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Risk Management of Financial Activities in the Construction Industry
Kyrychenko S. О., Katsevych M. M.

Kyrychenko, Serhii О., and Katsevych, Marta M. (2024) “Risk Management of Financial Activities in the Construction Industry.” Business Inform 10:175–181.
https://doi.org/10.32983/2222-4459-2024-10-175-181

Section: Industrial Economics

UDC 33.2964.338

Abstract:
The article analyzes the financial risk management systems in the construction industry of Ukraine. The industry is characterized by high vulnerability to external economic and political factors, such as inflation, currency risks, instability of the macroeconomic environment and customer defaults. Over the past five years, the number of bankruptcies in the sector has increased by 15%, which indicates the need for effective risk management to ensure the financial stability of enterprises. The main risks faced by construction companies include market risks related to fluctuations in the prices of building materials (growth of 8% year-over-year), currency risks, credit risks, as well as liquidity risks due to delays in customer payments. The article examines the methods of risk assessment used in the field: VaR (method of statistical assessment of losses), stress testing, and scenario modeling. In addition, the implementation of modern management tools, such as BIM and ERP systems, is one of the key recommendations for improving the effectiveness of risk management. Such technologies allow companies to better control project processes, predict possible financial losses, and respond in a timely manner to changing conditions. The study also found that the existing risk management systems in Ukraine have significant shortcomings, including a low level of digitalization (only 25% of enterprises use modern risk management tools), lack of an integrated approach and insufficient legal protection. This is compared to international standards such as ISO 31000, which offers a system approach to risk management at all stages of the project. Only 15% of Ukrainian construction companies implement international standards in their risk management systems, which reflects the need to adapt these practices to increase the resilience of the industry. Macroeconomic factors, including inflation (average level in 2023: 12.9%) and currency fluctuations (the hryvnia exchange rate against the dollar has increased by 15% over the past five years), significantly affect the financial condition of construction companies. In addition, the cyclical nature of construction works creates additional risks, since the volume of construction activities varies depending on economic conditions. At the end of 2023, the volume of construction work in Ukraine increased by 22.6%, which indicates the recovery of the industry after crisis periods, but also emphasizes the importance of risk management in the face of economic fluctuations.

Keywords: construction industry, financial risk, enterprise, forecasting, method, financial losses.

Fig.: 1. Tabl.: 1. Bibl.: 21.

Kyrychenko Serhii О. – Candidate of Sciences (Economics), Associate Professor, Associate Professor, Department of Economics and Entrepreneurship, National Technical University of Ukraine «Igor Sikorsky Kyiv Polytechnic Institute» (37 Beresteiskyi Ave., Kyiv, 03056, Ukraine)
Email: [email protected]
Katsevych Marta M. – Student, National Technical University of Ukraine «Igor Sikorsky Kyiv Polytechnic Institute» (37 Beresteiskyi Ave., Kyiv, 03056, Ukraine)
Email: [email protected]

List of references in article

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