FINANCIAL RISK ASSESSMENT BASED ON A DYNAMIC MODEL: A CASE OF SHIPPING INVESTMENTS

Given the high uncertainty of the external business environment, risk assessment is of particular importance for companies operating in capital-intensive and high risk sectors such as the shipping industry. This paper proposes a novel methodical approach to financial risk assessment that integrates several complementary methods. The approach is grounded in the development of a fully dynamic financial model that enables the calculation of projected financial indicators and the evaluation of risk through scenario analysis and descriptive statistical methods. The approach is examined using a case study of a newbuilding project for a dry bulk vessel. Based on the financial model and key project drivers, a set of scenarios is constructed, and statistical indicators are derived to quantify the financial risks associated with the volatility of freight rates, operational expenditure levels, and investment financing conditions relevant to shipping companies.