Irina Voronova

Methods of analysis and estimation of risks at the enterprises of non‐financial sphere of Latvia

The author considers the problems of analysis and assessment of risks at the enterprises of non‐financial sphere basing on tactical standards of risk management. The author studies the development and impact of the theory of economic cycles on the system of risks in entrepreneurship of Chizhevskys and Kondratjevs temporary cycles that are at the same time space cycles. The author expresses their attitude to the opportunity of using autogenetic and risks identification. As‐trolinguistics studies the nature of changes in macroeconomic environment on the basis of information about the mutual position of the solar systems planets in the process of their motion. This paper discusses how variety of scope methods may be applied for assessment of the profile of risks at the enterprise.

Entrepreneurship insolvency risk management: a case of Latvia

Financial crisis and its consequences are visible in the capital adequacy of many commercial banks, which indicates that the approach banks took to assess credit risk was not sufficiently sophisticated. This article discusses practical methods of insolvency risk modelling for enterprises. In this paper, the authors analysed the accuracy of ten models developed by foreign authors to assess insolvency risk, which were validated on the database of Latvian companies. The authors have shown that models developed on historical data for foreign companies are less accurate than the model developed on the basis of financial indicators of Latvian companies. The authors developed a three-factor model that estimates probability of default of Latvian enterprises based on historical data for 1,272 enterprises using binary logistic regression analysis.

Assessment of the Stability of Insurance Companies: The Case of Baltic Non-Life Insurance Market

Abstract The study gives an overview of the Baltic non-life insurance market. The purpose of the research is to summarise stability statistics on solvency ratios, risk profiles and capital surplus, which was contained in Solvency and Financial Condition reports (SFCR) in 2016 published first time by non-life insurance companies in European Union and Baltic market (Latvia, Estonia, and Lithuania). Solvency II came into effect in 2016, and these reports have been prepared using the new requirements of the Solvency II framework. All non-life insurance companies are required to have eligible own funds at least equal to solvency capital requirement (SCR) in order to avoid supervisory intervention (own funds divided by SCR are required to be at least 100 %). The SCR is based on well known risk measure value at risk with 99.5 % confidence level over a one-year time horizon. Baltic non-life insurance companies were strong capitalized (median 155 %) in 2016. It means that all Baltic companies can survive even if 1 in 200 years events have occurred although Baltic solvency coverage ratio is lower than the median ratio in European Union (209 %). For Latvian non-life insurance market, solvency ratio median is the lowest in European Union comparing by countries. The authors have analysed the historical development of the market and have calculated financial ratios, Gini’s concentration index, as well as dissimilarity index. The authors have investigated the current and future internal and external risks and issues for the Baltic non-life insurance market, such as political environment, low-yield environment, and market competition due to new mergers and acquisitions (M&A) activities, and a new rule for accounting for insurance companies IFRS17.

Risks Assessment of Trade Services

The goal of the research is to study types of risks, their identification and classification and assessment possibilities in activities of Latvian trade services enterprises. The authors have created classification of the trade services technological process risks and have carried out a survey of the most important risk factors in the stages of the trade services technological process. Also, the authors have created the trade services technological process risks matrix. The risks matrix is a quantitative assessment of risks. Risks have been arranged by their size of possible losses. The experts’ method for economic risks assessment has been used and a model of enterprises’ risks identification, classification and assessment for the trade services sector of Latvia has been made. The authors have used their own created model of enterprises’ risks identification, classification and assessment to research economic and financial risks by their effect on Latvian trade services sector enterprises’ development. From the year 2004 till the year 2011, the authors studied medium financial indexes of trade services enterprises in Latvia. Based on economic analysis of trade services enterprises’ medium financial indexes, risk-level dynamics assessment has been created, using the special coefficient method.