Research Of Bank Of China Hunan Branch Financial Risk Management

Finance is at the core of the modern economy while risk management is the lifeblood of the financial industry.Financial risks are prone to and frequently emerge at present.Although the overall systemic financial risk is controllable,risks such as bad assets,liquidity,bond defaults,shadow banking,external market shocks,property bubbles,government debt and internet financing are building up.Therefore,we should attach greater importance to financial risk prevention and control.In consideration of the real situation of China's commercial banks,it is of profound significance to analyze,control and prevent financial management risks of commercial banks under the guidance of scientific financial management philosophy.This paper summarized the definition,pre-warning and management of financial risks etc according to domestic literature review,and carried out a comprehensive research and analysis on theories regarding the financial risk management of commercial banks by employing a number of analysis methods,including literature analysis,a combination of qualitative analysis with quantitative analysis and case analysis.First,by taking Bank of China Hunan Branch's balance sheets and profit statements from year 2014 to 2016 as an example,the paper pointed out the financial risks the branch was confronted with in its financial risk management and made an analysis mainly on the major financial risks the branch faced,such as credit risk,interest-rate risk,liquidity risk and operational risk.Second,the paper pointed out the deficiencies in the financial risk management of the branch,and analyzed the reasons behind the financial risks by combining external and internal factors.External factors included a growth slowdown of real economy,authenticity of the information provided by firms being questionable,increasingly stricter financial supervision,severer horizontal competition and higher business risks.Internal factors included imperfect mechanism in preventing credit risk,a severe interest-rate risk situation due to a sharp drop in loan interest and an unexpected increase in deposit interest rate,a lack of dynamic in liquidity risk management,and imperfect operational risk management structure.At last,the paper gave the branch suggestions on how to improve credit,interest-rate,liquidity and operational risks in a bid to effectively enhance its comprehensive risk management capability.