Financial risk management in service companies in Ecuador facing the menace of Covid

Abstract

The objective of this research was to analyze the financial risk management and the adopted policies in Ecuadorian service companies when facing coronavirus (COVID-19). The research was ex post facto, descriptive, and relational, based on national aggregates and references. The financial indicators for the period 2010-2019, coming from the Superintendencia de Compañías, Valores y Seguros (2021), were quantified. Financial risk was measured with coefficient of variation calculations and Logit analysis. Incidence in the service sector was analyzed with the gross domestic product (GDP) 2020-2021. Possible scenarios and actions to follow were analyzed and proposed. The sectors with high risks were transportation, real estate, financial and insurance activities, and public administration and defense. The GDP variation rate 2020-2021 reported a total of -8.86%. Regarding the service sector, it decreased -9.48%. The most affected sectors were transport with -21.01% and professional, scientific, technical, and administrative activities with -13.52%. Debt is the riskiest variable according to Logit analysis.