Risk Management Strategies. Since the outcome of a risk may threaten the survival of a business, it is important for a business to adopt appropriate risk management strategies for risk management. What are the risk management strategies? Come together and focus on it.
What are the risk management strategies Part 1What are the risk management strategies
(1) Risk avoidance strategies.
Any economic unit to deal with risk strategy, the first consideration is to avoid risk. Where the loss caused by the risk can not be offset by the project may be able to obtain profits, avoiding risk is the most feasible and simple method. For example, the risk associated with an investment can be avoided by not making that investment. But the method of risk avoidance has great limitations, one is only in the case of risk can be avoided, risk avoidance is effective; Second, some risks can not be avoided; Third, some risks may be avoided but the cost is too large; Fourth, the enterprise passive risk avoidance, will make the enterprise to rest on their laurels, do not seek progress.
(2) Control risk strategy.
Economic units in the risk can not be avoided or in engaging in an economic activity is bound to face certain risks, the first thing that comes to mind is how to control the risk of occurrence, reduce the risk of occurrence, or how to reduce the risk of occurrence of the loss caused by the risk that is to control the risk. Control risk has two main meanings: one is to control the risk factors, reduce the occurrence of risk; two is to control the frequency of risk and reduce the degree of risk damage. To control the frequency of risk occurrence should be accurate prediction, to reduce the degree of risk damage should be decisive to take effective measures. Control of risk is subject to a variety of conditions, human knowledge and technology has been highly developed, but there are still many difficulties can not break through, and thus can not achieve complete control of risk and fully reduce the loss of purpose.
(3) diversification and neutralization risk strategy.
Dispersal of risk, mainly refers to the economic unit to take multiple angles of operation, multi-party investment, multi-party financing, foreign exchange assets multi-source, to attract multi-party suppliers, for multi-party customers in order to spread the risk of the way. Neutralization of risk, mainly refers to the decision-making used in foreign exchange risk management, such as taking measures to reduce foreign exchange positions, futures hedging, forward foreign exchange business to neutralize the risk.
(4) risk-taking strategy.
The economic unit can neither avoid the risk, but also can not fully control the risk or dispersion, neutralization of risk, can only bear the loss caused by risk. Economic units can be divided into unplanned simple self-retention or planned insurance. Unplanned simple retention, mainly refers to the unpredicted risk of loss caused by the way of assumption; planned own insurance refers to the predicted risk of loss caused by the way of assumption, such as the withdrawal of bad debt reserves and other forms.
(5) Transfer risk strategy.
The economic unit in order to avoid their own in the assumption of risk on their economic activities after the nuisance and unfavorable, can be on the risk of using a variety of different ways of transfer, such as insurance or non-insurance form of transfer. The modern insurance system is the most ideal way of transferring risks. For example, a unit may take out insurance for property, medical care, etc., and transfer the risk of loss to the insurance company. In addition, the unit can also transfer part of the risk to the other party through the terms of the contract.
On project risk management five strategies
1, risk mitigation strategy
Risk mitigation strategy is to mitigate the risk by means of palliative or anticipatory to mitigate the risk, reduce the likelihood of the risk or to slow down the risk of adverse consequences, in order to achieve the purpose of risk reduction. purpose. This is a proactive approach to risk management.
2, risk avoidance strategy
refers to when the potential threat of project risk is too likely to occur, the adverse consequences are too serious, and no other risk management strategies available, take the initiative to abandon the project or change the project objectives and programs of action, so as to avoid the risk of a risk management strategy (wind control network). For example, the enterprise is currently facing a less mature technology investment zi project, if through the risk assessment found that the implementation of the project will face a huge threat to the project management organization and there is no other available measures to control risk, and even the insurance company that the risk is too great to refuse to underwrite. At this point, we should consider giving up the implementation of the project, to avoid the huge risk of accidents and property damage.
