Financial risks of Ukrainian enterprises: Analysis, management, and ways to minimise them in conditions of economic instability

O. Storozhenko
Abstract

The study aimed to identify the main financial risks for Ukrainian enterprises caused by economic instability. The research methodology included an analysis of secondary data for 2022-2024, in particular, statistical indicators of inflation, exchange rates and unemployment rates. The main results of the study revealed significant trends that have a substantial impact on the financial stability of enterprises in Ukraine. In 2022, inflation reached 26.6%, which significantly increased costs for enterprises. In 2023, inflation fell to 5.1%, but rising exchange rates and interest rates remained a major challenge for businesses. At the end of 2024, inflation rose again to 10.7%, causing further increases in product prices and reducing consumer purchasing power. Currency fluctuations had a particularly high impact on businesses, notably the 34.1% devaluation of the hryvnia in 2022, which created significant difficulties for export-oriented businesses. In addition, it was found that enterprises that used diversification strategies and financial derivatives were able to reduce the negative impact of currency risks. Furthermore, the study identified that currency hedging can reduce exchange rate fluctuations by 15-20% compared to other strategies. The findings of the study indicate that enterprises that use a comprehensive approach to financial risk management, in particular through hedging, diversification and effective use of state support, can maintain financial stability even in times of crisis. The practical significance of the study is determined by the development of effective recommendations for managing financial risks of enterprises in conditions of economic instability, which ensures their financial stability and adaptation to changes in the macroeconomic environment

