The Financial Risk Management Research Of Overseas EPC Project

With putting forward the "going out" policy and "The Belt and Road" strategy,the Chinese government has encouraged our enterprises to take part in the international market competition.The overseas EPC projects have gradually increased and the scale has been expanding.However,because most of the engineering enterprises entered the international market for a short time,especially in the complex and changeable international environment,they lack the experience of the implementation of the international projects and the awareness of their own risk management.As a result,those enterprises were unable to identify the risks effectively,which affected the implementation of the project and caused a serious loss.EPC means that the company entrusted by the owner is responsible for the engineering?procurement and construction of the whole or part of the construction project according to the contract.Meanwhile,it should also responsible for the quality?safety and the cost.Generally,the company will sign the contract with the owner directly to reduce the management levels and lines,thus improving the management efficiency of the project.The financial risk exists in the whole stage of the project,which is also the final reaction of the operation of the enterprise.Seeking the effective way to identify the risk sources?analyze and evaluate the data and establish the risk early warning system will prevent and remedy the influence caused by the internal and external factors.In a complex and changeable environment of overseas engineering,the local legal policy,environment,politics,humanities and other factors may become the "blind spot" of the enterprise.Different tax management systems,the fluctuations of exchange rate,and the up-regulation of raw material prices will lead to more financial risks.For achieving maximum benefits,reducing risks and enhancing competitiveness,risk identification and prevention has gradually become the focus of the enterprises,which is also the purpose and significance of the study.Firstly,this paper defines the background?purposes?meanings and methods of the research.The second part is the literature review and theoretical basis.Third,it analyzes the reasons of occurrence and recognizes the classification of financial risk from the angle of overseas EPC project.Qualitative analysis and quantitative analysis can be used to recognize the risks,and several representative models are illustrated.Then,the author analyzes the Saudi Arabia EPC project of S company combining the theory above.After the introduction of the Saudi national environment and the status of the project,the preventive measures for each stage of EPC project were put forward according to those identified financial risk.Finally,on the basis of the research on the Saudi EPC project,the paper puts forward some concrete suggestions for strengthening the financial risk of the overseas EPC project.