Improving Investment Risk Management Methods in the

Implementation of National Projects and Government Programs

Askhab Alievich Indarbaev

Financial university under Government Russian Federation, Moscow

Keywords: Problems of investment of rational projects, investment risk management, investment risk assessment,

investment risk regulation methods.

Abstract: The results of the study of the factors of the formation of risk events of investment, confirmed by the results

of the study conducted by the Federal State Statistics Service regarding the distribution of risk factors,

identified the reasons for the investment activity of companies. Their structure was revealed as a risk

formation factor. During the FSGS survey, it was shown that about 30% of the leaders of the analyzed

companies noted that the implementation of investment activities leads to an increase in the competitiveness

of their business, 38% of the studied companies noted the increase in labor productivity. But investment risk

management methods are applied only in 49% of businesses. The success of realizing the potential of

innovation is directly related to the introduction of modern management methods, including risk management

methods with the substantiation of risk assessment methodologies and methods of their regulation.

1 INTRODUCTION

The main distinguishing feature of investment risk

management methods is that their accuracy decreases,

which leads to the development of almost specialized

directions in statistics, namely the theory of planning

an investment experiment.

As a result of the study of literature and

supplemented by the author in a number of works

[2,3,4], methodical approaches to the analysis and

assessment of the risk factors of investment projects

of state programs should be noted that at the moment

there are many different approaches to this problem.

However, the choice of a specific method for

assessing risk factors depends on the limited yet (and

apparently) access to information resources,

statistical data, on the possibilities of qualification

and competence of the attracted experts in the

investigated area, technical means and analysis

objectives, etc. This study is devoted to improving the

methods of choosing and evaluating risk

management.

2 METHODS AND

MAINTENANCE OF

RESEARCH

After identifying, analyzing and evaluating the risk

factors, we turn to the consideration of methods for

regulating and managing the risk factors of the meso-

level of investment projects of state programs.

The COSO standard considers such risk

management methods:

 risk evasion, i.e. non-use of risky procedures;

 risk reduction;

 redistribution of risk, where first of all means

external insurance, hedging, risk transfer of a

third-party organization;

 risk acceptance, i.e. none of any action.

In one of the first risk management practices, the

Australian-New Zealand Risk Management Standard

(Revision 2028) AS / NZS 4360 offers the following

risk management tools:

 avoiding risk, i.e. termination of risk activities;

 reduction of the likelihood and consequences

of the implementation of the risk event;

 risk diversification;

 risk localization (with respect to residual and

non-revealed risks).

Indarbaev, A.

Improving Investment Risk Management Methods in the Implementation of National Projects and Government Programs.

DOI: 10.5220/0010697000003169

In Proceedings of the International Scientiﬁc-Practical Conference "Ensuring the Stability and Security of Socio-Economic Systems: Overcoming the Threats of the Crisis Space" (SES 2021),

pages 215-218

ISBN: 978-989-758-546-3

215

In FERMA Standard, the main risk management

method is to finance the risk under which the funding

for the consequences of risk is the basis of which is

considered insurance. V. Nikonov in their work

described the following risk management strategies:

 risk acceptance;

 risk mitigation (reduced probability or

consequences of the risk event), including

elimination of vulnerability points,

diversification, hedging;

 risk transfer (transferring another risk company

for money), first of all insurance and

outsourcing.

S.M. Vasin and V.S. Shutov offer such risk

management methods:

• Risk evasion, i.e. In this case, the refusal to

perform risk-related operations;

• risk taking, accompanied by the creation of

reserves;

• avoiding risk, under which the risk transfer is

understood (external insurance and hedging),

diversification, limitation.

The risk management of investment projects of

state programs of the meso level of regulation in the

general submission is based on the list of specific

methods. Each of the methods includes a combination

of some specific measures and tools, and in particular,

specific technical, organizational, legal financial and

any other actions that are carried out by the

participants of the investment project in order to

manage the risks of this project. The classification of

project risk control tools can be carried out according

to the following features:

• areas of activity;

• according to management methods;

• according to the life phases of the project cycle;

• types of recipients of results (beneficiaries).

One of the ways presented in the literature and

methods of risk management methods in the process

of managing the risks of the meso-level investment

project of the state programs includes methods of

reduction, conservation, as well as the transfer of

risks to another subject or participant. Minimizing the

level of risk denotes a decrease in either the size of

the intended damage, or the likelihood of

accomplishing unwanted events. Mainly

minimization is implemented using preventive

technical and organizational events. For example,

training personnel safety, installation of fire safety

control systems, informing personnel on indicators of

risky situations, etc.

The exception or abolition of the risk factors of

the meso-level of investment projects of the state

programs involves the refusal of investors from the

risk activity or a radical change in the implementation

of the project, as a result of which the level of this risk

will be reduced to zero. Minimizing the intensity of

the manifestation of risk factors (minimizing the

likelihood of its manifestation) is an organization of

project implementation in such a way that the project

management, including its participants, can have a

maximum impact on risk factors preventing and

controlling it by minimizing the probabilities of

negative situations. The monitoring of risk factors

includes a whole range of activities aimed at

minimizing losses if an unfavorable event cannot be

prevented.

Saving risk factors at a fixed level may not always

mean the refusal of any actions aimed at

compensation for damages.

Measures to diversify risk factors involve the

transfer of responsibility for the implementation of

risky events to third parties (companions, banks, etc.)

in the event of preservation of the present level of

risk. The following can be attributed to them:

• financial guarantees;

• transmitting part of the risk of insurance

structure for a fee defined by the insurance

company;

• trading contracts, guarantee contracts and

others.

