Internal control and risk management thesis a
"Enterprise risk management and internal control shallow theory"
Abstract Enterprises in the business activities will inevitably encounter different risks, in addition to the existence of the objective risk of uncontrollable, most of the enterprise risk is controllable, can be strengthened by strengthening the internal control system, standardize the operating process to establish a more scientific risk control system, while the strengthening of internal control can also be used to strengthen the internal control system, and the internal control system can also be used to strengthen the internal control system, the internal control system can also be used to strengthen the internal control system. System, while the strengthening of internal oversight can also avoid risk, so that the risk is reduced to a tolerable level.
Keywords enterprise management, risk management, internal control
First, the definition of internal control and risk management
Internal control is an important means of modern enterprise management, is implemented by the Board of Directors of the enterprise, the management and its employees *** with the aim of reasonably ensuring the realization of the enterprise's strategy, business results, financial reporting, asset evaluation and other basic objectives of the control activities, the essence of which is to ensure that the enterprise's business strategy, operating results, financial reporting, asset evaluation and other basic objectives, and to ensure that the enterprise's internal control and risk management. The essence is to ensure the realization of the enterprise's basic objectives within a reasonable range. Enterprise risk management is a process, implemented by the board of directors, management and other personnel***, applied to strategy development and activities at all levels of the enterprise, aimed at identifying potential events that may affect the enterprise and managing risks in accordance with the enterprise's risk appetite to provide reasonable assurance that the enterprise's objectives will be achieved. The book Internal Control? Overall Framework" book, it is proposed that the control elements of risk management include control environment, risk assessment, control activities, information and communication, and supervision. It can be seen that the environment faced by any enterprise has more uncertainties, air pressure should be based on mastering the objective external environment, through certain control methods, the development of control processes and measures, in order to achieve the realization of corporate goals.
Second, the inherent relationship between risk management and internal control
The purpose of risk management is to prevent risk, timely detection of risk, predict the possible impact of risk, and try to minimize the adverse effects of control. Internal control is the risk management adopted within the enterprise, the internal control system is formulated on the basis of the risk or even entirely by the risk factors (in some extreme cases) to determine. Maintaining the interests of investors, preserving corporate assets and creating new value is the fundamental role of internal control or risk management. The purpose of the internal control of the enterprise, which is an integral part of the enterprise system, is to ensure the accuracy and reliability of accounting information, to prevent economic fraud, to protect the safety of property, and at the same time to protect the reputation of the enterprise from economic losses, etc. And in the new technology and market conditions of internal control of the natural expansion of risk management, internal control to promote risk management.
The power of enterprise internal control mainly comes from the management of risk, when the enterprise carries out risky operations, the internal control system becomes a necessary, efficient and effective risk management methods, therefore, the enterprise risk management system should achieve the state is able to meet the requirements of the enterprise internal control system. In other words, risk management is a natural extension of the concept of internal control, and new technologies and markets push internal control toward risk management. In short, enterprises in the actual business process, risk management and internal control are inseparable.
Third, the main risks faced by enterprises
The continuous development of economic globalization and the rapid growth of the economy has led to the modernization of the risks faced by enterprises are increasing day by day, the higher the degree of marketization, the more obvious the performance of enterprise risk, it can be said that the enterprise risk is always in, everywhere.
Enterprise risk is mainly divided into external risk and internal risk, external risk mainly refers to the external existence of many factors, such as national laws, normal changes, market supply and demand conditions or competitiveness. The internal risk mainly refers to the enterprise's resource allocation, industry status, business process, financial capability, and management personnel's value orientation, job responsibilities, incentive mechanism and team spirit, etc.
This is the first time that a company's internal risk management system has been used in the past.