3, accept the risk strategy
Accept the risk strategy is also one of the risk management strategy, it refers to the project team consciously choose to bear the consequences of risk strategy. When the cost of taking other risk avoidance methods exceeds the loss caused by the risk event, the method of risk acceptance can be taken. Acceptance of risk can be active, that is, in the risk planning stage has been prepared for some risks, so when the risk event occurs immediately implement the contingency plan; passive acceptance of risk refers to the project management team because of subjective or objective reasons, the existence and severity of the risk of insufficient knowledge, did not deal with the risk, and ultimately by the project management organization personnel to bear the risk of loss themselves. In the implementation of the project, should try to avoid the passive acceptance of risk, only in the risk planning stage to do a good job of preparation to actively accept the risk.
4, reserve risk strategy
Reserve risk strategy refers to the law of project risk in advance to develop contingency measures and develop a scientific and efficient project risk plan, once the actual progress of the project and the plan is different, the use of backup contingency measures, the project risk contingency measures are mainly cost, schedule and technology three. Budget contingency is a pre-prepared amount of money used to compensate for errors, omissions, and other uncertainties that affect the accuracy of a project's cost estimate. Budget contingency should be listed separately in the project budget and not dispersed under specific cost items, otherwise, the project management organization will lose control of the expenditure.
5, transfer risk strategy
refers to the transfer of risk to other people or other organizations, the purpose of which is to borrow contracts or agreements, in the event of risky accidents once the loss of a portion of the transfer to the ability to withstand or control the project risk of individuals or organizations. In practice, this may take the form of financial risk transfer (e.g. banks, insurance companies or other non-banking financial institutions are indirectly liable for project risks). Non-financial risk transfer (transfer of project-related properties or projects to a third party, or in the form of a contract to transfer the risk to other people or organizations, while also being able to retain the properties or projects that will generate risk).
The success of the project is related to the future development of the enterprise, the enterprise should increase the risk management of project investment, to achieve as little as possible failure, so as to enhance the competitiveness of the enterprise, so that the enterprise is invincible, long-term development. The ultimate goal of the risk management strategy is to take measures to avoid risk, defuse and transfer risk, or weigh the pros and cons of sharing and reducing the impact of risk loss.
Seven basic strategies for risk response
1. Risk-taking
Risk-taking is a strategy whereby an organization is not prepared to take control measures to reduce risk or mitigate losses after weighing the costs and benefits of risk-taking.
A group or subsidiary adopts a risk-taking strategy either because it is the more economical strategy or because there are no other alternatives (such as mitigation, avoidance or sharing). When adopting risk appetite, management needs to consider all options, i.e. if there are no other alternatives, management needs to be certain that it has analyzed all possible methods of avoidance, mitigation, or apportionment in deciding to take the risk.
In considering a risk response, management needs to evaluate the cost of various risk control measures and the benefits of reducing the likelihood and impact of the risk and select a risk response strategy.
2. Risk avoidance
Risk avoidance is the strategy of avoiding and mitigating losses by abandoning or stopping business activities related to risks that are beyond the risk tolerance level.
The purpose of using risk aversion is to mitigate risks in anticipation of adverse consequences. For example, if the Group believes that the risk of an investment project is highly probable and cannot be tolerated or mitigated, the Group may choose to withdraw from the investment project, or order a subsidiary to withdraw from the investment project, thereby avoiding the risk.
3. Risk transfer
Risk transfer is a risk management strategy in which a company transfers risk to another person or unit through contractual or non-contractual means.
Generally speaking, the way of risk transfer can be divided into financial non-insurance transfer and financial insurance transfer.
A financial non-insurance transfer is the transfer of risk and the financial outcomes associated with the risk to someone else through the conclusion of an economic contract. Common types of financial non-insurance risk transfers are leases, mutual guarantees, fund systems, and so on.
Financial insurance transfer is the transfer of risk to an insurance company (insurer) by entering into an insurance contract. Individuals can pay a certain premium to the insurer to transfer the risk when they face the risk. Once the expected risk occurs and a loss is incurred, the insurer must make financial compensation within the limits of its liability under the contract. Because of the many advantages of insurance, risk transfer through insurance is the most common form of risk management.
