro-social risks Risk management methods

Impact on risk - management method Formation of a model of public-private partnership Key risk indicator, risk assessment Change of government and ruling political parties, change in the country's development strategy and development of the ports of the industry, unauthorized actions of the executive and local authorities The risk of privatization / nationalization or confiscation of property Risk management methods

Impact on risk - management method Insurance, refusal of projects Key risk indicator, risk assessment The volume of GDP, the volume of regional GDP, the consumer price index, per capita income, the volume of foreign investment, the discount rate of the national bank Macroeconomic risks Risk management methods

Impact on risk - management method Hedging Key risk indicator, risk assessment Direction of international financial flows, changing the order and size of budget financing Macro-financial risks Risk management methods

Impact on risk - management method Transfer of risk to the client, risk sharing between the private sector and the state; risk acceptance - the use of the unallocated balance of profits received in the reporting period as a reserve of financial resources allocated in the necessary case for the elimination of negative consequences Key risk indicator, risk assessment Risk-adjusted net discounted cash flow Force Major Risks Risk management methods

Impact on risk - management method Transfer of risk to insurance companies, outsourcing in accident recovery Key risk indicator, risk assessment Study on the environmental risks. Environmental risks and the risk of man-made disasters Risk management methods

Impact on risk - management method Intensification of activities during the favorable period, repairs during the period of inactivity in order to stabilize the load, the use of borrowed funds Key risk indicator, risk assessment The volume of sales of services, its dynamics, the frequency of fluctuations in the volume of sales of services. Season risks Risk management methods

Impact on risk - management method Hedging, insurance, risk taking (knowingly accepting the burden of losses or benefits) Key risk indicator, risk assessment Volumes and structure of trade, scope of work Industry specific risks Specific risks of services Risk management methods Impact on risk - management method Hedging, reinsurance, risk taking (knowingly accepting the burden of losses or benefits) Key risk indicator, risk assessment Volumes and structure of trade, scope of work

Impact on risk - management method Hedging using forward contracts and swap operations; formation of a price risk insurance fund for a period of temporary deterioration in market conditions Key risk indicator, risk assessment Volumes and structure of trade, scope of work Market risks Risk management methods

Impact on risk - management method Inclusion in the contract of conditions for indexation of income due to inflation, transfer of such risk to the National Bank, obtaining relevant guarantees (format of a public-private partnership); diversification of the currency portfolio (currency basket) of the port; security clauses, guarantees, guarantees, letter of credit, check and bill forms of payment, advance payment method and prepayment, hedging operations - currency swaps and forward contracts Key risk indicator, risk assessment Currency convertibility, exchange rate of currency transactions at the time of the conclusion of the contract and the moment of mutual settlements. * A high margin of value deprives the motivation for hedging. At the first stage it is more expedient to turn to outsourcing. Currency risks Risk management methods

Impact on risk - management method Establishment of long-term cooperation based on mutually beneficial relationships (discounts), marketing activities, obtaining guarantees from customers, identifying the financial stability of the customer, expanding the range of solvent customers, reducing dependence on customers with a share of more than 15%, increasing customer satisfaction, maintaining the customer base, searching for new beggars, risk limiting - setting a maximum period for diverting funds to receivables Key risk indicator, risk assessment Level of liquidity indicators and financial stability of customers, consumer complaints; the percentage of customers who applied again, the market share of the port, the availability of orders (contracts) in days, the number of regular customers, the number of new customers, statistics of excess discounts Consumer risks Risk management methods

Impact on risk - management method Long-term contracts, discussions with the ministries of shipping and oil on the continued use of the port, expanding the range of services offered and diversifying activities, refusing to work with intermediaries, reducing prices by improving production efficiency, improving the quality of services, cooperation with competitors. Privatization of terminals, obtaining budget support to improve port capacity, modernization of port terminals by private port operators Key risk indicator, risk assessment Competitive pricing and marketing methods, competitive advantages Competition risks Risk management methods

Impact on risk - management method Legally enshrined in the contract obligations of the parties, the failure of which can be appealed in court; protection of property interests - registration of all necessary documentation for the ownership of industrial and infrastructure facilities, as well as objects that can be attributed to intellectual property Key risk indicator, risk assessment Procedure for participation and attraction of funds from private investors and credit institutions, terms of concession agreements The risk of ownership, the risk of participation in public- private partnerships Risk management methods

Impact on risk - management method Flexible pricing policy, hedging using forward contracts, formation of a price risk insurance fund for a period of temporary deterioration in market conditions Key risk indicator, risk assessment Price conjuncture, dumping facts Pricing risks Risk management methods

Impact on risk - management method Analysis of legal restrictions in the port activity, transfer of risk to insurance companies Key risk indicator, risk assessment Environment for investment and business activities Legislative risks Tax risks Risk management methods Impact on risk - management method Optimization of the tax base, tax burden analysis, tax audit Key risk indicator, risk assessment Accounting data

Regulation risks Risk management methods Impact on risk - management method Impact on performance indicators in case of delayed response, impact on the results of ongoing trials Key risk indicator, risk assessment Legal framework

Impact on risk - management method Improving the efficiency of the organization of production activities, increasing the speed of work, improving the organizational structure, establishing communications, using the information network (intranet); management improvement: distribution of powers; change of the functional structure - transfer of the control function during shipments to check the correctness of prices and payment terms changing processes to improve decision-making mechanisms.; regulation of ad hoc processes and procedures Key risk indicator, risk assessment Compliance with quality standards, investment in modern equipment, the cost of restoring damaged goods, the coefficient of extensive and intensive use of equipment, established "direct" and "feedback" links - communication. Production and management risks Risk management methods