Keywords

hedging; inflation; unemployment; interest rates; loans

Suggested citation
Storozhenko, O. (2025). Financial risks of Ukrainian enterprises: Analysis, management, and ways to minimise them in conditions of economic instability. Economics and Business Management, 16(3), 197-213. https://doi.org/10.31548/economics/3.2025.197
References
  1. Abaidoo, R., & Agyapong, E.K. (2023). Inflation uncertainty, macroeconomic instability and the efficiency of financial institutions. Journal of Economics and Development, 25(2), 134-152. doi: 10.1108/JED-09-2022-0166.
  2. Ahmad, H., Yaqub, M., & Lee, S.H. (2023). Environmental-, social-, and governance-related factors for business investment and sustainability: A scientometric review of global trends. Environment, Development and Sustainability, 26, 2965-298. doi: 10.1007/s10668-023-02921-x.
  3. Arenas, A.J., & Scudiero, E. (2023). Futures contracts as a means of hedging market risks. AiBi Revista de Investigación Administración e Ingeniería, 11(3), 42-51. doi: 10.15649/2346030X.3185.
  4. Athari, S.A., Irani, F., & AlAl Hadood, A. (2023). Country risk factors and banking sector stability: Do countries’ income and risk-level matter? Evidence from global study. Heliyon, 9(10), article number e20398. doi: 10.1016/j.heliyon.2023.e20398.
  5. Atichasari, A.S., Ratnasari, A., Kulsum, U., Kahpi, H.S., Wulandari, S.S., & Marfu, A. (2023). Examining non-performing loans on corporate financial sustainability: Evidence from Indonesia. Sustainable Futures, 6, article number 100137. doi: 10.1016/j.sftr.2023.100137.
  6. BBC. (2023). The hryvnia is already over 40. What is happening and what will be the exchange rate next. Retrieved from https://www.bbc.com/ukrainian/articles/c888p8z6p2wo.
  7. Burkova, L., Shepeliuk, V., & Rtyshchev, S. (2023). Management of financial risks of enterprises as a prevention component of their financial instability and bankruptcy for the sustainable development achieving. Economics, Finance and Management Review, 1(13), 98-114. doi: 10.36690/2674-5208-2023-1-98.
  8. Centre for Economic Strategy. (2023). Ukraine’s economy in 2023: Main points. Retrieved from https://ces.org.ua/ukrainian-economy-in-2023-tracker-overview/.
  9. Du, W., Gadgil, S., Gordy, M., & Vega, C. (2016). Counterparty risk and counterparty choice in the credit default swap market. Finance and economics discussion series 2016(087). Washington: Board of Governors of the Federal Reserve System. doi: 10.17016/FEDS.2016.087.
  10. Ekadjaja, M., Siswanto, H.P., Eka, A., & Rorlen, R. (2021). The effects of capital adequacy, credit risk, and liquidity risk on banks’ financial distress in Indonesia. In Proceedings of the ninth international conference on entrepreneurship and business management (ICEBM 2020). Paris: Atlantis Press. doi: 10.2991/aebmr.k.210507.059.
  11. Ekonomichna pravda. (2024). AMCU allowed MHP to open a company in Saudi Arabia. Retrieved from https://epravda.com.ua/news/2024/03/15/711211/.
  12. Exbase. (n.d.). Derivatives in the crypto industry. Retrieved from https://exbase.io/uk/wiki/derivativi-v-kriptoindustriyi.
  13. GMK Center. (2024). ArcelorMittal Kryvyi Rih plans to increase capacity utilization to 50%. Retrieved from https://gmk.center/ua/news/arselormittal-krivij-rig-planuie-zbilshiti-zavantazhennya-potuzhnostej-do-50/.
  14. González Calzadilla, A.C., Segovia Villarreal, M., Ramón Jerónimo, J.M., & Flórez López, R. (2022). Risk management in the internationalization of small and medium-sized Spanish companies. Journal of Risk and Financial Management, 15(8), article number 361. doi: 10.3390/jrfm15080361.
  15.  Inc. (2022). Southwest airlines just revealed an enormous advantage. Why doesn’t everyone do this? Retrieved from https://www.inc.com/bill-murphy-jr/southwest-airlines-just-revealed-a-huge-advantage-why-doesnt-everyone-do-this.html.
  16. Kagan, J. (2024). What is insurance? Retrieved from https://www.investopedia.com/terms/i/insurance.asp.
  17. Konchitchki, Y., & Xie, J. (2023). Undisclosed material inflation risk. Journal of Monetary Economics, 140, S82-S100. doi: 10.1016/j.jmoneco.2023.03.004.
  18. Kornyliuk, A., & Kornyliuk, R. (2024). Sectoral analysis of Ukrainian business financial resilience under systemic instability. Topical Issues of Economics, 7(277), 249-256. doi: 10.32752/1993-6788-2024-1-277-249-256.
  19. Kulhanek, L., & Sulich, A. (2018). Financial risk in the contemporary environment of enterprises. Humanitas Zarządzanie, 19(2), 49-63. doi: 10.5604/01.3001.0012.2038.
  20. Loi, A. (2023). Identification of investment attraction strategies to increase the economic potential of a trading enterprise. Economics, Entrepreneurship, Management, 10(1), 8-16. doi: 10.56318/eem2023.01.008.
  21. Lumivero. (n.d.). Probabilistic risk analysis in Excel. Retrieved from https://lumivero.com/products/at-risk/.
  22. MHP. (n.d.). Retrieved from https://latifundist.com/kompanii/51-mironovskij-hleboprodukt.
  23. MinfinMedia. (n.d.a). Devaluation of the Ukrainian hryvnia. Retrieved from https://index.minfin.com.ua/ua/economy/index/devaluation/.
  24. MinfinMedia. (n.d.b). Export and import of Ukraine. Retrieved from https://index.minfin.com.ua/ua/economy/gdp/eximp/.
  25. MinfinMedia. (n.d.c). Interest rates on NBU operations. Retrieved from https://index.minfin.com.ua/ua/banks/nbu/rates/.
  26. Ministry of Economy of Ukraine. (2024). EBRD’s Ukrainian business support programs will be modernized to meet the current needs of the economy. Retrieved from https://surl.li/dmaeie.