The adoption or absorption of risk is one of the

ways to organize activities (within the risk-appetite),

as a result of which the damage in the event of a risk

situation will completely fall on its participants.

Given the time factor, the risk management tools

are classified into up-to-events (preventive) and after-

events.

The most common approach to the classification

of risk management tools is:

• risk evasion,

• diversification (distribution),

• localization,

• compensation.

Diversification is defined as the most important

and most popular method of risk management and can

be defined as the distribution, dilution, for example,

of the company's assets between different types of

activities, the results of the implementation of which,

as well as the implementation of these activities are

not interrelated.

During the planning and implementation of the

investment project of the state program, the following

forms of distribution of risk factors are possible:

 diversification of activities in the project;

 diversification of sales markets for the project's

products;

SES 2021 - INTERNATIONAL SCIENTIFIC-PRACTICAL CONFERENCE "ENSURING THE STABILITY AND SECURITY OF

SOCIO - ECONOMIC SYSTEMS: OVERCOMING THE THREATS OF THE CRISIS SPACE"

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 diversification of suppliers of materials,

components, raw materials, growth of the

number of participants (in order to reduce the

share of risk per participant) etc.

The practice of using syndicated loans should be

attributed to one of the modern tools for distributing

risk among the participants of an investment project.

Thus, companies wishing to implement risk sharing

must rely on the business ethics and integrity of their

partners.

Part of the scientific researchers include

diversification in the group of methods of risk

dissipation. Risk factor dissipation tools act as the

most flexible risk management mechanism. In this

situation, the company seeks to minimize its risk by

involving other companies as partners in solving its

problem situations.

Unfortunately, in business practice, the most

common methods are risk avoidance.

Risk avoidance is implemented by various

instrumental approaches. The main disadvantage of

this method is the rejection of innovative promising

projects, the implementation of innovative business

ideas, which in a market economy can lead to

stagnation, a decrease in competitive advantages and

loss of solvency.

Risk compensation is essentially similar to

insurance, but with its own funds and provides for the

creation of reserves – informational, financial, and

material.

Reserving funds as a method of covering

unforeseen expenses. As noted by M. V. Gracheva,

foreign experience allows for an increase in the cost

of the project by 2-7% due to the reservation of funds

for force majeure, and Russian practice requires a

significant increase in this indicator and provides for

the establishment of a ratio between the potential

risks that increase the cost of the project and the

amount of additional costs associated with

overcoming violations during its implementation.

Material reserves — a specially created insurance

reserve, for example, the formation of a stock of raw

materials and materials to ensure uninterrupted

production for a certain time without additional

supplies.

Risk compensation methods are used in

organizations where strategic planning is carried out.

This method is effective only if the strategy

development procedure penetrates exactly into all

areas of the organization's activities.

These methods have become widely used in large

industrial organizations of industrialized countries in

the process of mastering innovative products,

introducing innovative technologies, the commercial

result of which raises some doubts. These are usually

certain types of products that require active R & D or

the application of new scientific results that have not

yet been tested in industry.

Systematization of risk management methods at

the meso-level of investment projects of state

programs offers six widely known groups of risk

regulations (evasion, diversification, localization,

transfer, etc.).

Some researchers also distinguish a group of

socio-psychological methods of risk management.

This group usually includes such types of measures

as doing business in a socially responsible manner

with the application of CSR principles, maintaining a

certain level of organizational culture, raising

employees 'awareness of possible risks of the

company, forming employees' assertive behavior in

relation to risk, forming a positive investment image

of the organization, etc.

Having considered various views on the methods

of risk management of economic entities, we will

present a schematic systematization of these methods

aimed at managing meso-level risks of investment

projects of state programs.

Currently, using the experience of foreign

practice, we can recommend, on the one hand, the

standard algorithm (scheme) of risk management of

the organization is regulated by specialized risk

management standards, which in general is quite

universal. But, on the other hand, the sequence of

actions has a number of differences, showing the

techniques and methods of evaluating investment

projects (with the establishment of investment

efficiency criteria), these are criteria for reducing

general economic risks associated with the variability

of the context of the external and internal business

environment. In foreign practice, updated risk

management standards have been developed and

actively applied: the ISO 31000 "Risk Management"

standard, the standard of the Federation of European

Risk Managers ' Associations (FERMA), the COSO-

II standard and the Sarbanes-Oxley Act (USA), the

South African KING III standard, adopted in

February 2010, etc. But for Russian practice, it is

important to adopt Russian standards that take into

account the specifics of the country's economy,

adopted recently (in December 2019) and put into

effect from January 2020. At the same time, these

developments are practically unknown to Russian

business, so the task of implementing such modern

management methods, taking into account risk

management, is relevant for the investment practice

of Russian business.

Improving Investment Risk Management Methods in the Implementation of National Projects and Government Programs

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3 CONCLUSIONS

The results of the study of risk event formation

factors, confirmed by the results of the study

conducted by the Federal State Statistics Service on

the distribution of risk factors, showed the reasons

that limit the investment activities of companies.

Their structure was identified as a risk-forming

factor. In the course of the FSGS survey, it was also

revealed that about 30% of the managers of the

analyzed companies note that the implementation of

investment activities leads to an increase in the

competitiveness of their business, 38% of the studied

companies noted an increase in labor productivity.

But investment risk management methods are used

only in 49% of businesses. Investments are usually

directed to the introduction of innovations

(technological, innovative, organizational,

managerial, etc.) that lead to lower costs, increase the

competitiveness of products, and new technologies

lead to increased productivity, which generally

increases the competitiveness of enterprises. But the

success of realizing the potential of innovation is

directly related to the introduction of modern

management methods, including risk management

methods with the justification of risk assessment

methods and methods of their regulation.

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