Fourth, for the main risk enterprises can take internal control management measures
Whether the enterprise's own development or and to meet the risks and challenges, the establishment of a sound internal control system has become an urgent issue. Enterprises only according to the actual business situation to develop a scientific and reasonable internal control system, and at the same time to be strictly enforced, in order to achieve the goal of risk prevention. The internal control referred to in this paper mainly includes people, money, material and information. Specifically, it mainly includes the following:
(a) the implementation of the principles and elements of internal control to ensure the realization of effective risk management
The principle of internal control refers to the comprehensiveness, importance, checks and balances, adaptability. The elements mainly include five aspects, i.e., elements of internal environment (governance structure, institutional setup and distribution of authority and responsibility, internal audit mechanism, human resource policy, corporate culture), elements of risk assessment (goal setting, risk identification, risk analysis, risk coping), elements of control activities (incompatible position separation control, authorization and approval control, accounting system control, property protection control, budget control, operation analysis control, performance appraisal control), elements of control activities (separation control of incompatible positions, authorization and approval control, accounting system control, property protection control, budget control, operation analysis control, performance appraisal control), elements of internal control, and elements of internal control. performance evaluation control), information and communication elements (information quality, communication system, information system, anti-fraud mechanism), internal supervision elements (daily supervision, special supervision) and so on. In practice, companies should always review the regulations, processes, work requirements, etc. are in line with the four principles and five elements of the connotation of risk management is conducive to ensuring the effectiveness of risk management.
(2) Strengthen human resources management, improve the employment system
Enterprises are more likely to lack of relevant systems and processes in the management of the personnel did not strictly implement the relevant systems and processes, or the personnel's business capacity, the quality of the phenomenon of their own quality is not high, which will lead to enhance the risk of the enterprise's employment. Therefore, the full mobilization of enterprise human resources enthusiasm, initiative and creativity has become a modern enterprise management must solve the problem. First of all, we should establish a strict recruitment process, to put a good import; secondly, we should regularly organize theoretical and practical training, to put a good quality; finally, we should develop a more reasonable and scientific incentive mechanism, to put a good distribution.
(C) strengthen the property safety management, to ensure corporate profits
Strengthen the property management, that is to say, to strengthen the inventory, energy and fixed assets of the physical management. Inventory risk mainly refers to the damage caused by various causes of inventory and the loss caused by the enterprise, once the inventory crisis, then it will also affect the direction of business operations or the flow of cash. Some enterprises on the property material internal control management is too SongZhao, the system can not be implemented, thus resulting in inventory material damage, scrapping, shortages and so on, resulting in the unit caused by the more serious economic losses. Therefore, in order to reduce the risk of enterprises must improve the internal control management of materials and property, should strengthen the regular inventory, account reconciliation, registration details, property insurance, monitoring and supervision, so as to ensure the safety of the property, to promote the effective operation of the enterprise, in order to achieve a better development of the enterprise. Secondly, it should strictly implement the authorization and approval system of funds, so that it can target the use of funds on the basis of saving resources. The enterprise's capital flow is mainly used for procurement, payment, sales, collection, etc., should develop a rigid management system, and require the terms of reference and responsibilities of the functional departments, to ensure that employees can be implemented in accordance with the corresponding management regulations to ensure the safety of funds.
(D) employees in their respective roles, improve the implementation of risk management
The enterprise level of internal control of the state issued a breakdown of eighteen normative guidelines, is a further refinement of the five elements of the standardization of the operation of the enterprise has played a very detailed guidance, each guideline is clear about the risk points, how to control the potential risks, etc., is the establishment of the enterprise's internal control system focus on the content of the reference, but also the enterprise must adhere to the implementation of norms, and also the internal control system. It is the key reference content for enterprises to establish internal control system, and also the standard content that enterprises must insist on implementing. But more importantly, the implementation of both risk management and internal control is the implementation of the main people, so the implementation of risk prevention management system is the most critical factor is to participate in the awareness and improve the quality of all staff.
Internal Control and Risk Management Essay II
"Research on Internal Control and Risk Management of Enterprises"
[Abstract] How to carry out reasonable and feasible design of internal control system of enterprises on their own characteristics and to be sustained and effective implementation, which has become the focus of the enterprise's current internal control practice and the difficult point. This paper focuses on the relationship between internal control and risk management, discusses how Chinese enterprises should improve their internal control, strengthen risk management, in order to achieve effective prevention of various risks and reduce losses.
