Development of methodological approaches to establishing an integrated risk management framework for leasing transactions in Ukraine
DOI:
https://doi.org/10.35774/visnyk2017.03.049Keywords:
risks, leasing transactions, risks of leasing transactions, risk mitigation techniques, integrated risk management framework for leasing transactions.Abstract
Based on studies of domestic and foreign researchers, the article gives a modified and extended classification of risks related to leasing transactions which includes a new classify cation attribute ‘by types of leasing activities’ (in terms of risk management). Risk mitigation techniques for leasing transactions are described in detail, as well as their essence, ways of introducing and expected outcomes. The advantages of securitization are summarized and key reasons for low efficiency of this method in the domestic leasing market are identified. For these reasons, the domestic stock market is less developed and Ukraine’s current legislation on leasing is imperfect.
It is pointed out that success in development of Ukraine’s financial market relies on the growth of leasing along with the efficiency of financial and credit mechanism that supports leasing transactions and determines the quality of risk management framework as an integral part of such a mechanism.
The process of risk management for leasing transactions is formalized. A comparative analysis of fragmentary and complex approaches applied in Ukraine towards establishing a risk management framework for leasing companies is undertaken. The paper justifies the necessity of establishing an integrated risk management framework for leasing transactions as part of financial and credit mechanism that supports leasing transactions.
The need for establishing such a framework is driven by the following market trends: globalization; increased competition; company consolidation; product standardization; product life cycle decrease; technological innovation; increased attention to risks given by the state, society, stockholders and board of directors.
It is stated that establishing an integrated risk management framework for leasing transactions involves the following progressive steps: setting goals and targets, identifying and evaluating risks, planning for potential risks, monitoring risks and introducing risk management process.
The article highlights the main goal of an integrated risk management framework for leasing transactions, long-term tasks for achieving this goal, major function that the framework should perform and principles that it should preserve.
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