Enterprise risk-management system administration problems

The importance of risk management in modern economics is gradually growing; that is confirmed not only by a fast-growing number of scientific researches on risk problems but also by the growth of enterprises’ orders to design risk management systems, as well as by the lack of professionals in the sphere of riskmanagement. This can be the result of the world economic crisis that is taking place because of not taking into account the risks in different spheres of economic activities and risks on different management levels.

Today a new stage of management theory and practice development which is oriented towards a steady development and functioning of high risk business environment begins. Modern stage of management development shows the real side of globalization, complex and increased dynamics of economic processes to manage which it is necessary to create adequate diagnostic procedures of risk situations, methods, and management tools, as well as to suggest new requirements to the personnel qualification [1].

Risk management is a main function of management, the content of which is defined by economics level of development and also by the peculiarities of the present stage of the society development. So, in the period, when the main focus of the company was on the organization of industrial production on a large scale, applied disciplines of management such as financial planning, logistics were distinctly developing. Risk management was mainly based on managers’ intuition and did not go beyond the traditional methods of insurance. In succeeding years, the main focus in the development of management methods was on the marketing development. Strategic planning tasks, complex analysis of businesses, economic efficiency assessment, product quality managing was the first on the list. The main attention was paid to the development of management tools connected with the market risk. The process of functions integration started in the form of such directions as financial management, management accounts, consulting, etc. Since the 80s, the tendency to globalization of the world economics has become more developed. It caused not only serious structural shifts on the level of the international business and finances, but also had an influence on the separate countries’ national economics. The major factors of the influence on this process are the achievements of scientific and technical progress(computers and telecommunications), the reduction of the government’s intervention into economics and finances, first of all, in such developed countries as the USA, Great Britain and Japan, the increase of the capital flows on the international level and the rise of their mobility. At this time it is hard to say how the process will be developing later, but, even now, we can distinguish the following important consequences of globalization:

  1. There have been the structural changes in the relationships between underdeveloped and industrial countries. The transition of the industrial countries from the laborious production to the knowledge-based one has been implemented and goes on developing. The meaning of the international capital flow in the world trade has increased. The degree of the multinational corporations’ diversification, the international investing in the joint ventures and the agreements about the partnership have become higher.
  2. The enormity and number of the systemic financial crisis have increased (only for the last 20 years they have been observed in

93 countries, including 5 countries with the developed economy). On the one hand, it says that the rapid development of high technology markets, which have the newest achievements in the scientific and technical progress, was not a sufficient guarantee of the social development. On the other hand, such institutes of the world economic system, as the International Monetary Fund, the International Bank of Reconstruction and Development, the World Trade Organization, turned out to be insolvent. Their main objectives were production and realization of different policies to avoid critical situations and stimulate the development of the economical relationships on the global and national levels.

  1. Like never before has the competition in the sphere of scientific and technical development intercalation worsened. That period of time, which has been providing the competitive advantage and effective use of innovations, has been reduced to a minimum. The requirement of the insurance of the continuous innovations’ flow is becoming of current importance. Although, they are not always economically justified apart, they will give the base for the higher level of production in the future.
  2. Most of the classical elaborations in the sphere of management (including organization, planning, financial control, marketing, systems of accounting and analysis) turned out to be unable to provide necessary theoretical support in the developing of a new phenomenon of economics and creation of instruments to manage it. Recently, besides the further development of traditional disciplines, there have been many new examples of development (reengineering, controlling, risk management, crisis management, etc.) where the analysis and assessment of risks occupies a central place in different scopes of activity. Such categories as "risk" and "risk assessment" became an integral part in the disclosure of the context of all management functions.
  3. "Vulnerability" has increased significantly for external risks of individual enterprises, because the general trends, a level of their integration has increased into the overall economic links.

For Kazakhstan, the influence of globalization is not so great. The influence of external factors of instability in combination with the internal contradictions (the weak development of the science and technology innovation market, lagging development of methods and tools for management of economic entities in the market economy, lack of sufficient practical experience in the market economy, imperfection of the legislative framework) can reinforce the negative impact on the local economy.

The whole business activity of a company, especially its innovative component, is connected with the situation of uncertainty, which characterizes all the unforeseen situations on the market and in the work of the company. We must pay particular attention to this question: Is there an element of indeterminacy in the operational management of a company that is inherent in the realization of the management process?