[Keywords] internal control, risk management, internal audit
The global financial crisis triggered by the U.S. subprime mortgage crisis has had a strong impact on China's economic development, and the pace of economic growth has slowed down markedly, and the negative impact of the worldwide economic crisis on China's real economy has continued to spread, and the market environment has become even more volatile, and the business risk has increased, which has also triggered the enterprise The company's business has also led to the thinking of how to strengthen the risk management.
First, risk management
Risk is the possibility of loss. Risk management is the process of identifying, evaluating and responding to various business risks. Business risk is unavoidable, enterprises should be combined with different stages of development and business development, and actively carry out risk management to minimize risk and effectively reduce avoidable losses.
Internal control refers to the policies and procedures designed and implemented by corporate governance, management, and all employees in order to reasonably ensure the reliability of financial reporting, the efficiency and effectiveness of operations, the safety of assets, and compliance with laws and regulations. As a very important part of the management of each enterprise, good internal control, is one of the important enterprise risk management tools, strengthen the internal control of enterprises to improve the level of business management, risk behavior prevention ability, to ensure that the strategic objectives of the enterprise to be achieved is of great significance. 2009 published "China's listed companies in 2009, the white paper on internal control," the statistics show that: the better the internal control of the The statistics of "2009 White Paper on Internal Control of Listed Companies in China" published in 2009 show that: the better the internal control, the higher the return on invested capital, and the strengthening of internal control helps to improve the return on invested capital.
At this stage, China's market economic system is still not perfect, the market environment is more prominent irregularities, coupled with many enterprises are in transition, a variety of uncertainties intensified. Therefore, China's enterprises urgently need to improve their internal control, effectively prevent and respond to the various risks faced by enterprises.
Second, the current situation of internal control and risk management in China's enterprises
1. Management's weak concept of internal control, employees do not participate in risk management
Some managers have a bias in their knowledge and understanding of internal control, thinking that internal control is just a simple summary of the various rules and regulations within the enterprise. They wrongly believe that internal control can only play the role of day-to-day management of employees and do not recognize its importance in risk management. Some enterprises have poor operationalization of internal control and low level of risk management. They usually only emphasize the response to risk, but neglect the prevention of risk, resulting in the possibility of the enterprise to have a major incident outside the increased. But it is not known that effective risk prevention is more conducive to reducing business losses than remedying risks after they occur and correcting them afterward, and it is easier to take the initiative to prevent risks beforehand than to deal with them afterward.
Some enterprises have not established the concept of full participation in risk management, that risk management is only the business of corporate governance and management, and has nothing to do with the general staff. The consequences of not involving frontline staff in risk management are usually that it is difficult to identify weaknesses in the risk management process and prevent problems before they occur. Let every employee of the enterprise in the work, all consider the risk factors, in order to prevent risk from the source.
2. Internal control design flaws, risk management mechanism is not sound
The traditional internal control design is only limited to the authenticity of financial information and reliability of supervision and management, for the financial risks other than the risk is often not taken into account. Reasonable internal control design should take into account the various risks faced by the enterprise, such as market risk, financial risk, legal risk and investment risk should also be included. Enterprises should seize all the key control points in the management process, according to the actual situation of the design of the corresponding internal control, and to prevent the management of the enterprise may be fraudulent purposes or succumb to external pressures of factors (such as time or cost, etc.) and override the internal control, the internal control may be circumvented, in effect, a sham.
