Risk Analysis In Engineering Purchase Of JC Company

With the continuous ferment of business sandals between Enron andWorldCom,and the global financial crisis caused by the defects of the United Statesown economic structure, investors and other stakeholders had suffered huge economiclosses. People came to realize the importance of risk management. They wanted to builda system to identify, evaluate and manage risks effectively to strengthen corporategovernance and risk management. But how to carry out risk management effectivelyand how to give full play to the role of risk management had become a major challengeto the management class of the company faced in reality. It is in such a backdrop that5ministries, including the Ministry of Finance, the Securities and Futures Commission,the Audit Commission, the CBRC and CIRC, jointly issued the Standard For EnterpriseInternal Control and its supporting guidelines. The guidelines are on the basis of thelatest international and domestic internal control theory，and fully absorbed the ideasand experiences of comprehensive risk management. The documents combined thetheory and practice together to help companies achieve strategic objectives during theirdevelopment.14listed companies in2008were selected as pilot units to implement theStandard For Enterprise Internal Control firstly. In2011Standard For EnterpriseInternal Control was carried out fully among domestic main board listed companies.After2007, JC company carried out the flattening management vigorously, closeddown and reorganized a part of enterprises. Business pattern was changed fromheadquarters investment mode to a mode which combined headquarters investmentmode with materialization operation. As business grows, regulatory environment andcompetitive environment of the industry changes, companies need to change theoriginal management to adapt to the new situation. Through research and preparation,JC company determined to use the Standard For Enterprise Internal Control of the5ministries for reference to improve the management of the company. The article is onthe basis of the above practice and takes the engineering procurement operations of JCcompany as an example. Firstly, the article analyses the current management and theinternal control of JC company,takes goal setting, the elements of matter identifying and brainstorming of Risk Management Theory to identify possible risks. Secondly, thearticle takes the use of Risk Assessment Theory to analyse the identified risks by usingthe qualitative and quantitative analysis, to take specific assessment of the risks whichwill impact on the JC company, to assess the effectiveness of the internal control, toscore and sort for residual risks. Then the article puts forward the solution to theresidual risks in accordance to risk appetite of JC company. Finally, the articlesummarizes the key factors, the key steps, problems and difficulties and furtherdevelopment of risk management by using inductive method so as to provide usefulexploration to enhance Standard For Enterprise Internal Control and capacity ofsustainable development and achieve the goal of enterprise management.