How important is the risk management of commercial banks?

In the new era and new economic background, it is very important to strengthen the strategic layout of risk management. It is a valuable thinking to embed risk management into the strategic management framework of banks as an analysis project to enhance their core competitiveness. Share it with everyone below, I hope you like it! Welcome to read!

The role of risk management in strategy

For a long time, most domestic banks have focused on the front-office business, while the middle-office work such as risk management is rarely reflected in the strategy. The homogeneity of domestic inter-bank strategies is obvious, which leads to the similarity of banking business, resulting in the coexistence of excessive financial supply and insufficient financial services in the banking industry. Lack of strategic positioning thinking according to local conditions, it is difficult to reflect the differentiated operation of banks, which leads to some business areas being too intense, diluting profits one after another and being involved in low-price games. I wanted to continue my business, but on the other hand, it's getting harder and harder to make money. When there is new demand in the market, banks will lag behind in responding to the real needs of customers, thus losing the opportunity of product innovation.

Risk and income are two sides of business development, and bank strategy needs to face up to bank risk factors, especially the overall key issues that affect the whole body. For example, the ubiquitous imbalance of business structure, deviation of risk decision-making, and weak coordination should all be necessary options for strategic content. In other words, the bank's business strategy must reflect the solution to future uncertainty and its own transformation, and break the organizational barriers and inertia barriers in management, otherwise it will inevitably lead to strategic deviation and strategic risks.

Facing the complicated international and domestic economic situation, bank risk management needs to keep pace with the times and break away from the original management inertia. Find the most sensitive risk factors in the current economic cycle of this era and find the key points and pain points of bank risk management. For example, what are the risks that banks need to solve first, and where are the risks concentrated (in which industries, customers, products, regions, channels, etc. ) and what measures need to be taken to solve these risks. Especially when the traditional banking business breaks through the limitations and seeks a new mode of cross-border cooperation, the reference of past experience and foreign experience is very limited, and the risk management of emerging businesses depends entirely on the active exploration of banks themselves.

Risk management of embedded strategy breaks through key points.

1. Risk management needs to break through internal management barriers.

Cross-border cooperation within banks has always been a management pain point, and the information barriers between lines, institutions, departments and systems are serious, which leads to the inability to form effective coordination. Due to the gradual advancement of interest rate marketization, the demand of bank customers has become more comprehensive, and the bigger the business stall, the more prominent the contradiction. There is an urgent need to break down barriers from a strategic perspective, so that risk management tools and methods can run smoothly among lines, institutions and departments, and different institutions and departments can reach a * * * understanding of the measurement results of risk tools. The risk management of embedded strategy needs to effectively promote the interest rebalancing in the internal management transformation. Rebalancing interests will touch sensitive issues such as posts and responsibilities, and poor operation will have a greater impact on stability, which is a test of the wisdom of senior decision makers.

2. Actively connect with new markets, new industries and new economies.

The traditional risk management of banks rarely collects and understands the risk factors of new markets, new industries and new economies. For example, Internet finance, as a highlight of financial innovation under the background of "internet plus", challenges the traditional business model of banks and is slowly changing the competitive landscape of the banking industry. The importance of internet finance is self-evident, especially the innovation of payment and channels, which forms a new business model by docking with transportation, catering and other industries and changes the consumption pattern of food, clothing, housing and transportation. Traditional risk management methods can't quickly and effectively identify the whitewash and fraud elements in the Internet model, so it is necessary to adopt completely different versions of new processes and new models to eliminate the false and retain the true. Therefore, risk management embedded in the new era strategy needs to actively connect with new markets, new industries and new economic information, especially highlighting the risk management and control of customers, counterparties and financial products, which is a necessary measure for risk management.

