Methodological aspects of financial risk management in budgeting processes

This article focuses on the methodological foundations of financial risk management in organisational budgeting. The relevance of this topic stems from increasing external uncertainties that compromise the reliability of budget forecasts and undermine stable financial planning. This study introduces a unified stochastic method for modeling budget risks alongside an adaptive mechanism for building reserves that cover a range of external-change scenarios. The study outlines approach for embedding risk management into the stages of strategic planning, budget formulation, and execution; examines methods for systematic risk identification, quantitative assessment and control; and explores organisational tools and procedures for monitoring the risk environment. Special attention is given to a comparative analysis of the expert method, scenario analysis and Monte-Carlo simulation with respect to their practical applicability in the budgeting process. The article seeks to generalise existing practices and to offer recommendations on incorporating reserve funds and adjusting budget appropriations. The research employs comparative analysis, a systems approach, expert assessment, statistical modelling and scenario analysis. The conclusion presents proposals for optimising risk-management mechanisms. The material will be of value to finance professionals, managers and organisational analysts.