Risk Prevention And Control System Study For Pension Investment

The key to successful management of pension investment lies ineffectivemechanismto prevent and control investment risks.In view of the high risk sensitivity of pensionand the risk complexity of stock market,aneffective and efficient risk prevention and control system must be built in order to solve the dilemma between maintaining investment yieldand avoiding the risk of stock market.This paper aims to study the construction of risk prevention and control system for Chineses pension investment in stock market. According to systems theory, this paper presents a framework for pension’s stock market investment risk prevention, which contains four defending lines and two phases.On overall level, this study provided a top-down design for the whole risk prevention system, which clarifies the basic principles and objectives. While on the particle level, this study follows the top-down design and provides basic means and methods for risk control.This research can at least make 4 contributions to existing literature. First, this study proposed a top level design of the risk control system, which employed the top-down design methodology into pension investment risk control. Second, for direct risk, the traditional VARmethod was effectively improved and empirically tested, which leads to a new VG-GARCH-c VAR model. Third, stress testing is proposed as a supplementary model, which could be combined with VG-GARCH-c VAR model to form a binomial risk control model. Last, for indirect risk, an early warning and control system was built, which can further ensure the safety of pension investment in the stock market.Most extant research focuses on a specific aspect of this problem. To the best of author’s knowledge, there is no existing research on comprehensive risk control system. The researchresult can enrich the field of research, and enhance the operations security of pension investment.