Impact on risk - management method Transfer to the client of the part of the risks for which he has more opportunities to neutralize the negative consequences Key risk indicator, risk assessment The level of prices for services; sales and profits; purchase prices of the goods; planned and actual purchases; the volume and quality of the goods in the process of circulation (transportation, storage); amount of distribution costs in comparison with the planned Commercial risks Risk management methods

Impact on risk - management method Improving the remuneration system and non-material incentives for employees, increasing the attractiveness of the social package, training specialists, attracting specialists on a temporary contract basis in order to prevent staff shortages due to retirement, outsourcing; creating reserves to cover possible excess payments under a collective agreement Key risk indicator, risk assessment Staff turnover, number of qualified employees, staff competence; timely performance of work; the presence of errors in the reports; additional costs associated with training, training, retraining of personnel; staff dissatisfaction, increased requirements for working conditions; labor productivity Personnel risks Risk management methods

Impact on risk - management method Increasing the cost of repairs, checking the level of security, careful adherence to the rules of operation, rent, distribution of risk between the port and customers, insurance of cargo and liability; Risk Reduction Financing: Replacing Equipment, Tightening Security Measures Key risk indicator, risk assessment The share of main equipment with wear over 60%, the number of outstanding technical supervision regulations, the availability of spare parts in stock, according to the volume of purchases, deviation from the plan (% of the monthly norm), the duration of downtime (h / m) on time, the number of equipment failures (once / month), the share of unused production capacity, the reliability of loading, the average loading time, the number of lost and damaged goods during loading Technological (operational) risks Risk management methods

Impact on risk - management method Accurate tracking of the directions of financial flows, risk distribution among the participants of the investment project; diversification of the real investment program - inclusion of various investment projects in the program Key risk indicator, risk assessment Discounted cash flow; Wald, Hurwitz, Savage, Laplace-Bayes criteria, estimated cost, standard deviation and coefficient of variation Investment risks Risk management methods

Impact on risk - management method Development and implementation of a long-term social security program, development of an early retirement scheme with security from the corporate non-state pension fund of the port; creating reserves to cover possible excess payments under employment contracts Key risk indicator, risk assessment Compliance with social guarantees for employees Social risks Risk management methods

Impact on risk - management method Preventing overdue receivables, partial advance payments, inventory control, increasing the company's solvency, avoiding the excessive use of current assets in low-liquid forms, refusing to use temporarily free cash assets in short-term financial investments; the minimum size (specific weight) of assets in a highly liquid form - the formation of a liquid cushion that characterizes the size of the reserve of highly liquid assets with a view to the forthcoming repayment of urgent financial obligations of the port Key risk indicator, risk assessment The liquidity ratio of the balance, current ratio, quick ratio, absolute liquidity ratio Insolvency Risk management methods

Impact on risk - management method The increase in the share of long-term borrowings in the structure of borrowed funds, the rejection of the use of large amounts of borrowed capital; Limiting - setting the maximum amount (share) of borrowed funds used in financing a real investment project; limiting - setting the maximum amount (share) of borrowed funds used in financing the formation of current assets Key risk indicator, risk assessment The coefficient of independence or autonomy, the ratio of borrowed and own funds Reduced financial sustainability Risk management methods

Impact on risk - management method Increased revenue, reduced costs Key risk indicator, risk assessment Profit from sales Break-even increase Risk management methods

Impact on risk - management method Refusal to carry out financial transactions, the level of risk for which is excessively high Key risk indicator, risk assessment The total capital turnover ratio, current assets turnover ratio, non-current assets turnover ratio (capital productivity), equity turnover ratio, inventory turnover ratio, accounts receivable turnover ratio, accounts payable turnover ratio Efficiency drop (turnover) Risk management methods

Impact on risk - management method Sale of assets, increase in profits and revenues Key risk indicator, risk assessment Return on sales, return on finished goods, return on assets (capital), return on net assets, return on non- current assets, return on equity, return on permanent capital Reduced profitability Risk management methods

Impact on risk - management method Asset sale, risk taking, increasing asset profitability; the maximum amount (share) of borrowed funds used in financing the formation of current assets. Key risk indicator, risk assessment Non-current assets, current assets Inadequate valuation and depreciation of assets Risk management methods

Impact on risk - management method The maximum possible reduction in production costs, an increase in the rate of profit and value added, monitoring the calculation of the cost price Key risk indicator, risk assessment Cost of work, balance sheet profit, net profit Inadequate costing and operating cost overrun Risk management methods

Impact on risk - management method Analysis of counterparty creditworthiness, operational analysis of the credit resources market and the search for an alternative financing option, the use of credit instruments with a fixed interest rate, limiting; loan portfolio diversification - expansion of the number of counterparties, recommended in conjunction with limiting the concentration of credit operations by setting a credit limit differentiated by groups of counterparties; the maximum amount of a deposit placed in one bank; diversification of the deposit portfolio. Key risk indicator, risk assessment The list of counterparties with which you can work without prepayment; a list of counterparties with which you can work on a prepaid basis, individual trading limits for counterparties, a limit on the sufficiency of funds per bank, a ratio of the maximum level of receivables or payables, a list of credit institutions where the port may have credit accounts, the cost of credit resources. Credit risks Risk management methods

Impact on risk - management method Reduced risk load Key risk indicator, risk assessment Models of Conan and Golder, Lisa, Springate The occurrence of aggregate bankruptcy risk Risk management methods