3. Lack of effective risk management
Effective implementation of a system of safeguards requires effective monitoring. Effective implementation of well-designed internal controls can really achieve the purpose of risk prevention. Therefore, the supervision of internal control is one of the important risk management measures. At present, many enterprises in China ignore the supervision system of internal control, especially the lack of quantifiable risk management system. For example, internal audit is an important measure for risk supervision. But because the internal audit work is not mandatory, and can not be issued with legal effect of the audit report; therefore, China's internal audit has long been unattended to, many enterprises either did not establish an internal audit system, or the internal audit did not really play its supervisory and management role. For example, from the job setup, most of the current internal audit department, basically parallel with other functions, most small and medium-sized enterprises do not even have an independent internal audit department. From the point of view of the enterprises that have been set up, this mechanism also tends to make the internal audit organization and personnel by the group interest factor constraints, the influence of traditional Chinese interpersonal relations, can not independently, objectively, truthfully, impartially, in-depth work, to make the audit process is often due to the constraints of the management system, resulting in a lot of the internal audit process in the form of a lack of their own status and prestige, so that the internal control of such an effective mechanism, the internal audit department, basically parallel to other functions, most of the small and medium-sized enterprises do not even have an independent internal audit department. control of such an effective mechanism, into an internal control? Insider control? The mechanism.
Third, improve internal control, strengthen risk management
1. Strengthen the quality of staff training, improve the business capacity of employees
With the development of the socialist market economy and the establishment and improvement of the modern enterprise system, enterprises are facing serious challenges. Enterprises, including accounting staff, including the knowledge structure of the existing staff, business capacity and legal concepts have not been able to meet the needs. For enterprises, employees should have a good work ethic, professional competence and vocational skills, but enterprises often existing employees do not have all these capabilities, improve employee risk awareness and vocational skills is an important lesson that enterprises should make up for the current situation of the staff, enterprises should take a variety of measures to strengthen the education and training of employees and pay attention to the internal control of the management model, reflecting the relevant training system and effectiveness. The training is systematic and effective. Only by enhancing the professional awareness and basic vocational skills of all employees, improve the ability of all employees to rationally treat the enterprise and work, in order to adapt to the needs of the national development of the economy, improve the professional image of the whole enterprise team and professional skills, and thus improve the economic efficiency of the enterprise.
2. Emphasis on risk management-oriented corporate culture construction
Some enterprises have employees who lack a rational approach to the company and the work of the mentality brought about by the restlessness and turbulence. The goal of building a risk management-oriented corporate culture is to cultivate positive values and a sense of social responsibility among employees, advocate honesty and trustworthiness, dedication, innovation and teamwork spirit, establish modern management concepts, pay attention to internal control, and strengthen risk awareness. At the same time of strengthening the staff's business quality training, but also to carry out integrity education, enhance their self-restraint. Efforts to establish a corporate culture based on integrity, on the one hand, can ensure that the operation of the company's legal compliance, on the other hand, can prevent the staff's misconduct to bring unnecessary losses. And the good reputation of the corporate culture also helps to improve the visibility of the enterprise, establish a good social image, to create intangible benefits for the enterprise.
3. Standardize internal control, strengthen risk management
Standardize the internal control of the enterprise is a very important work, a reasonable internal control system can be reflected in all aspects of business management. According to the principle of mutual constraints and checks, the establishment of scientific and reasonable internal control, that is, the reasonable setup of management bodies and jobs, clear rights and responsibilities of employees, in order to ensure the normal conduct of day-to-day business activities of the enterprise, at the same time, let the risk management of the enterprise institutionalized, procedural. However, when designing the supervision and management, the management personnel must consider from a humane point of view, to prevent the management system from being overly harsh, resulting in impeding the normal production and operation of the situation. At the same time, there are special risks for certain matters or transactions (such as major investment expenditures, etc.), but also to establish the corresponding special internal control, in order to prevent it from causing significant losses to the enterprise.
Enterprises should formulate human resources policies conducive to their sustainable development, the assessment system to implement a combination of rewards and penalties, so that the employee's salary and enterprise risk management performance combined to motivate all employees to actively participate in risk management, set up a comprehensive risk internal control organization system, the formation of risk management of all staff from top to bottom and the whole process of risk management system.
