The Research Of Financial Risk Management In Company L

Domestic sports products industry experienced a "golden decade" due to the improvement of people's living standard and increase of sense of participating in sports activities. However, because of factors of cost increase and large inventory volume, the growth became slower since the year of 2011, and many companies in sports products industry had troubles in business. Along with the depression of sports products industry, people mainly focus on the risk of marketing and brand, instead of financial risk. Financial risk, as one of many risks that a company may face, cannot be avoided in market economy activities, and it is related to every activity of company's operation and business, so the financial risk management is crucial for the company's healthy and continuous development.The essay selects the Company L, one of the representative companies of domestic sport product industry, as the target for analysis. The essay considers COSO risk management framework, and analyses the development and financial risk management for Company L in the years 2008 to 2014, and figures out problems in the financial risk management of Company L, including:duties are not separated in the department setting; risk event identification is focused on historical events, and new events cannot be identified in time; the level and competence of risk assessment department; none of instructions on the use of external experts work; stakeholders are not considered for risk assessment; risk response ways are not plenty; control activities are not well performed; instructions on information and communication are not specific and concrete; monitorin is not well performed.In addition, the essay figures out 46 financial risks, covering fund operation aspect, financing aspect, investment aspect, liquidity aspect, profit distribution aspect, accounting booking aspect and internal control aspect, by the process analysis method and assesses risks using financial data analysis, together with questionnaire method, and figures out 5 significant financial risks, that are liquidity risk, fund operation risk, profit distribution risk, inaccuracy of financial reports of subsidiaries rik and ineffective internal control risk. Then the essay analyses the causes for these 5 significant financial risks and provides specific control activities.At last, in addition to the control activities for the 5 significant risks, the essay provides several specific suggestions on financial risk management improvement, based on analysis and COSO risk management framework:(1) enhance risk culture construction and the sense of risk management of employees; (2) improve the configuration to improve the risk management; (3) improve the competency of employees and using both internal and external resources; (4) improve the performance review standards and payroll policy, considering both quantity and quality; (5) build long term and short term human resource plan; (6) build synthesized management information system, improve the communication and feedback internally and externally; and (7) improve the monitoring process.The essay provides suggestions and references to domestic companies in sport product industry on financial risk identification, risk analysis and risk response.