The mathematical formulation of the problem of programming the path of object movement is reduced to the determination of the initial conditions, the conditions at the time of control and the end of the class of admissible control functions, which convert the object from the initial to the final state. Optimization of control is to ensure extremum of a certain optimality criterion (minimum cost, manage control time, etc.).

A rigorous mathematical formulation of the problem inevitably rests upon the fundamental impossibility of exact determining (measuring) the initial conditions of the object. The greater the measurement error is, the greater the deviation from the desired direction of the object is. It should be noted that further processes of external disturbance and ill-defined final positions are imposed. Being achieved in specific cases, the accuracy of measurements is determined by the nature of the measurement situation, a dedicated resource and measuring a variety of situations where it is determined by the criterion adopted for precision characterization of error. The requirements for measurement accuracy are established on the basis of priori estimates of allowable levels of errors of the first and second kind ("pass" or "false alarm"). If the requirements to the quality of the measurement are set as an acceptable level of losses, the allowable values of errors of the first and second kind are determined according to these requirements, and the required accuracy of measurements is determined according to these values [2].

As the nature and parameters of external and internal perturbations of the object for the economical production and, especially innovation systems, cannot be determined with sufficient reliability, the management of such processes fundamentally should be adaptive. With such management, there is adjustment of parameters and the structure of the controller in the control process.

The price of risk for the agent making decision is connected with a probability of risk occurrence and the magnitude of the damage from this event. The subjective side of risk is associated with an individual relation to its consequence of tolerance in relation to the risk. Investor's attitude to risk can be described by curves of aloofness as well as by the terms of utility theory.

Any risk of innovative design is multifaceted in its manifestations and represents a complex structure of elements of other risks. Manifestations of risk for each participant of a situation is individual (the Chairman of the Corporation Board, President, Vice Presidents, Development Manager, key specialists, marketers, financiers). Thus, the risk of the innovative project is the system of factors which is manifested in the form of complexes of individual risks for each participant of the project in quantitative and qualitative introspection

.Such a system can be represented as follows: R11, R12,… .R1n

R21, R22,…. .R2n

R= ….. ….. ….. ……


Wheren a possible number of individual risks m – a number of participants of the project

Rija particular risk for a certain participant of the process.

The risk value is individual for both participants and for the whole organization. The risk of any innovative project is a complex system of general and individual risks with complex multiple connections. The system of risk management of any innovation project must contain the stages in accordance with Pattern 1.

The goal is optimization of risks.

Picture 1. Structure of risk management of an innovative project

During the organization of the innovative project risks control system at the enterprise it is necessary to remember that efficiency of this structure action is determined, first of all, by observance of synergetic effect principle [3]. This principle assumes that the cumulative result of any system actions is determined, first, by its components’ degree of a target and effective one-orientation, and secondly, by their work quality. At the same time, the limiting factors of cumulative efficiency of this system are parameters of its weakest links. According to this, for the purpose of increasing risk-management efficiency in managing innovative projects, there are no secondary elements, and optimization of their action is an important strategic task for the enterprise. It belongs also to one of the risk management key stages, a problem of risks classification.

Nowadays, there are a lot of disputes about the optimal classification of innovative project risk system [4].

According to the results of the research, there is no universal classification at all. The author considers raising this task improper. Such point of view is created on the basis of the appeal to one of the main principles lying on the basis of decision-making process. The principle is that the decision and the choice of the parameters of its optimality is always determined by the specific task and characteristic of producing its subject, as well as by the specific factor-time situation. Hence, the classification of risk as an end in itself, irrespective to above-listed factors, is illegitimately wrong.

From the foresaid follows the logical conclusion: it is impossible to take as a basis the standard classification of risks in questions of their management in the frames of innovative project management not only because of the lack of such a universal solution, but also the impossibility of its creation in principle.

For every specific task the classification of risk will be an independent decision, because the nature of risk that accompanies a certain type of activity has its certain specificity that sets expediency of existence of certain characteristics in the system of classification. Since the risk of any innovative project is a special definition that is different from complex of risks of traditional activities of enterprise by reason of specific characteristics of the innovative project, classification of these risks, and also it should be different from other systems.

In order to find out what the system of classification of risks of the an innovative project should be like, it is necessary, first of all, to formulate the goals of its development. This goal must correspond to the task of the riskmanagement system in the frames of governance of an innovative project. The task of the risk management is to develop an optimal system of training and to implement a set of actions in order to reduce the danger of making a wrong decision and reduce possible negative consequences of an unwanted course of events during the implementation of the decision. Thus, the task of the risks classification should be optimization of provided information about risks as the basis for defining the expediency of using certain methods of management.

