Risk Management Research On The Trust Institutions In China

Financial risk management is the core and frontier problem in modern financial theory; it is a critical and practical issue which our country is facing as well. Trusting industry is one of the four main parts in financial industry. Being a primary component of financial risks, the risk of trust institutions can bring great impact on the economic safety of a country. Therefore, an analysis on these risks and management problems in China is of great theoretical and practical significance. This dissertation mainly targets at risks of trust institutions in China. Based on trusting theories and risk management theories and the existing achievements of experts home and abroad, the writer applies regular analysis with case analysis, and quantitative analysis, into systematic analysis and study concerning trust institutions and risk management situations in China with the purpose of providing effective models and policy making strategies to the related current risks and problems in the country. The writer considers trust institution risks to be the uncertainty of financial lost facing the main body of trust institutions in managements. In the trusteeship, the risks of the trust institution, i.e. trustee takes the occupying place, since the related risks of the trust and his or her beneficiary are caused by or derived from the risks of the trustee. During the old phase of trusteeships, the major business of a trust institution includes credit loans and investments which concerns a limited activities in the real trusting business sense. The major risks in this phase take the forms of credit risks, market risks and fluidity risks, all of which are systematic and non-original. To the contrary, the new phase of trusteeships really set in place the business or "managing wealth on behalf of others", makingreputation risks the essential and principle one. The business of finance assembling trusteeships is one type of the primary activities in the new phase, which in the meantime most likeable to initiate risks. In addition, risks in this phase characterize in complexity, system-relating, and differences. The author propounds some idea about the measuring model for the risks of trust institutions. The dissertation has also analyst the main reasons for the risks of trust institutions based on the limitations of system.Risks are various, co-related, inter-depended, and transferable, and hence, trust institutions need to take into consideration of synergetic management between interior control and exterior supervision of the risks, risk-taking and profit-making, and between different kinds of risks, in so doing, to gain the greatest profits out of acceptable and willingly accepting risks, or to minimize the risks on the basis of presumable profits. Synergetic management of the risks refers to the action of coordinating, synchronizing, and systemizing them. The dissertation suggests that the "Four-layer Model" and the "Synergetic Risk Management (SRM) Model" be taken respectively in aspects of macro-and micro-fields of the agencies. This risk management is not a solitary behavior, but instead, a process of inter-related or exchange with the outside world. In the macro phase or the society as a whole, we can divide the risk management structure into four layers including the interior control of risk, industry self-disciplining within the industries, society supervision, and government regulation. In this model, the four layers are arranged in a way of radiation, with the very risks in the core radiating outward. These layers can function individually and co-operatively. Meanwhile, "Synergetic Risk Management Model"means to measure and evaluate the over-all enterprise risks, and to bring reputation risks, conducting risks, legal risks, market risks and credit risks into conformity and finally to exercise the all and the one control over industry in ways of bringing all-rounded risk management, crew risk management, whole process risk management and full range risk management into a peace. Risk management of trust institution in this dissertation includes the macro-risk management through government, and the micro-risk management of the agency itself. The author offers some suggestions about the macro strategies and micro strategies on the risk management of trust institutions. In the final part of the dissertation, the writer points out that a further research is needed to adapt to the possible changes in both risk situations and risk management models since the future tendency of trust institution will likely be one of integrated business.