4. Strengthen internal supervision, correct deviation
Enterprises should take risk management as the center, the risk management process throughout the day-to-day operation and management of all stages, the establishment of a risk management as the core of the internal control, risk management for the identification of job responsibility, supervision, analysis and evaluation. Strengthen the supervision of enterprise risk, especially for the enterprise development strategy, organizational structure, business activities, business processes, key jobs and other major adjustments or changes in the case of some aspects of the internal control of the special supervision is very necessary. Efforts to build a quantifiable risk early warning mechanism combined with internal control, and to formulate risk management plans in advance, so that we can carry out risk management in an all-round, whole-process manner, timely detection, identification and assessment of risks, and actively respond to the risks, and to grasp the initiative of the operation. Enterprises should also combine the actual situation found in the internal oversight, regular self-evaluation of the effectiveness of internal control, and timely correction of internal control deficiencies found in the process of supervision and inspection, as well as the necessary rectification.
Enterprises should ensure that the internal audit organization set up, staffing and independence of work. Vigorously implement risk-oriented internal audit methodology, internal audit organizations should be combined with internal audit supervision, supervision and inspection of the effectiveness of internal control. If the enterprise can give full play to the role of internal audit, in particular, the key control points should be implemented to focus on supervision, can achieve twice the result with half the effort.
Fourth, the conclusion
Many successful cases in the shopping mall tell us: successful enterprises can not be separated from good internal control and risk management system. In the face of today's unpredictable market environment and fierce market competition, enterprises face risks everywhere. However, the internal control and overall risk management system of Chinese enterprises still lags behind the western developed countries. After China's accession to the WTO, enterprises need to learn to proactively take risks and manage risks, combine the establishment of the internal control framework with enterprise risk management, continuously improve the internal control of enterprises, establish risk management barriers, effectively prevent risks, and actively respond to risks.
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Internal control and risk management thesis of the third
Enterprise Financial Risk Management and Internal Control
Abstract Due to the existence of the financial risk of the objective Due to the existence of financial risk objectivity, enterprises should proactively take scientific and effective measures to prevent and cope with the risk, through scientific analysis and assessment of existing and potential financial risks, to find out the key risk factors, to establish a financial risk prevention system, to minimize the financial risk, improve the quality of economic operation and efficiency of the enterprise, to ensure that the enterprise's healthy and sustainable development.
Keywords: financial risk, causes, internal control measures
I. Reasons for the emergence of corporate financial risk
1. Imperfect corporate governance structure
Corporate governance structure refers to the relationship between shareholders, directors, supervisors and managers within the company. At present, the common problems of corporate governance are: the board of directors can not play its due role, the supervisory board's function is very limited. If the board of directors and the supervisory board do not fulfill their corresponding duties, resulting in the lack of effective supervision and checks and balances of the managerial layer, making the company and the interests of shareholders damaged.
2. Financial decision-making mechanism lacks scientific and predictive
Many enterprises have not established a scientific decision-making mechanism, there is the phenomenon of decision-making based on experience and subjective decision-making, which often leads to decision-making errors, which will have unfavorable consequences on the financial returns and capital recovery. For example, when making investment decisions, enterprise decision makers may be due to information asymmetry, difficult to obtain adequate and effective information or access to information cost is high, often market research is not in-depth, scientific argumentation is not sufficient, so that the investment is too blind, and thus suffer huge losses. In addition, most of the enterprises have not yet established financial risk warning, prevention and control system, financial decision-making lack of predictability.
Second, the formation of financial activities in the process of risk
1. Financing risk
Enterprises can be financed through debt financing and equity financing in two ways. The choice of different financing structure directly affects the cost of financing and the size of the financing risk. Liabilities can enable enterprises to quickly raise the required funds, but at the same time, the debt has a repayment period, repayment methods and the price of funds used that is the interest rate provisions. If the enterprise does not effectively use the funds raised in the process of its own internal operation, cash flow problems, unable to repay the debt in full on time, will face the risk of credit decline, share price decline, or even bankruptcy and closure. At the same time, the cost of debt financing is affected by interest rate policy, inflation and other external factors, which cannot be fully controlled by these enterprises themselves. Equity financing usually refers to enterprises' financing through issuing additional shares, which involves the number of shares to be issued, the timing of issuance, and the cost of financing. When the funds invested by investors cannot produce the expected investment returns, investors will sell their shares, causing the stock price to fall, making it more difficult for enterprises to raise funds again, and the cost of fundraising will also rise. Factors affecting the risk of equity financing are the scale of equity financing, the capital structure of the enterprise, the operating conditions of the enterprise, the capital market environment.