This classification should provide an opportunity to get information not only about the risk system accompanying the innovative project, that is to get the reliable ‘risk diagrams’ of the project, but also about the parameters of the management. In this case, the optimal set of features of the risks classification of an innovative project will be such a set of classification parameters, which will be able to fully reflect the relationship of the tasks of risk management, that are applicable in this situation, methods of risk management, nature of the risks of innovative project, characteristics of the specific enterprise and ambient, as well as the innovative project itself. The classification of risks, ultimately, should provide the opportunity to make adequate conclusions about optimality of a certain scheme of risk management and management of innovative projects in general.

Thus, classification features are determined by a set of parameters, the main of which is the goal of its design and features of nature of the classified phenomenon.

The choice of parameters should be based on these factors. Therefore, working out the risks classification, the thorough relationship reflection of innovative project risk characteristics, classifier and classification goal method is offered to use.

This risk is a dynamic indicator with changeable temporal characteristics.

There is an opportunity to emphasize the most significant risks for this subject.

The guarantee of reducing an incomplete information impact, i.e. expanding of familiar predictable risks range (scope) is provided.

Giving the opportunity to judge the applicability of certain risk management methods and their successful application on the basis of the classification[5].

There is a range of basic parameters, which a company should take into account, characterizing the innovative project risks.

There is also information about the risks, which are not under company’s control.

According to it, the following group of classification factors for innovative project risks are introduced.

Source of risk

The fact that risk is made by the specific object and not being an abstract notion is considered to be one of the risk characteristics. Thus, a source of risk must be one of the classification features. Emphasizing it as a classifier will let to define all the spectrum of object-participants in “the risk diagram” of innovative project. In other words, it will distribute efforts of risk management among (to) specific objects.


Owing to binary risk nature, division of them by controllability and possibility to influence the source of risk is advisable. From one side, the objective of risk management is about defining the areas of risk, which requires certain control. From the other side, the areas of risk require an adaptive mechanism due to impossibility of control. So, the objective of this classification is to divide risks into ones for which mechanisms are developed, and risks under which adaptation mechanisms are supposed to develop.


As innovative project risks are characterized by different degree of bad consequences for both innovative project and subject itself, it is reasonable to add acceptability in the set of risk classifiers as a parameter. It will let us distribute the risks by significance with relation to the influence on project implement.

From the position of this classification, one of the main tasks of risk-management of innovation project is ranking by the degree of acceptability in respect to an objective mark and in respect to specific economic subject producing and realizing the specific innovative project.

The main task of this classification is marking out an aggregate of catastrophic risks, the aggregate of it is impossible, as it leads to a project failure.

The time of appearance

The indication of aggregate risks(risk combinations) of innovative project is diversity of appearances of its elements, that is why, it is important to introduce a reference to a definite stage of project

This will develop a common risk management system in the time relationship of action, and also optimally allocate efforts to forecast and take preventive and operational measures

The duration of impact.

As the characteristic of any risk is presence of consequences, which can appear not only as eventual losses but also in duration of impact of risky event on innovation project subject, it is suggested to classify the risks by duration impact on the system of innovation project.

The introduction of this classifier will determine the severity of the occurrence of an event from the perspective of the duration of exposure to the enterprise

The degree of determinism

As the nature of the risk of the innovative project corresponds to the essence of the innovative project, one of the risk characteristics is informational complexity and multicomponent, generated by the fact that none of the innovative projects is implemented in full or complete certainty of uncertainty.

As an innovative project is implemented within various information environments, from the determined to the indistinct sets of the system, the aggregate of risks consists of:

  • probabilistic and deterministic risks for which a random distribution quantity is exactly known, but it is unknown which specific value will take a random quantity;
  • risks characterized by subjective probability(distribution of the random quantity is unknown, but probabilities of individual events are known and defined experimentally);
  • risks with the nature of the uncertainty interval (the distribution of the random variable is unknown, but we know that it can take on any value within a certain range);
  • and risks that belong to the nature of the fuzzy set, when the outcome of the event is known only to a certain approximation with a certain degree of belonging to these outcomes.