  27. Mizrak, K.C. (2024). Crisis management and risk mitigation: Strategies for effective response and resilience. In F. Mızrak (Ed.), Trends, challenges, and practices in contemporary strategic management (pp. 254-278). Hershey: IGI Global Scientific Publishing. doi: 10.4018/979-8-3693-1155-4.ch013.
  28. Msomi, T.S. (2023). The effect of interest rates on credit access for small and medium-sized enterprises: A South African perspective. Banks and Bank Systems, 18(4), 140-148. doi: 10.21511/bbs.18(4).2023.13.
  29. Nalçacığılı, E., & Özyilmaz, A.F. (2020). Crisis management and early warning systems in enterprises. ISPEC International Journal of Social Sciences & Humanities, 4(4), 387-437. doi: 10.46291/ISPECIJSSHvol4iss4pp387-437.
  30. National Bank of Ukraine. (2023). Commentary of the National Bank on the inflation rate in 2022. Retrieved from https://bank.gov.ua/ua/news/all/komentar-natsionalnogo-banku-schodo-rivnya-inflyatsiyi-u-2022-rotsi.
  31. National Bank of Ukraine. (2024). Commentary of the National Bank on the inflation rate in 2023. Retrieved from https://bank.gov.ua/ua/news/all/komentar-natsionalnogo-banku-schodo-rivnya-inflyatsiyi-u-2023-rotsi.
  32. National Bank of Ukraine. (n.d.a). Commentary of the National Bank on the inflation rate in 2024. Retrieved from https://surl.lu/iyykta.
  33. National Bank of Ukraine. (n.d.b). National Bank discount rate. Retrieved from https://bank.gov.ua/ua/monetary/archive-rish.
  34. Nechyporenko, A.V. (2023). Features of financial risk management of enterprise in the conditions of transformational changes. Economic Bulletin of the University, 56, 200-206.
  35. Nehrey, M., & Trofimtseva, O. (2022). Analysis of the agriculture sector of Ukraine during the war. Bulletin of V.N. Karazin Kharkiv National University Economic Series, 102, 49-56. doi: 10.26565/2311-2379-2022-102-06.
  36. Nihro, S., & Allawi, K.M. (2020). The impact of risk of exchange rate fluctuations on corporate profits: A review. International Journal of Research in Social Sciences and Humanities, 10(4), 451-459. doi: 10.37648/ijrssh.v10i04.043.
  37. Nowicki, J., Ratajczak, P., & Szutowski, D. (2024). Impact of macroeconomic factors on financial liquidity of companies: A moderation analysis. Sustainability, 16(11), article number 4483. doi: 10.3390/su16114483.
  38. Number of registered unemployed. (n.d.). Retrieved from https://index.minfin.com.ua/ua/labour/unemploy/register/2024/.
  39. Pavlov, K., Pavlova, O., Kryzhanivsky, S., & Savchuk, A. (2022). Financial security of Ukrainian enterprises: Current status, main problems and ways to solve them. Socio-Economic Problems and the State, 26(1), 3-11. doi: 10.33108/sepd2022.01.003.
  40. Pohrebnyak, A.Y., Dergaliuk, M.O., & Syvashova, V.P. (2024). Analysis of the financial crisis in Ukraine. Economic Bulletin of NTUU “Kyiv Polytechnic Institute”, 30, 61-65. doi: 10.20535/2307-5651.30.2024.313038.
  41. PrivatBank. (n.d.a). Exporter support program. Retrieved from https://privatbank.ua/business/prohrama-pidtrymky-eksporteriv.
  42. PrivatBank. (n.d.b). PrivatBank is a participant in the program “Affordable Loans 5-7-9%”. (n.d.). Retrieved from https://privatbank.ua/business/5-7-9.
  43. Propozitsiya. (2024). MHP became the leader of Ukrainian food exports in 2024. Retrieved from https://propozitsiya.com/ua/mhp-stala-liderom-eksportu-harchovogo-vyrobnyctva-ukrayiny-u-2024-roci.
  44. RiskWatch. (n.d.). Manage risk, meet compliance, improve security. Retrieved from https://www.riskwatch.com/.
  45. Shevchuk, L.T., Shevchuk, Y.V., & Pas, Y.I. (2024). Financial risk management and rehabilitation of enterprises in the conditions of marital state. Scientific Notes of Lviv University of Business and Law, 41, 158-167.
  46. Tan, D. (2024). The causal effect of economic sanctions on political stability: A two-stage difference-in-differences analysis. International Journal of Social Welfare, 34(1), article number e12707. doi: 10.1111/ijsw.12707.
  47. Tarasovsky, Y. (2024). Slovenian company controlled by MHP buys assets in Albania. Retrieved from https://forbes.ua/news/pidkontrolna-mkhp-slovenska-kompaniya-kupue-aktivi-v-albanii-25042024-20809.
  48. Tomashuk, I., & Tomashuk, I. (2022). Financial risk management of the enterprise as a component of ensuring sustainable functioning of the economic entity. Economy and Society, 39. doi: 10.32782/2524-0072/2022-39-64.
  49. Vărzaru, A.A., & Bocean, C.G. (2024). Digital transformation and innovation: The influence of digital technologies on turnover from innovation activities and types of innovation. Systems, 12(9), article number 359. doi: 10.3390/systems12090359.
  50. Virglerova, Z., Panic, M., Voza, D., & Velickovic, M. (2022). Model of business risks and their impact on operational performance of SMEs. Economic Research-Ekonomska Istraživanja, 35(1), 4047-4064. doi: 10.1080/1331677X.2021.2010111.
  51. Zadorozhnyy, Z.-M., Muravskyi, V., Zhukevych, S., Khoma, N., & Danylyuk, I. (2024). Financial stability in the management system of enterprises: System analysis and formalization of assessments in the conditions of sustainable development. Financial and Credit Activity: Problems of Theory and Practice, 6(59), 234-250. doi: 10.55643/fcaptp.6.59.2024.4592.
  52. Zhou, S. (2023). The current state and challenges of financial risk management. Highlights in Business Economics and Management, 21, 188-196. doi: 10.54097/hbem.v21i.14183.