4. Risk switching
Risk switching refers to the risk management strategy of converting one risk into another or several other risks through some special means, making the converted risk easier to manage or obtaining additional profit.
A typical application of the risk conversion strategy is the convertible bond. A convertible bond is a corporate bond that is issued by an issuer in accordance with legal procedures and can be converted into shares (usually common stock) within a certain period of time under agreed conditions. When holding this bond, the main risks faced are convertible bond issuance failure risk, stock listing failure risk, convertible bond maturity can not be converted to stock risk, after conversion of earnings per share, NAV dilution risk and convertible bond price volatility risk, etc., when the bond is successfully converted to common stock, the risk faced by the holder is converted to the risk of stock price volatility, the risk of stock hedging, etc., and may bring some profit.
5. Risk Hedging
There are two interpretations of risk hedging, one is a management strategy that reduces the magnitude of risks by assuming a variety of related risks and creating a hedge between these related risks; the other is a risk management strategy that offsets the potential loss of risk of an underlying asset by investing in or purchasing an asset or derivative product that is negatively correlated to the fluctuation in the return of the underlying asset. Management strategy. Typical examples are hedging business and option trading business.
6. Risk compensation
Risk compensation refers to the development of the necessary compensation mechanism for risk-taking measures beforehand (before the loss occurs), in order to increase the confidence and courage of individuals or units to take risks.
In general, for those who can not be managed through risk hedging, risk conversion or risk transfer, and can not be avoided, have to bear the risk, you can take this risk compensation strategy. The more typical application is in the marketing of marketing personnel assessment incentives compensation mechanism. For example, the company sent Zhang to develop new markets in Northwest China, according to the company's current performance-oriented sales assessment, Zhang is difficult to complete the sales task, so the probability of obtaining a bonus is very small, the work enthusiasm is not high, so the sales director to develop a separate compensation program for him: if Zhang failed to complete the sales task, but as long as there is a monthly growth of 20% over the previous month, you will be able to obtain additional bonuses. In this way, Zhang's motivation is much higher, which is a typical risk compensation strategy.
7. Risk control
Risk control is a strategy in which a company, after weighing the cost-benefit, is prepared to take appropriate control measures to reduce the risk or mitigate the loss, and keep the risk within the risk tolerance level. Since the two main dimensions of risk are the likelihood of occurrence and the degree of impact after occurrence, risk control is to reduce the likelihood of occurrence, or reduce the degree of impact after occurrence in order to reduce the level of risk.
For example, a group of companies to participate in a project investment, investment amount of 100 million yuan, the more the first investment, if the project is successful, the greater the return obtained, if the project fails, the greater the loss suffered. The company after analysis, decided to take risk control measures: the first measure is to reduce the possibility of risk, that is, to send a large number of additional professional project management personnel, improve the quality of the project, strengthen project supervision, to better ensure the success of the project; another measure is to reduce the degree of impact of the risk after the occurrence of the 100 million yuan will be invested in batches, the first investment of 40 million, if the project is progressing well, the later in the sub-two Respectively invested 30 million. In this way, if the first investment fails, the loss amount is 40 million, in fact, reduce the degree of impact after the occurrence of risk.
What are the risk management strategies Part 2The financial risk of the enterprise refers to the process of various financial activities, due to a variety of factors that are difficult to predict or control the impact of the financial situation with uncertainty, so that the enterprise has the possibility of suffering losses. In the market economy, financial risk is objective, to completely eliminate the risk and its impact is unrealistic. The goal of enterprise financial risk management is: to understand the sources and characteristics of risk, correctly predict and measure financial risk, appropriate control and prevention, sound risk management mechanism, improve financial policy, minimize losses, and create the maximum return for the enterprise.