From this definition of risk, firstly, the risk of the innovative project has different ability to predict, and, secondly, recognition of different nature, and accordingly, there are different uses of one or another method of recognition and prediction. Therefore, it is advisable to introduce a classification of feature determinism degree of risk. This classification will enable the researcher to determine the method of describing a particular risk, as well as the device description and analysis of the overall risk of the innovative project.

Traditional specificity

Taking into account that the risk of innovative project is a set of risks, it is particularly specific for this innovative project, implemented in the environment of each economic entity and the risks that are specific to the traditional business processes, it is proposed to introduce as a criterion of classification features of a conventional or risks specificity. The necessity of introducing such a classification feature is based on the determination of innovative project, which has both features in comparison with the risks of traditional kinds of financial and economic activities, and communities assuming that, by virtue of a dual nature, it has its own traditional risks from the perspective of ordinary business activities, and specific risks for the project. This is useful to distinguish separately the risks associated with innovative design, as well as specific company, industry, etc. Information about the combination of traditional risks of a specific innovation project will allow to use the best, already approved devices for traditional risk management business process and build an interconnected risk management system of a innovative project as a whole, taking into account the availability of specific risks.

Retrospectiveness, “genetics” Considering that the risk of an innovative project is not only a set of risks posed by the adoption of a decision on the implementation of an innovative project, but the totality of risks producing its subject, it is advisable to add a retrospectiveness ("genetics") to the group of classification factors. This classification of risks will make a conclusion about what kind of risks in the project are the product of the enterprise activity, and which are directly related to the introduction of innovative tasks in enterprise activities.

Such classification, first of all, can define connection between retrospective and perspective risks and influence the realization of an innovative project and then build a different management system. The main goal of this classification is to define not constructive, retrospective risks and to take measures to reduce them. The classification can define the risks which can appear in the future.

On the basis of the main classifications, the total classifications of innovative project risks will be determined, or in other words, dynamical “risk profiles” which give the information on the basis of next dynamical “risk panoramas”:

Current and innovational, or concerned with an innovative project, before determining the goals of the realization, or after making the decision. The given comparison can define where the project can lead the business. That way helps to judge expediency of the project.

Initial and final regarding to the risk management measurement system. In this case we can judge expediency of the realization of the project. Current classification allows to compare initial, basic, risk profile, the condition of the risk system at the moment of mak-

ing decisions about the necessity of realization of innovative project and the final risk after the development of risk management system.

“Step-by-step”, which defines the condition of the project risk systems at the definite stage of its realization, and give the chance to judge expediency of the project.

Similar classification system of risks of the innovative project allows to take necessary and qualitative information which is appropriate to the requirement and can build the optimal system in the business.

Classification of the risk and other elements of this system should be appropriate for the providing the effective risk management.

Thus, risk of an innovative project is a complicated definition and the total of the risks, which combine the elements, connected with this innovative project. This project is implemented in the concrete economical business and its components, which are typical for business-processes.

Besides, this type of risk is an integral part of an innovative project, and its characteristics are tightly interrelated both with the nature of an innovative project and characteristics of its producing subject. According to this definition of the innovative project’s risk, it turns out that this very definition is quite justified, as the innovative project’s risk is an interrelated multitude of elements that could be related to a certain multitude according to a certain criterion. Moreover, there will be a number of risks for every certain project and its producing subject, at the same time their classification features of innovative projects complex will be common as they are given for any innovative projects.


  1. Yekaterinoslavsky Y.Y., Medvedeva A.M., Schenkova S.A. Riskibiznessa (diagnostika, profilaktika, upravleniye). – M.: Ankil, 2010. – p. 280.
  2. Arysbekova D.A., Kulbatyrov N.N. Industrialno-innovatsionnoye razvitiye Kazakhstana: sostoyaniyei perspektivy. – Almaty, 2013.
  3. Kaplan Robert S.Norton Deivid P. Strategicheskoy eyedinstvo: sozdaniye sinergii organizatsii s pomoschyu sbalansirovannoi sistemy pokazatelei. M.: Progress, 2006.
  4. Thomas S. Coleman, A Practical Guide to Risk Management.Kindle Edition, Published July 8th 2011 by Research Foundation of CFA Institute, 206 pages.
  5. David Hillson, Ruth Murray-Webster. Understanding and Managing Risk Attitude. – Paperback, Published March 18th 2016 by Routledge, 208 pages.
Year: 2016
City: Oskemen
Category: Economy