Study On Risk And Risk Management Of XXX Credit Guarantee Co.Ltd

With establishment and ever fast-growing development of China's financial market, credit guarantee companies have made critical contributions to China's economy as a new blood in the industry. Credit guarantee companies not only help the banks with risk elimination and risk diversification, but also act as a "bridge" over the gap between regular financial credit supply and the demand of SMBs. As independent economical entities, credit guarantee companies should pay great attention to risk prevention and risk management. Therefore, studying the risks involved for credit guarantee companies and bringing forward effective mechanism of risk prevention are of importance to solve the problems of SMBs' financing difficulty.The author first brings up the issue of SMBs'financing difficulty by elaboration on the topic of current status of SMBs in China, and the role of SMBs in China's economy development. Basing on analysis of SMBs'lagged development due to insufficient financing supply, the author points out the critical role of credit guarantee companies for the development of SMBs. Meanwhile, acting as a bridge, credit guarantee companies are vulnerable to enormous risk caused by compensatory mechanism. In order to secure a steady business environment for credit guarantee companies, and to unleash their role for the most advantage, study on risks involved in credit guarantee companies is particularly important. The author then elaborates on related theories, from both domestic and international sources, and to utilize the advanced experience on credit risk management. With innovation and modification, the author explores a mechanism of risk management which is suitable for China's environment. Following the theories, case study of XXX Credit Guarantee Co. Ltd is introduced. The author illustrates the company's internal environment in terms of organization structure and company basic information. For the external environment, the author elaborates on macro-economy environment, on law and regulation, and on the society's general credit environment. The author then takes a step further to predict the future of this industry. Various risks during each process of credit guarantee project are categorized into operational risk, risk of adverse selection, moral hazard, and risk of internal control defect. Finally, the author concludes a risk management solution from four processes of credit guarantee project:project investigation, project audit, project implementation, and post-project supervision. Furthermore, the author exams the solution by using real projects, and ultimately justifies the solution's practicality and effectiveness.