The main goal of organizing any business is to maximize income. However, any business entity, when investing its capital, is faced with manifestations of certain risks, sometimes even losses, which may be associated with the non-receipt of expected income. As a result, a zero result can be obtained from the introduction of a new project, or even an entrepreneur will suffer losses. A good risk analysis can help prevent these negative consequences.
It provides for risk assessment in case of their occurrence using established criteria that should take into account all costs, as well as environmental factors and socio-economic aspects.
Qualitative analysis makes it possible to obtain a result that defines the classification of risks in terms of the probability of their occurrence and expected consequences.
The main problem in their management is the correct determination of their list at the identification stage. Without this, it is simply impossible to manage these negative factors due to the need to attract significant personnel and financial costs. Therefore, a qualitative analysis is aimed at the correct division of risks into groups and their alignment in a certain order by priority. Their classification, for example, can be carried out by time proximity. Those risks that can be detected in the near future should have a higher priority than those expected in the distant future. In order to build them correctly, it is necessary to conduct an analysis using an assessment of the probability of occurrence and their impact on a future or current project.
Qualitative analysis is a fairly quick and inexpensive way to assign priorities, it is carried out throughout the project’s cyclic existence. It should also reflect absolutely all changes that may relate to the manifestations of risks in the project.
The main task of a qualitative analysis is to determine the risk factors and at what stages or in the process of performing what kind of work they arise. In other words, this type of analysis allows you to first potentially establish their areas, and then - to determine absolutely all varieties.
Assessment of financial risks consists in determining the impact on their degree in the project. Conventionally, all factors are divided into two main groups: subjective and objective.
Objective factors include factors that do not depend on the firm itself, but are consequences of the economic or political situation in the state. These are competition, inflation, economic and political crises, customs duties, ecology, etc.
But subjective factors depend directly on the activities of the company itself. This, for example, production potential, level of technical specialization, equipment, organization of labor, level of safety equipment, level of labor productivity, etc. This type of factors is of great importance for the organization, since the profit obtained at the end of the project depends on it.
With the correct and timely detection of these risks, it is possible to significantly reduce or completely prevent their negative impact on the implementation of the entire project. For this, it is necessary to very skillfully apply qualitative analysis and develop appropriate effective measures to minimize such negative consequences.
That is why any manifestations of financial risks should be controlled in the process of concluding any transactions or carrying out monetary operations. Otherwise - there is a possibility of loss, and possibly ruin.