Financial Risk Management of FK Coal Group: Basis for Policy and Strategy Formulation

Abstract

This study delves into the financial risk management of FK Coal Group in China, focusing on aspects such as credit risk, liquidity risk, stability risk, and profitability risk. The research aims to provide a comprehensive profile of FK Coal Group, including its organizational structure, years in operation, number of employees, geographical scope, and asset size as of 2022. The financial risks are primarily associated with debt payments, asset management, the company's capacity to meet expenses, and production costs and outputs. The financial risk management process encompasses risk identification, analysis, evaluation, and treatment. Challenges are encountered in each phase, such as uncertain adverse events, risk assessment accuracy, risk mitigation strategies, and risk reduction and avoidance measures. The survey results from the employees of FK Coal Group reveal that it is a state-owned enterprise with a long operational history, a substantial workforce, and strong assets, primarily operating in the domestic and international markets. The study underscores the critical role of financial risk management in ensuring the company's operational continuity and competitiveness. Effective risk planning and monitoring are highlighted as crucial elements to improve profitability and prevent excessive spending or losses. The proposed financial risk management policy or strategy aims to address these challenges comprehensively, focusing on proactive risk identification, thorough risk analysis, robust risk evaluation, and appropriate risk treatment strategies to minimize adverse impacts on FK Coal Group's financial health and performance.