Research On Improvement Of Risk Management System Of Trust Companies

The trust industry has become an indispensable part of financial system in China due to its unique institutional strengths and functions.It is capable of embracing the needs of financial investors by introducing social idle funds to substantial economy via cross-market allocation and other several measures.However,along with the progression of the financial supervision system and financial reformation,the trust industry is undergoing profound changes including the changes of supervision policies,operational environment,competitive landscape,business models,and financial risks.It is inevitable to prevent systemic risks in order to achieve all-sided risk management in the trust industry.The trust company should further build a comprehensive risk management system conforming to the industry's characteristics by building risk management awareness,operational philosophy,organizational structures and informational system so that its core competitiveness and expertise in risk management would be well-developed.All the changes are supposed to be in accordance with supervision policies to insure the industry is able to keep developing properly and substantially.This essay reviews the development process of the comprehensive risk management system,refers to relevant literatures both domestically and world-wide,and categorizes the risks which China's trust companies are confronted with.In addition,the essay roughly demonstrates the feasibility of the COSO-ERM framework applying to the trust industry according to the characteristics of risk management in the trust industry.Further,the essay evaluates the potential risk management issues L Company might be going through and provides reasonable solutions by referring to the 5 core elements and 20 principles of COSO-ERM,which was initially published in 2017 in the U.S,and applies those theoretic concepts in practice based on the actual situation of L Company.Last but not least,the essay presents advices dedicated to optimize the risk management of L Company.This is to improve the internal environment,optimize business processes,strengthen internal control and risk early warning supervision,improve risk management trust mechanism.It is significance to improve the management efficiency of trust companies,strengthen internal management and internal control,and achieve the strategic goals of enterprises.