First, the financial policy and its position in enterprise management
Financial policy generally refers to the financial subject to use a certain approach to consciously change the financial object, in order to achieve the enterprise financial management objectives of the pointer. Financial policy because of the state and enterprise two different subjects and produce two different target orientation and performance:
(a) on the national subject, financial policy is the state to financial rules, systems and other forms of financial aspects of the enterprise to regulate, it is a kind of mandatory implementation of the financial policy. Its basic goal is as a kind of macroeconomic policy with the enterprise financial activities to regulate and restrict. From the content of the financial policy, mainly including the form of the source of capital and management of the regulations, the provisions of the cash management methods, the provisions of the depreciation of fixed assets, the provisions of the cost of the scope and standard of expenditure, profit and its distribution policy regulations; from the financial policy in the form of expression, mainly the "enterprise financial rules" and the financial system of the various industries.
(b) as far as the main body of the enterprise is concerned, the financial policy is the enterprise under the guidance of the national financial policy, according to the overall objectives of the enterprise and the reality of the requirements of a set of independent financial management action guide, it is an independent selective financial policy. Its basic goal is to cooperate with the enterprise business policy, adjust the enterprise financial activities and coordinate the enterprise financial relations, and strive to improve the enterprise financial efficiency. From the content of the financial policy, including risk management policy, credit management policy, financing management policy, operating funds management policy, investment management policy and dividend management policy; from the expression of financial policy, it is a set of independent, flexible internal financial system.
In our country for a long time the implementation of the planned economy system in the context of the enterprise as a subsidiary of the government, no independent autonomy, enterprise financial behavior can only be a passive behavior, financial policy is basically to the state as the main body of the mandatory implementation of the financial policy for the enterprise to choose a very limited scope, resulting in the enterprise "no financial management The result is that enterprises have "no finance to manage". With the establishment of the socialist market economic system, the enterprise as a market subject status is established, especially with the establishment of the financial body of the legal person status, the enterprise financial behavior has become a positive, active behavior, independent selective financial policy has become the financial management personnel independent financial management of the external performance. In this case, the status of the company's financial policy has become more and more important, it is an important guarantee for the realization of the whole enterprise business policy and financial goals, but also to regulate and optimize the company's financial behavior, improve the efficiency of corporate finance is an important basis.
The current financial management problems
1, the original property rights theory and system exacerbates the conflict of interest between shareholders, operators and employees. Knowledge economy is built on the production, distribution and use of knowledge and information on the economy, which makes the traditional plant, machinery, capital as the main content of the resource allocation structure into a knowledge-based capital-based resource allocation structure. Our existing property rights theory and system still maintains the "owner's property rights theory", ignoring the significant role of human capital in the development of the company. As a matter of fact, in the existing market economy, employees who create, receive, utilize, process information and master knowledge and technology play an increasingly important role in the creation of corporate wealth. Therefore, in the traditional industrial economy to the knowledge economy in the transition period, the modern enterprise is no longer only "ownership and operation rights of the separation" of the issue, the modern enterprise is actually the financial capital and knowledge capital of the two kinds of capital and its ownership of the "composite contract", is the "stakeholder", the "stakeholders", and the "business". The modern enterprise is actually a "composite contract" between the two kinds of capitals, financial capital and intellectual capital, and their ownership, which is the cooperation of property rights of "stakeholders". The traditional industrial economic era of property rights theory and system only focuses on the allocation of tangible assets and input capital, ignoring the effective allocation of intellectual capital, focusing only on the contributors to enjoy the enterprise's residual claim rights, exclusion of intellectual labor and other relevant stakeholders on the enterprise's residual distribution rights, which will exacerbate the owners (shareholders), operators and employees, and other stakeholders in the conflict between the conflict and contradiction. In this case, it is necessary for financial personnel to further clarify whose interests should be maximized as the financial management objectives of the enterprise.
