Modeling contracting processes in the defense procurement system under conditions of heightened financial and operational risks

<jats:p>The article examines the modeling of contracting processes in the Ukrainian defense procurement system amid elevated financial and operational risks. The study systematized the principal risk factors affecting contracting decisions and substantiates the need to translate risk assessment results into specific contractual parameters, rather than limit risk management to identifying individual risk events. An adaptive contracting model is proposed that integrates the assessment of procurement criticality and urgency with the supplier’s risk profile, a two-dimensional matrix for configuring contractual decisions, and a three-level system for continuous monitoring of residual risk. Particular attention is given to the differentiated selection of procurement procedures, payment and advance-payment arrangements, performance security instruments, the depth of pre-contractual due diligence, and the intensity of subsequent monitoring, based on the combination of operational criticality and supplier risk. The model is designed as a closed management cycle in which monitoring results provide feedback to adjust individual contracts and model parameters. The institutional conditions, information requirements, methodological prerequisites, and key limitations of practical implementation are also identified. The proposed approach provides a framework to reduce discretionary decision-making, strengthen financial discipline, and balance the operational need for timely defense supplies with the protection of public financial interests. Further research should focus on empirical validation using actual defense procurement data, calibration of risk categories and indicator thresholds, expansion of supplier and contract-performance indicators, and integration of the model with digital defense procurement platforms. Keywords: defense procurement, contracting processes, financial and operational risks, risk-oriented management, contract decision matrix, monitoring, contract management, decision support, digitalization.</jats:p>