Research on financial risk management based on international contracted projects 

Qiuxia Wu 1 Shengwen Gao 2 Wen Chen 2 Yao Zhang 2 

1.School of Finance and Economics, Nanchang Institute of Technology,Nanchang City,Jiangxi Province, 330000; 

2.School of Engineering and Technology, Nanchang Vocational University,Nanchang City,Jiangxi Provinc e,330000; 

Abstract: With the continuous development of domestic construction projects and the growing economic strength of the country, China is playing an increasingly important role in the field of international engineering construction. International project contracting has gradually become one of the key paths for the transformation of China's construction industry. Compared with other industries, international project contracting has characteristics such as long construction periods, uncertain political impacts, high social risks, and high asset requirements. From an operational perspective, financial security is the most critical risk point that needs attention. The financial uncertainties in international contracting projects include inflation, exchange rate fluctuations, and changes in bank interest rates. This paper focuses on the risks associated with exchange rate fluctuations and inflation factors, and conducts theoretical and empirical analysis on the management essentials of international contracting projects using the VAR parameter model. It also proposes basic strategies and measures for financial risk management. The research indicates that the new contract amount for international contracting projects increases with the rise of exchange rates and the Consumer Price Index (CPI), but an increase in the CPI will reduce the profitability of international contracting projects. Therefore, companies need to pay attention to the profit level of their projects. Enterprises can analyze the changes in the relative value of currencies in advance and adopt delayed or accelerated settlement strategies to mitigate the impact of exchange rate changes, improve profit levels, and ensure financialsecurity. As for inflation, companies can reduce operating costs and minimize the negative impact of inflation by cutting internal expenses and expanding the market strategy. 

Key words: international contracting, financial risk, inflation, exchange rate change, VAR model. 

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