2. Investment Risk
In order to ensure and expand the scale of operation, enterprises will use the existing funds to invest in order to obtain investment income, and the investment income is also very uncertain. If the enterprise managers do not carry out scientific investment analysis and decision-making, it will trigger blind expansion or loss of development opportunities, so that the funds occupied by the investment did not make use of the benefits, but instead of affecting the cash flow, which leads to the level of profitability and solvency of the enterprise there is uncertainty.
3. Capital Recovery Risk
The capital recovery risk mainly comes from the uncertainty of the time and amount of the settlement capital recovery. If the customer because of poor management default accounts receivable, the funds can not be fully recovered on time, is bound to bring direct economic losses to the enterprise, affecting the enterprise's capital turnover, so that the capital chain is broken, the reproduction of funds is insufficient, then the enterprise is bound to take other ways to raise the funds required for reproduction, which in turn increases the enterprise's financial costs, resulting in a deterioration of the financial situation, and, in serious cases, will also lead to corporate bankruptcy.
4. Income distribution risk
The allocation of income refers to the distribution of net profit between the enterprise retained and investors, and there is a relationship between the two. If the enterprise gives too high a return to investors, it will inevitably result in insufficient retained earnings, which will affect the enterprise's future production and operation activities. On the contrary, if the enterprise increases the retained earnings and reduces the distribution to investors, it will frustrate the enthusiasm of investors and affect the reputation and value of the enterprise. Therefore, different trade-offs and trade-offs in the way, time and amount of the enterprise's distribution of earnings bring uncertainty to the value of the enterprise.
5. Macroeconomic and National Policies
Macroeconomic and national policies are exogenous, and enterprises can only adapt passively. Crisis, crisis, before the advent of risk to have encountered knowledge, after the advent of risk, there should be an active response to the measures to seize the opportunity in the risk, to resolve financial risks.
Third, the financial risk of internal control measures
The factors that cause financial risk are both from external systematic risk, but also from internal non-systematic risk. For enterprises, the systematic risk is not controllable and non-systematic risk can be prevented and controlled by analyzing the changes of internal and external factors and taking scientific and effective internal management measures.
1. Improve the corporate governance structure
Whether or not the corporate governance structure is perfect is the root cause of determining the level of management of the enterprise, and is the key to the enterprise's ability to effectively control the operation of financial activities. In the implementation of the institutional arrangements for the separation of ownership and management rights, in order to effectively establish a perfect corporate governance structure and effective corporate governance mechanism, we must scientifically configure the company's control. To ensure the ultimate control of the shareholders' meeting, to ensure the independent decision-making power of the board of directors, and to ensure the manager's power of independent operation and management. To start from the actual enterprise, the establishment of a scientific and effective incentive and supervision mechanism adapted to the characteristics of the enterprise's own industry and scale, not only to protect the interests of the owners, but also to give the operator full operational autonomy, mobilize its enthusiasm, and to ensure the effective operation of enterprise management and control.
2. Establishment of a scientific financial risk early warning mechanism
The formation of financial risk is not an overnight thing, it has a long latent period, the enterprise can be completely through the combination of qualitative analysis and quantitative analysis of potential financial risk monitoring, early warning, prompting managers to take effective measures to deal with the financial crisis in a timely manner, to minimize the risk. Therefore, the enterprise should be solvency, profitability, operating capacity, growth capacity, cash flow and other financial indicators and corporate governance and other non-financial indicators to conduct a comprehensive analysis, different enterprises should be based on the key factors affecting their own financial risk of the different establishment of financial crisis early warning model suitable for their own enterprises. Financial personnel should always pay attention to and analyze the financial risk of the enterprise, based on the enterprise's financial statements, combined with the business plan and other relevant information, the use of financial crisis early warning model for financial management of the whole process of implementation of the monitoring, once the discovery of some early warning indicators are abnormal, through the early warning model to determine the possibility of financial risk of the enterprise, the enterprise should be timely to find out the reasons and take countermeasures, in order to avoid and reduce the risk of loss.
