Building Of Konka Group Financial Risk Management System Based On The COSO Framework

Appliance industry is one of the fastest growing traditional industries after the Chinese economic reform. At the same time, appliance industry and consumer electronics market are facing many challenges. While the net profit is falling, operating cost is rising and the competition in the industry market is getting intense, the Chinese home appliance enterprises in order to survive and develop in a highly competitive market environment and seize opportunities, the risk management is particularly important and prominent. It is imperative that corporate financial risk management must be implemented as soon as possible, especially for enterprise survival and development. Thus, it is a very important significance to utilize the scientific method to analyze corporate financial risk and build a long-term development for their own health risk management system.Firstly, to identify and assess Konka Group’s financial risk by selecting the Konka Group key financial data and indicators 2009-2013 and utilizing the risk control theory and methods for quantitative analysis of financial indicators. And then, utilize qualitative analysis of risk control methods to predict through financial index evaluation system, plus the environmental risks of various market factors(such as: business environment, decision-makers and leaders of preferences, the public and legal regulations, etc.). To identify issues in financial management and make risk warning for enterprise financial by combining the above two methods and through a comprehensive evaluation of the Konka Group’s financial risk.Secondly, based on "Enterprise Risk Management- Integrated Framework" released by the COSO Commission, guided by Konka Group corporate financial risk management strategy, we construct the two dimensions, three levels and seven elements in financial risk management framework for Konka Group’s financial risk management situations. Then, we elaborate implementation of Konka Group’s financial risk management framework separately from the target layer, management and base layer.Finally, enlightening by the analysis of Konka Group Case, enterprises build sets of risk management framework corresponding with their actual situations through scientific methods and achieve the desired effect base on their own reasonable circumstances. This article describes the building of financial risk management corresponding with Konka Group, by analyzing the data on the financial statements as well as the financial risk management combining theory, referring to the "Enterprise Risk Management- Integrated Framework" and combining with its own characteristics and appliance industry overall business environment. This article is mainly focused on researching the Konka Group, constructing Konka Group financial risk management framework. We hope this case can provide a useful reference for the long-term development of Konka Group, but also other electrical appliance enterprises can reasonably utilize the "Enterprise Risk Management--integrated Framework " to strengthen the development of their own financial risk management as a reference.