2, risk management has been an important issue in financial management. With the arrival of the knowledge economy, enterprises will face more risks:
(1) due to the network of economic activities, virtualization, information dissemination, processing and feedback speed will be greatly accelerated, if the enterprise internal and external information disclosure is not sufficient, not timely, or the enterprise authorities can not timely and effective selection of the use of internal and external information, it will increase the risk of decision-making;
(2) due to the accumulation of knowledge, the financial management is an important issue in financial management. p> (2) Due to the accelerated accumulation of knowledge and innovation, if the enterprise and its employees can not respond in time, it will not be able to adapt to the development of the environment, which will further increase the risk of the enterprise;
(3) The development of high and new technology, so that the life cycle of the product is shortening, which not only increases the inventory risk, but also increases the risk of product design and development;
(4) Due to the "media space" of the enterprise, it is very difficult for the enterprise to adapt to the development of the environment, which will further increase the risk of the enterprise. (4) Due to the unlimited expansion of the "media space" and the use of "Internet banking" and "electronic money", making the international capital flows accelerate, thus further aggravating the risk of the goods market;
(5) The development of high-tech has led to the shortening of product life cycle, which not only increases the inventory risk, but also increases the product design and development risk. p>
(5) in the pursuit of high yield drive, enterprises will be a large number of funds invested in high-tech industries and intangible assets, so that the investment risk is further increased. Therefore, how to effectively prevent and resist a variety of risks and crises, so that enterprises can better pursue innovation and development has been an important issue of financial management needs to be studied and resolved.
3, the existing financial management theory and content has not adapted to the knowledge economy era of investment decision-making needs. Traditional industrial economy, economic growth is mainly dependent on plant, machinery, capital and other tangible assets; and in the knowledge economy, the enterprise asset structure based on knowledge of patents, trademarks, computer software, quality of talent, product innovation and other intangible assets will account for a much higher proportion. Intangible assets will become the enterprise's main and most important investment object. However, the theory and content of today's financial management of intangible assets involved less, in the reality of financial management activities, many enterprises tend to underestimate the value of intangible assets, not good at using intangible assets for capital operations. The traditional financial management theory and content of the industrial economy era has not adapted to the needs of the knowledge economy era of investment decision-making.
4, the existing financial institutions and the quality of financial personnel seriously impede the information technology, knowledge-based financial management. With the arrival of the knowledge economy, all economic activities must be fast, accurate, full information-oriented. Enterprise financial institutions should be set up to manage the level of management and intermediate management personnel less, and has a sensitive, efficient, fast characteristics, most of China's existing enterprise financial institutions set up a pyramid-type, intermediate level, inefficient, lack of innovation and flexibility; financial management personnel lagging behind the concept of financial management, financial management knowledge, financial management methods are backward, accustomed to all listen to the leadership, the lack of initiative to master knowledge, lack of innovative spirit and ability to innovate. Lack of innovative spirit and ability to innovate. All of this is far from the requirements of the knowledge economy era, a serious obstacle to the process of information technology, knowledge-based financial management.
Third, the prediction and measurement of financial risk
The financial activities of the enterprise throughout the entire process of production and operation, financing, long-term and short-term investment, distribution of profits, etc., may produce risk, according to the source of risk can be divided into financial risk:
(1) financing risk, refers to the supply and demand of funds due to changes in the market, the macro-economic environment, the enterprise's supply and demand for funds and the market, the enterprise's supply and demand for funds, the enterprise's supply and demand for funds, the enterprise's supply and demand for funds. (1) Financing risk, refers to the uncertainty of the financial results brought about by the changes in the market of supply and demand of funds, macroeconomic environment, and the raising of funds by the enterprise.
(2) investment risk, refers to the enterprise to invest a certain amount of money, due to changes in market demand and the impact of the final return and the expected return deviation risk.
(3) cash flow risk, refers to the enterprise cash outflow and cash inflow in time inconsistent with the formation of risk.
(4) foreign exchange risk, refers to the uncertainty of the results of the enterprise's foreign exchange business caused by changes in exchange rates. Specifically include economic risk, transaction risk and conversion risk. Economic risk refers to unanticipated exchange rate changes in the foreign exchange market, so that the enterprise foreign exchange business by the impact. Transaction risk refers to the enterprise foreign currency business, due to the transaction date and settlement date exchange rate inconsistency, so that the enterprise may suffer losses. Translation risk refers to the enterprise will be expressed in foreign currency accounting statements converted to a particular currency expressed in the accounting statements, due to exchange rate changes and the impact on the accounting statements.