3. Moderate indebtedness, to prevent financing risks
Liability has a financial leverage, both for the owner to bring financial leverage gains, but also may be due to poor business operations, the decline in profits, to the owner of the earnings caused by a greater loss, so the enterprise should be moderate indebtedness, to prevent financing risks. Specifically, first of all, according to the production and operation situation and the capital turnover situation reasonable prediction of the demand for funds, moderate debt, and through the cost of funds, the risk analysis of each financing program, choose the risk is small, the cost of funds rate is low financing program, and determine a reasonable funding structure, pay attention to short-term liabilities and long-term liabilities with a reasonable mix. Secondly, improve the efficiency of the use of funds, strengthen the placement and management of liquidity, revitalize the stock of assets, and accelerate the processing of idle equipment to ensure that the debt is repaid in full and on time.
4. Scientific decision-making, to prevent investment risk
Enterprises in the investment process, in-depth market research, to grasp the full and effective investment information, and focus on the necessity of project investment, technical feasibility, economic reasonableness of the rigorous scientific demonstration, through the prediction of the program payback period, the rate of return on investment, such as the future returns, to exclude high-risk, low-yield program, to ensure that the investment decision is made, and to ensure the success of the project, to ensure the success of the project. Programs to ensure the scientific nature of investment decisions. Enterprises can also rationalize the investment portfolio, not only to dare to risky investments to obtain excessive profits, but also to overcome adventurism and blind investment, as far as possible to control the risk and diversify the risk. Only by improving the decision-making level of decision-makers and investing limited funds in the most needed projects and projects with better benefits can we give full play to the effectiveness of funds and realize corporate profitability.
5. Establish a scientific and reasonable credit risk management system to prevent the risk of capital recovery
An important risk point for capital recovery is accounts receivable. The use of accounts receivable can make the enterprise's profit increase, but does not form the enterprise's cash inflow, but due to the increase in profit makes the related tax expenditure increase, accelerate the speed of cash outflow, make the net cash flow decrease. Therefore, for the management of accounts receivable, first of all, according to the different financial status and creditworthiness of customers, to take different sales methods and settlement methods. Secondly, we regularly analyze the ageing of accounts receivable, closely follow up the repayment of accounts receivable, and formulate reasonable collection policies to control the risk and reduce the loss of bad debts. Finally, for possible bad debt losses, bad debt reserves should be extracted to make up for the risk of loss and prevent the interference of the risk of capital recovery on the normal business activities of the enterprise.
6. Formulate a reasonable income distribution policy to prevent the risk of income distribution
Retained earnings is an important source of funds to protect the reproduction of enterprises, earnings should be retained a certain amount of the enterprise, but also can not be ignored the role of the signaling of the distribution of income, the distribution of income distribution, time and distribution of the number of investors tend to convey some kind of information, is an important basis for investment decision-making investors. The way, time and amount of distribution of earnings often conveys some information to investors, which is an important basis for investment decisions. Therefore, when formulating the earnings distribution policy, enterprises should not only consider the significance of earnings for reproduction, but also consider the impact of the signals conveyed by the earnings distribution policy to investors on the future financing of the enterprise. Therefore, it is appropriate for enterprises to combine their own strategic objectives, according to the current situation of how much actual profit and stability or not, the reasonable allocation of earnings in the proportion between the investors and the enterprise retention, not only to ensure that the enterprise reproduction of capital needs, but also to stabilize investor confidence in order to reduce financial risks.
References:
[1]Sheng Yanmei, Xu Lufan, Zhang Yanjun. China's corporate finance outsourcing risk analysis and preventive measures. Value Engineering.2012(22).