Risk management of financial and credit institutions and transnational corporations

№ 5, 2026

Authors: Ihor POSOKHOV

Issue: № 5, 2026

Doi: https://doi.org/10.37634/efp.2026.5.12e

Introduction. The paper examines key risk management methods in financial institutions and transnational corporations. The purpose of the paper is to summarize the theoretical aspects of risk management of financial institutions and transnational corporations. Results. For effective investment management, financial institutions and transnational corporations need to establish a risk management system. Such a system should minimize investment risks and prevent investors from losing their funds. Five main approaches to risk mitigation are analyzed: avoiding risky operations, risk minimization, insurance, diversification, and hedging. Using a hedging strategy with futures contracts allows you to fix the value of the underlying asset portfolio at the level that was on the hedging start date. Conclusions. The theoretical aspects are summarized and the methodology of risk management of financial and credit institutions and transnational corporations is investigated. For risk management, it is important to divide risk factors into price and non-price. The risk of changes in the price of the underlying asset can be eliminated by using the hedging method. Moreover, the hedging method can be used only in the conditions of a developed stock market. If the country does not have a developed stock market and there is no futures market on the stock exchange, then the hedging method cannot be used. To reduce the risk of investing in a certain asset, the diversification method can be used. Thanks to the use of the diversification method, the impact of losses on one asset on the total value of the investment portfolio can be reduced. To manage non-price risks, insurance can be used. In this case, the risks of using the asset will be compensated by the insurance company.

Keywords : risk management, risk aversion, risk minimization, diversification, hedging, futures contract

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