Risk factors: are the conditions or potential causes that generate and induce risk, and are the direct cause of loss. Risk factors in different areas of the performance of different forms, according to its nature, can be divided into physical risk factors, moral risk factors and heart risk factors.
Risk accident: is an incidental event that causes loss of life and property, it is the medium that causes the loss.
Risk Loss: is an abnormal, unintended reduction in economic value, usually measured in monetary units. And all the above conditions must be met to call it a loss.
What are the basic elements of risk
Risk consists of three basic elements: risk factors, risky events and losses.
1. Risk factors
Risk factors are the causes and conditions that cause or increase the chances of risky accidents or expand the magnitude of loss. Generally according to the nature of risk factors are divided into three types: substantive risk factors, moral risk factors and psychological risk factors.
Substantial risk factors, also known as physical risk factors, are tangible and can directly affect the physical function of things tangible factors.
Moral risk factors are intangible factors related to human moral cultivation, that is, due to personal dishonesty, dishonesty or misbehavioral attempts to promote the occurrence of risky accidents, resulting in the destruction of social wealth or casualties caused by the causes or conditions.
Psychological risk factors are intangible factors related to the psychological state of people, also known as discipline risk factors. It is due to people's subjective negligence or negligence, so as to increase the chance of risky accidents or expand the degree of loss factors.
Among the above three risk factors, moral risk factors and psychological risk factors belong to the risk factors related to human behavior, so they are classified as intangible risk factors or human risk factors.
2. Risky accident
Risky accident refers to the incidental events that cause the loss of life and property.
3. Loss
A loss is an unintentional, unintended and unplanned reduction in economic value.
Risk is a unity consisting of risk factors, risky events and losses. The relationship between these three is:
(1) Risk factors are the conditions that cause or increase the chances of the occurrence of risky accidents or expand the magnitude of the loss, and are the potential causes of risky accidents;
(2) Risky accidents are the episodic events that cause the loss of life and property, and are the direct or external causes of loss, and are the medium of loss;
(3) Losses are the unintentional, unintended and unplanned reduction in economic value. Therefore, risky accidents can cause losses.
The three concepts of risk and the relationship between them
1. Definition of risk management
Definition: Risk management, also known as crisis management, is the process of managing how to minimize risk in an environment where risk is certain. It involves measuring, assessing and responding to risks. Ideally, risk management is a series of prioritized processes in which the things that can cause the most damage and are most likely to happen are dealt with first, and the things that are relatively less risky are dealt with second.
In reality, however, this optimization process is often difficult to decide because risk and likelihood are often not aligned, so the two have to be weighed in order to make the most appropriate decision.
Risk management also faces the challenge of efficient resource utilization. There is an opportunity cost involved. Dedicating resources to risk management may reduce the amount of resources that can be applied to rewarding activities; ideally, risk management wants to spend the least amount of resources to resolve the biggest crisis possible.
"Risk management" used to be a mandatory subject for Western business executives investing in China in the 1990s. Many MBA programs had an additional "risk management" component.
Risk management
The process of weighing the benefits and costs of reducing risk and deciding what measures to take.
The process of determining the cost-benefit trade-offs for reduction (trade-off) and deciding on an action plan (including deciding not to take any action) becomes risk management.
2. Various steps of risk management
For modern enterprises, risk management is the identification, prediction and measurement of risks, and the selection of effective means to minimize the cost of dealing with risks in a planned manner, in order to obtain the economic security of the enterprise's safe production. This requires the enterprise in the production and operation process, should be possible risk identification, predict the occurrence of various risks on the resources and production and operation of the negative impact, so that production can be sustained. Visible, risk identification, risk prediction and risk management is the main step of enterprise risk management.
2.1 Risk identification
Risk identification is the first part of risk management. Only on the basis of a comprehensive understanding of the various risks, can we predict the harm that may be caused by the danger, so as to choose an effective means of dealing with risk.
There are many risk identification methods, and the common methods are:
2.1.1◆Production process analysis method
Production process analysis method is to comprehensively analyze the whole production and operation process of the enterprise, and analyze the risks that may be encountered by each link of the analysis, and find out various potential risk factors. The production process analysis method can be divided into risk enumeration method and flow chart method.
1. The risk enumeration method refers to the risk management department according to the production process of the enterprise, listing all the risks of each production.
2. The flow chart method refers to the enterprise risk management department will be the entire enterprise production process of all links systematization, sequential, made of flow charts, so as to facilitate the discovery of the risks faced by the enterprise.
2.1.2 ◆Financial table analysis method
Financial table analysis method is to analyze the balance sheet, profit and loss account, business report and other relevant information of the enterprise, so as to identify and discover the risks of the existing property and responsibility of the enterprise.
2.1.3 Insurance Survey Method
There are two forms that can be utilized for risk identification using the insurance survey method:
Through the Insurance Risk List, an enterprise can select the type of risk that suits the needs of the enterprise based on the list of insurance risks from an insurance company or a specialized insurance publication. This method only identifies insurable risks, but not uninsurable risks.