3. Popularization and application of model analysis results.

The risk management of most banks is out of touch with the management department, and the output of the risk model cannot be effectively promoted and applied in the business chain. Strategic embedded risk management should involve the results of risk model analysis in business decision-making and high-risk business, so that risk management can be effectively transmitted according to strategic intentions. In the application phase, the adjustment items can be flexibly set to present the business strategy, so as to prevent the business department from making a big deviation in actual implementation. The final result should not deviate from the unified strategy of the whole bank. In addition, to ensure the popularization and application of risk model output to the end, it is necessary to monitor and strictly investigate compliance and audit, and resolutely put an end to the "two skins" of regulatory compliance and internal management.

4. Actively connect with the latest regulatory policies.

Historical experience shows that every major technological progress will bring about the adjustment of regulatory concepts, contents and methods. For example, the scale effect of new businesses with Internet genes is stronger, and the consequent risk effect breaks the geographical and industrial restrictions, so it is difficult for localized supervision to adapt to the characteristics of the Internet. This will inevitably lead to major regulatory actions, as evidenced by the recently established the State Council Financial Stability and Development Committee. The risk management embedded in the strategy should actively connect with the supervision, find the risk management preference and the final bottom line, adapt to the promotion of the "internet plus" national strategy, and conform to the general trend of the continuous integration of the Internet and traditional banking.

5. Take data as an important resource allocation project.

The last link of risk business plan is the construction of information system, and the essence of risk business plan is to analyze data. Risk identification, collection, quantification, quota, decision-making and reporting all depend on data, and both internal management and regulatory reports are presented through data, so data is a very critical resource guarantee in risk management. The premise of risk quantification is to have high-quality raw data as the input of quantitative model. If the data quality is not up to standard and the data supply is not timely, it is futile to do the model well. For a long time, banks have promoted risk management in accordance with the Basel Accord, mainly focusing on risk quantification, lacking a comprehensive understanding of the bank's data ecology. Where is the authority and application value of the calculated indicators? How to play a role in business details? If the information system construction is the last mile of the business plan, then the allocation of data resources is the last hundred meters of the last mile.

Comprehensive risk systematization construction

When communicating with employees in grass-roots posts, we will find that all lines and departments are very busy, but from the analysis results, the output value of unit cost is not large. The root cause is the lack of systematization of risk management, because there is no systematic management standard, which leads to complicated processes, repeated work and high rework rate. A lot of work is in vain and worthless.

The construction of comprehensive risk system of banks has obvious characteristics of practical exploration. However, compared with the banking industry's concern and expectation for risk systematization, especially the requirements of the times for bank risk management to keep pace with the times, it is very weak and lagging behind in the final landing, which is embodied in the fact that the effect at the operational level can not meet expectations. The so-called systematization is a systematic project. It is necessary to strengthen the docking of development strategies, promote the interconnection between the front, middle and back offices, deepen inter-departmental cooperation, and improve process efficiency. We must also take into account the interests and concerns of all parties, seek the greatest common denominator of interests and cooperation, and create the same responsibilities and rights of mutual trust and integration.

As a key role in the financial institution system, the importance of banks is self-evident. Bank managers should bear the pressure from shareholders, regulators, customers and competitors, and adapt to the increasingly fierce competitive environment, increasingly tight regulatory environment and changing economic environment. Therefore, the risk management of embedded strategy must face the pain point and solve the key problems. Only with the help of comprehensive and systematic risk management tools can we make a list of risks, find out which risks are the primary risks that most worry management and supervision, where the risks are mainly concentrated, the main laws of risk changes, and formulate measures that should be taken in high-risk areas.

More than a decade ago, the banking industry began to pay attention to the Basel Accord, which brought domestic banks into line with international advanced risk management, and banking colleagues began theoretical research and practical attempts on comprehensive risk management (including risk quantification). After more than ten years of exploration and practice, outstanding peers have applied for compliance, and more and more banks realize that building a comprehensive risk management that adapts to the overall environment is not only an urgent need to further promote industry knowledge cohesion and create a good business environment, but also a security guarantee for effectively and orderly promoting financial innovation and financial inclusion in the future. Banks urgently need to build a comprehensive risk construction system, keep the bottom line of feasibility and unity, and form a new attitude of bank risk management based on their respective business strategies, which is steady, compliant, quantitative and enjoyable.

