The Market Risk Analysis and Methodology of its More Effective Management in Smes in the Slovak Republic

Abstract

The worldwide surveys indicate that many enterprises still fight with the application of corporate risk management. Problems with the risk management application are observed in the Slovak enterprises, too. According to our survey, just the market risk is one of the most important risks of SMEs in Slovakia especially when they do not manage it sufficiently. They do not deal with conditions or the preventive measures which could reduce or prevent the problem. The aim of this paper is to present the results of the survey oriented on the business risks faced by the SMEs in Zilina region with a special focus on the market risk and proposing the methodology of enterprise risk management for more effective market risk control. The analysis of the market risk is carried out through the analysis of the selected statistical characteristics using the point and interval estimates and other methods of mathematical statistics. The results of the survey showed that the influence of the market risk on value of the SMEs in Slovakia should not be underestimated.

Assessing the Market, Financial and Economic Risk Sources by Czech and Slovak Smes

“…The major types of market risks are (Lam, 2003): interest rate risk, foreign exchange risk, commodity risk, equity risk, basis risk, other market driven risk. In addition to the most common market risk types listed above, there are other market risks, such as option risks and exposures to other market prices (Hudakova et al, 2017).…”

The Dependence of Perceived Business Risks on the Size of SMEs

“…According to several experts dealing with this issue (Sira et al, 2016;Klučka & Grünbichler, 2016;Hudáková et al, 2017;Leskaj, 2017;Kelíšek et al, 2017), managers have a dangerous tendency toward exaggerated confidence that when problems occur, they will be resolved in time and without much loss. Enterprises do not know in detail the risks and opportunities of processes, nor the actual statistics for the target key risk indicators.…”

“…Based on these surveys, certain conclusions concerning enhancing awareness and extending the knowledge of business owners and managers responsible for risk management processes were drawn up. It has been shown that the absence of risk management can be one of the main causes of entrepreneurial failure and loss of competitive advantage of enterprises in Slovakia (Hudáková & Lusková, 2016;Hudáková et al, 2017) In comparison with the situation abroad, the following conclusions were put forth: the benefits of introducing a risk management system in enterprises are not properly interpreted and understood, i.e. operational management of the problems that arise takes precedence over systemic preventive solutions, enterprise risks represent a significant problem in application, especially in the field of planning appropriate prevention measures to prevent or eliminate identified risks,   a negative view of risk management in enterprises is caused in part due to incapability or, in fact, a feeling of powerlessness in the possibility of influencing risks (the whole risk management thus loses importance), the risk management system in the enterprise is, in terms of the terminology and its understanding in Slovakia, insufficiently elaborated upon and not shared or communicated further, the fragility of various risk management methodologies and standards, i.e.…”

Cost benefit analysis within organization security management

“…Economic analysis, unlike financial analysis, takes into account all direct and indirect benefits of all entities involved in the project [12]. The key factor is not the profit but the socio-economic impact of the economic recovery [13]. As part of the organization's security issues, the CBA method can be implemented in the structure of the risk assessment and risk management process.…”