An insurer or an insurance consulting service is commissioned to conduct a risk management survey to identify the risks of various properties and liabilities.
2.2 Risk prediction
Risk prediction is actually the estimation and measurement of risk, by the risk manager to use scientific methods, the statistical data, risk information and the nature of the risk of systematic analysis and research, and then determine the frequency and intensity of the risk, to provide a basis for choosing the appropriate risk treatment method. The prediction of risk generally includes the following two aspects:
2.2.1 Predicting the probability of risk: through the accumulation of information and observation, to find the regularity of causing losses. A simple example: a period of 10,000 houses in ten houses in a fire, the probability of the risk is 1/1000. from this high probability of the risk to focus on prevention.
2.2.2 Predicting the intensity of risk: Assuming that the risk occurs, resulting in direct and indirect losses to the business. For easy to cause direct losses and losses ...... >>
What are the elements of risk
The elements of risk are composed of risk factors, risk incidents and losses. Risk factors increase or generate risky incidents, risky incidents cause losses, and the tandem of the three constitutes the risk formation mechanism.
Risk factors is to promote and increase the frequency or severity of the loss of the conditions, divided into two categories of tangible risk factors and intangible risk factors. Tangible risk factors are material risk factors that directly affect the physical function of things. Intangible risk factors are culture, customs and attitudes to life and other non-material, affect the possibility of loss and the degree of damage to the factors, it can be further divided into moral risk factors and psychological risk factors.
A risk incident is the direct or external cause of a loss, which is the medium through which the likelihood of the risk causing a loss is transformed into reality.
A loss is an unintentional, unintended and unplanned reduction or disappearance of economic value. Loss management refers to conscious action to prevent or reduce the occurrence of disasters and accidents, as well as the resulting economic and social losses. Its goal is divided into two kinds: one is before the loss occurs, comprehensively eliminate the root cause of the loss occurs, minimize the frequency of the loss occurs; the second is after the loss occurs to try to reduce the extent of the loss. Risk components: cause - lead - produce.
The three elements of risk management and their contents
3 elements of financial risk?
1. Risk factor: the subject in question has engaged in financial activity;
2. Risk incident: unexpected changes in certain factors (unplanned, unanticipated, unintentional);
3. Loss potential: the possibility of financial loss.
Management of Financial Risk
I Internal Control and Comprehensive Risk Management
1. Internal control structure: control environment, risk assessment, control activities, information and communication, and supervision;
2. Comprehensive Risk Management Structure
(1) corporate objectives: strategic objectives, operational objectives, reporting objectives, and compliance objectives;
(2) Elements of risk management: internal environment, objective setting, event identification, risk assessment, risk countermeasures, control activities, information and communication, and monitoring;
(3) Enterprise levels: the entire enterprise, functional departments, business lines, and subsidiaries.
II The process of comprehensive risk management: risk identification, assessment, categorization, control, monitoring, and reporting.
Three credit risk management
1. Mechanism management: audit and loan separation mechanism, authorization management mechanism, quota management mechanism
2. Process management
1) Ex-ante management "5c": repayment ability (capacity), capital (capital), Character (character), collateral (collateral), business environment (conditions),
"3c": cash flow (cash), management (control) and business continuity (continuity)
(2) Management during the event
(3) Management after the event
Four market risk management
1. Interest rate risk management methods
(1) Selection of favorable interest rates;
(2) Adjustment of borrowing and lending terms;
(3) Gap management;
(4) Continuity management;
(5) Use of interest rate derivatives trading.
2. Methods of exchange rate risk management
(1) Selecting favorable currencies;
(2) Receiving and paying foreign currencies in advance or at a later date;
(3) Engaging in structured hedging;
(4) Doing forward foreign exchange transactions;
(5) Trading with currency derivatives.
3. Investment Risk Management Methods
(1) stock investment: buy up and sell down, diversification, purchase of funds, stock index futures or options;
(2) investment in financial derivatives: strengthen the system, limit management, hedging and hedging of risk exposures.
V Operational Risk Management
1. System Management
2. Information System Management
3. Process Management
4. Staff Management
5. Risk Transfer
VI Liquidity Risk Management:
1. Maintaining liquidity of assets
2. Maintaining liability Liquidity
3. Conduct integrated management of asset and liability liquidity.
VII Management of Legal and Compliance Risks
1. Strengthening culture construction
2. Strengthening organization and system construction
3. Strengthening human resource management
4. Strengthening process management
VIII Country Risk Management
1. Management approaches at the enterprise level
IX Reputational Risk Management
What are the risk factors?
By nature
1. Pure risk: Pure risk is the risk that there is only a chance of loss and no possibility of profit. For example, homeowners face the risk of fire, car owners face the risk of collision, etc., when the fire and collision accidents, they will suffer a loss of economic benefits.