Risk management moves from blueprint to reality

The first step to turn risk management from blueprint to reality is to formulate risk preferences accurately. Bank risk management preference originates from top-level strategy and is a vivid embodiment of strategic intention in risk dimension. Risk preference is an important carrier to convey strategic objectives, and the board of directors and senior management play a key role in the setting and management of risk preference. Risk preference comprehensively expounds the expectations of bank shareholders, supervisors, customers and related stakeholders, as well as the nature and level of risks they are willing to take in order to achieve the established mission. Setting risk preference requires comprehensive consideration of internal and external environment, future economy and operation. Of course, the formulation of risk preference also needs a set of standardized process matching, and the formulation of risk preference essentially reflects the bank's expectation of future business based on past performance and its internal ability judgment to realize this expectation.

Transfer the risk preference of the source strategy to the business operation level to ensure that a blueprint is implemented to the end. Based on the amount, price and structure of risks that banks are willing to bear within their total tolerance, specific indicators such as risk tolerance, type, concentration, emergency plan, risk profile, etc. are defined, and macro-strategies are split layer by layer by means of risk systematization tools (organizations, systems, processes, tools, etc.) and transmitted to micro-business details. ). At the same time, we can collect business data at the grass-roots level, summarize, analyze and observe whether it is consistent with the business structure and layout expected by the strategic intention, whether it matches the cognition of shareholders, customers and regulators and their own positioning in the market, and also test the efficiency of comprehensive risk systematization.

Another key point is stress testing. Stress testing is an innovative highlight of the new generation of risk management methodology, which is of milestone significance. At the macro level, stress testing is a set of top-down business simulation process. Finally, through unified design of stress scenarios, stress simulation is carried out by coordinating credit risk, market risk, liquidity risk, interest rate risk and other sub-modules, and the stress performance of balance sheet, income statement, capital, liquidity and other items is observed. Stress testing is an in-depth interpretation of management indicators in some extreme situations at the operational level. Stress testing runs through the whole bank risk management, which can be introduced into every management tool to find the pain points in management.

Finally, we can learn from the latest regulatory quantitative indicators and accurately set the risk limit. Combine assets, capital and income more closely, set short-term, medium-term and long-term goals that reflect assets, risks and income, embody new management concepts of "light assets", "light capital" and "light cost", and promote the improvement of risk management level. Find the optimization space of business structure, implement strategies, and guide the business to achieve sustained and healthy growth in the short, medium and long term.

Let Risk Management Create Value

At present, it is the shift period of China's economic growth, with obvious characteristics such as economic speed change, structural optimization and kinetic energy conversion. In terms of speed, China's economy grew by 6.7% in 20 16 and 6.9% in 20 17. Although it has slowed down compared with the high double-digit growth in the past, it still ranks in the forefront of the world's important economies. Through the "Belt and Road" and "AIIB" strategies, we will build a new pattern of globalization, reform and adjust the economic structure on the supply side to achieve optimal allocation, and continue to integrate and upgrade "internet plus" with traditional industries. It shows that the trend of "stable and good" is constantly consolidating. Under such economic trend, the risk management of commercial banks needs to move towards a higher form, which is an opportunity brought by long-term economic development.

Risk management is essentially an art and science to find the balance between income and risk. Effective risk management helps to establish a standardized and orderly business process and is an important guarantee for creating sustained and stable benefits. Based on the full understanding of risks and insight into economic laws, the bank's assets are optimally allocated, so that every risk undertaken by the asset portfolio can create maximum value. From the perspective of core competitiveness and goodwill, strengthening the construction of strategic risk management, strengthening information disclosure, reassuring regulators, ensuring market recognition, gaining respect from peers, gaining the trust of customers and investors, and improving and maintaining the reputation of banks will help to comprehensively enhance the competitiveness and asset scale of banks.

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