A correct understanding of the sources and types of financial risk is a prerequisite for financial risk prediction and measurement. On this basis, the enterprise should establish a financial information network to ensure timely access to a large number of high-quality financial information, in order to correctly carry out the various decision-making and risk prediction to create conditions. The enterprise collects and organizes the information about the forecast risk, including the enterprise's internal financial information and production technology information, planning and statistical data, the enterprise to the Department of the market information and information on the production and operation of competitors in the same industry.
On the basis of preliminary forecasts, financial risk can be measured with the help of a simplified model, that is, to calculate the expected return in case of risk. Usually a combination of qualitative and quantitative methods is used, combining analytical judgment of the situation and the organization of data and calculations. Since risk and probability are directly related, the degree of risk is often measured with the help of probability statistics. First, analyze the probability of various possible scenarios and the possible benefits or costs, calculate the expected value, variance and standard deviation of the benefits or costs, and finally judge the degree of risk based on the coefficient of variation. Sensitivity analysis can also be used to determine the range of risk factors, especially in the prediction of investment risk, often through the determination of the annual cash inflow, payback period and the sensitivity of the embedded rate of return and other indicators, the choice of investment projects to reduce risk.
Fourth, the management of financial risk strategy
1, the development of strict control programs to reduce risk.
Diversification is the preferred method of enterprise risk diversification. Diversification, refers to a company involved in a number of basically unrelated industrial sectors, production and operation of a number of categories of unrelated products, in a number of basically unrelated markets to compete with the corresponding opponents. The theoretical basis for diversification to disperse risk lies in: from the principle of probability statistics, the profitability of different products is independent or incompletely correlated, operating a variety of industries and a variety of products in time, space, and profit to complement each other to offset, you can reduce the risk of corporate profits. Enterprises in the main industry under the premise of highlighting the combination of their own manpower, financial resources and technical research and development capabilities, moderately involved in diversified operations and diversified investment, diversification of financial risks.
2, risk transfer method, including insurance transfer and non-insurance transfer.
Non-insurance transfer refers to the transfer of a particular risk to the specialized agencies or departments, such as the sale of products to the commercial sector, some features of the business to a professional company with a wealth of experience and skills, with specialized personnel and equipment to complete. Insurance transfer that is, the enterprise on a particular risk to the insurance company to insure, pay insurance premiums.
3, self-insurance risk, that is, the enterprise itself to bear the risk.
Enterprises set aside risk compensation fund in advance, the implementation of amortization. At present, China requires listed companies to withdraw bad debt reserve for accounts receivable, inventory reserve for decline in value, short-term investment reserve for decline in value and long-term investment reserve for impairment, which is an important measure for listed companies to prevent risks and operate soundly. In the process of financial activities, some risks can be predicted and controlled at the planning stage, and the actual situation can be compared with the planned situation to analyze the control effect. Some risks are sudden, unpredicted, should identify the source and nature of the risk, measuring losses, and strive to find the optimal way to control or weaken the risk.
4, the establishment of a sound financial risk mechanism
The financial risk mechanism of the enterprise, that is, the risk mechanism introduced into the enterprise, so that business operators in the fierce competition, bear the responsibility for the risk, the exercise of its right to control financial risk, and access to risky business returns. For the risk-takers, firstly, they are required to set up a correct awareness of risk and clarify their responsibilities legally and economically; secondly, they should be given certain investment decision-making rights, fund-raising rights and fund distribution rights, so that the decision-makers, while exercising their rights, can fully consider the increasingly changing internal and external environment of the enterprise, and prudently consider the fund-raising, utilization and distribution activities; thirdly, they should be made to enjoy the Risk remuneration, clear responsibilities and rights, mobilize its enthusiasm. The establishment of a sound financial risk mechanism, but also requires enterprises to distinguish between the responsibility of the risk, to determine the channels of enterprise compensation for risk losses, truly reflect the effectiveness of enterprise risk control and management.