Ensuring the financial and economic security of enterprises under the conditions of martial law

Field: Business, Management and Accounting (Social Sciences)

Relevance of the research topic. Ensuring a high level of financial and economic security of
the enterprise has always been one of the main tasks of the management staff of business entities.
The introduction of martial law and the deterioration of the operating environment of the Ukrainian
economy created new challenges in ensuring the financial and economic security of business entities
and the transformation of general approaches to enterprise management.
The aim of the research: to determine the basic principles of the formation of financial and
economic security of enterprises in the conditions of martial law
Research methods: The following such methods of scientific research where used: analysis and
synthesis, comparative method, data analysis method.
Research results: The article reveals the main problems and principles of ensuring the financial
and economic security of enterprises under martial law.
Conclusions on the article: The introduction of martial law, as a result of the full–scale invasion
of Ukraine by occupying Russian troops in February 2022, fundamentally changed the views of the
management staff of the enterprise on the basic principles of the functioning of business entities.
In conditions of significant uncertainty regarding the ability to carry out continuous activity and the
presence of significant security, financial and economic threats, the main attention of management is focused on preserving the functional capabilities of business entities. In such conditions, planning the
expansion of activities and increasing the profitability of enterprises gives way to the need to ensure
the appropriate level of financial and economic security of the enterprise, which will preserve its main
functions while minimizing the risks of stopping economic activity.
The question of the study of the financial and economic security of the enterprise has remained
the subject of active scientific discussion in recent years. In the conditions of modern realities of the
economic environment, the economic discourse regarding the problems of ensuring the financial and
economic security of the enterprise has reached a qualitatively new level. Despite the deep level of
existing research in the direction of ensuring the financial and economic security of the enterprise,
the topic needs updating in connection with fundamentally new challenges to ensure the financial and
economic security of enterprises in conditions of uncertainty caused by the introduction of martial law.
Based on the analysis of macroeconomic indicators and their dynamics as a result of military
operations in Ukraine, the main groups of risks that affect the provision of the necessary level of
financial and economic security of business entities in the conditions of war have been identified.
The consequences of a full–scale invasion and the introduction of martial law lead to the creation of
new risks associated with ensuring the financial and economic security of the enterprise, among which
the following main groups of risks have been identified: risks of physical destruction of production
assets; risks associated with attracting financing and debt servicing and risks associated with
population migration both within Ukraine and beyond its borders.
The risks of physical destruction of the company’s production assets are directly related both to
the conduct of active hostilities on the lines of contact of the troops, and to constant missile attacks
on domestic infrastructure in regions far from the front line. Despite the fact that the risk of physical
destruction of assets due to missile attacks is observed in all regions of Ukraine without exception, it
can be significantly reduced through the relocation of the main assets.
In the conditions of martial law, the risks associated with raising financing and servicing the debt are
significantly increased, and the levers of control over them are becoming more and more limited. A decrease
in financial stability and, accordingly, the state of financial indicators significantly limit the ability of enterprises
to meet the requirements of banks, and therefore, to attract loan funds. The deterioration of the financial
condition leads to an increase in the cost of borrowed funds in direct proportion to the increase in the credit
risk of the enterprise in the context of the assessment of a potential borrower by a financial institution.
Without sufficient intellectual potential, no enterprise will be able to quickly respond to the challenges
of the modern operating environment in the conditions of martial law. The wave of external and internal
migration caused by the war significantly limited the ability of enterprises to attract qualified personnel
in sufficient quantity. On the one hand, a large number of specialists went abroad, and on the other
hand, the majority of the population of Ukraine is extremely limited in their ability to freely move around
the territory of Ukraine and choose for themselves the most favourable regions for employment.
As a result, the basis of financial and economic security is to ensure the protection of the main production
assets from the consequences of hostilities. It is equally important to ensure the healthy financial condition
of the enterprise through the regulation of the level of debt load in the conditions of the increase in the cost
of borrowed funds. Additional risks are created by migration processes, which reduce financial stability due
to the shortage of qualified personnel, provoked by a wave of external and internal migration.
In further studies, it is necessary to take into account both quantitative and qualitative indicators
of the impact of macroeconomic processes on ensuring the financial and economic security of
enterprises. Further analysis of the principles of ensuring the liquidity and profitability of the enterprise
in the conditions of martial law, the influence of demographic factors on the ability of business entities
to restore lost intellectual potential will be appropriate. A separate direction of further research is
proposed to focus on the post–war restoration of financial and economic stability of enterprises.