2. Speculative risk: speculative risk is relative to pure risk, is the risk of both the opportunity to lose and the possibility of profit. The consequences of speculative risk are generally three kinds: one is no loss; two is a loss; three is a profit. For example, buying and selling stocks on the stock market, there are three consequences of making money, losing money, and not losing money, and thus belonging to speculative risk.
According to the subject
1. Property risk: property risk is the risk of damage, loss or depreciation of all tangible property and the risk of economic or monetary loss. Such as plant, machinery and equipment, finished products, furniture, etc. will be subject to the risk of fire, earthquake, explosion, etc.; ships in navigation, may be subject to the risk of sinking, collision, grounding and so on.
Property losses usually include both direct and indirect losses of property.
2. Personal risk: personal risk refers to the risk of disability, death, loss of labor capacity and increased medical expenses. Such as people will be born, old age, disease, death and other physiological laws and natural, political, military and other reasons and early death, disability, loss of working ability or old age without dependence.
There are generally two types of losses due to personal risk: one is the loss of earning capacity; and the other is the loss of additional costs.
3. Liability risk: Liability risk refers to the risk of civil liability in accordance with the law, contract or morality due to the negligence or negligent behavior of an individual or a group of individuals, resulting in property damage or personal injury or death of others.
4. Credit risk: credit risk refers to the risk of economic loss suffered by the other party as a result of one party's breach of contract or violation of law in economic transactions between the right holder and the obligor. Such as import and export trade, the exporter (or importer) will be due to the importer (or exporter) does not fulfill the economic losses suffered.
According to the behavior
1. Specific risk: the risk of a causal relationship with a specific person, that is, caused by a specific person, and the loss only involves the risk of a specific individual. Such as fire, explosion, theft, as well as the legal liability of others for property damage or personal injury are of this kind.
2. Basic risk: the risk of damage to society. The cause and effect of the basic risk is not related to a particular person, at least the risk of the individual can not be prevented. Risks related to social or political, and risks related to natural disasters are basic risks. For example, earthquakes, floods, tsunamis, and economic downturns fall into this category.
According to the environment
1. Static risk: static risk is the risk of loss or damage caused by irregular changes in the forces of nature or people's negligent behavior under normal socio-economic conditions. Such as lightning, earthquakes, frost, storms and other natural causes of loss or damage; fire, explosion, accidental injury caused by loss or damage.
2. Dynamic risk: dynamic risk is the risk of loss or damage due to socio-economic, political, technological and organizational changes. Such as population growth, capital increase, production technology improvements, changes in consumer preferences.
According to the causes
1. Natural risk: natural risk is the risk of irregular changes in natural forces that threaten social production and social life. Natural phenomena such as earthquakes, windstorms, fires, and various plagues occur frequently and in large numbers. Among the various types of risk, natural risk is the risk that insurers underwrite the most.
Natural risk is characterized by:
(1) the uncontrollability of the formation of natural risk
(2) the periodicity of the formation of natural risk
(3) the consequences of natural risk accidents caused by the **** stained, that is, natural risk accidents, once the accident occurs, the object involved is often very wide.
2. Social risk: social risk refers to the risk of social production and people's lives suffer losses due to the behavior of individuals or groups (including negligent behavior, misconduct and intentional behavior) or inaction. Such as theft, robbery, negligence and vandalism and other acts will likely cause damage to other people's property or personal injury.
3. Political risk (country risk): political risk refers to the process of foreign investment and trade, due to political reasons or reasons beyond the control of both parties; so that creditors may be subject to the risk of loss. Such as war in the importing country, civil unrest and suspension of imports of goods; because the importing country to implement import or foreign exchange controls and so on.
4. Economic risk: economic risk refers to the production and sales and other business activities due to a variety of market supply and demand, economic and trade conditions and other factors affecting the change or operator decision-making errors, the prospect of bias in expectations and other risks that lead to business failure. For example, the increase or decrease in the scale of production of enterprises, the rise and fall of prices ...... >>
What are the three elements of risk
Risk factors: is to produce, induced by the conditions of the risk or potential causes, is the direct cause of loss. Risk factors in different areas of the manifestation of different forms, according to its nature, can be divided into physical risk factors, moral risk factors and heart risk factors.
Risk accident: is an incidental event that causes loss of life and property, it is the medium that causes the loss.
Risk Loss: is an abnormal, unintended reduction in economic value, usually measured in monetary units. And all the above conditions must be met to call it a loss.
What are the three elements that make up risk
Risk factors: are the conditions or potential causes that generate and induce risk, and are the direct cause of loss. Risk factors in different areas of the manifestation of different forms, according to its nature, can be divided into physical risk factors, moral risk factors and heart risk factors.
Risk accident: is an incidental event that causes loss of life and property, it is the medium that causes the loss.
Risk Loss: is an abnormal, unintended reduction in economic value, usually measured in monetary units. And all the above conditions must be met to call it a loss.