Forecasting an enterprise's insolvency risk under uncertainty

Economic literature analysis has shown that there is currently no uniform approach to systematization of methods of forecasting the risk of insolvency, which means that there is not any objective understanding of the tools that can be used to monitor this risk. In this regard scientific and practical search for representative indicators for the formalization of the insolvency forecasting model is very important. The purpose of the research is to improve the conceptual apparatus and analytical procedures for the identification of insolvency risk. To achieve this purpose, the following tasks have set: to determine the nature of insolvency risk and its identification in the process of financial relations within a management system; to justify representativeness of the indicators in predicting insolvency risk; to form the insolvency risk forecasting model. Theoretical and practical provisions by national and foreign researchers investigating the problem under study have become the scientific and methodological bases of the research. We used general scientific methods of systemic and comparative analysis, economic-statistical and dynamic analysis of economic processes and phenomena. Scientific novelty of the results of this study consists in justification of the insolvency risk forecasting model. As for the practical significance of the research, it consists in the development of theoretical foundations for solving the issues that arise while diagnosing insolvent enterprises, as well as in the application of the results obtained in the practical activities of the bodies of the institution of bankruptcy. The model presented makes it possible to predict an enterprise''s insolvency risk basing on the general trend of development and the corridor of bankruptcy risk fluctuation. This model also allows us to determine the significance of each index factor, its quantitative impact, and doing so to avoid the insolvency risk of an enterprise.