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A Study On ERM For Enterprise Annuity Of China

Posted on:2011-12-22Degree:DoctorType:Dissertation
Country:ChinaCandidate:P ZhangFull Text:PDF
GTID:1119330368978498Subject:Social insurance and economic security
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Under the background of aging population, economic globalization, and socio-economic transformation, how to establish social security system to adapt to the market economy and the development of times lacks clear pointing on value targets, institutional arrangements, and specific operations. The much controversy on "Social Insurance Law" and its difficult publish are the most realistic portrayal to this situation. As the second pillar of old age security, the strategy meanings of enterprise annuity no matter how emphasized are not overstated. This is not only reflected in the generated huge economic and social benefits of the establishment of enterprise annuity, but also the coordinated development between basic old age insurance and enterprise annuity to solve the worries of retired workers, but also a demonstration effect for occupational pension.It has been nearly 20 years since "The State Council on Decisions about Workers'Old Age Insurance of Enterprises" (Guo Fa [1991]33) first proposed "the nation promotes and encourages enterprises to implement supplementary old age insurance". During the past 20 years, it has basically formed the institutional framework and initially established the market-oriented operation mechanism. However, the coverage is low and the development is uneven. Enterprise annuity is still in early stage.As the supplementary of basic old age insurance, enterprise annuity only maintain good returns that can attract more enterprises and workers to join enterprise annuity plans. Compared with basic old age insurance, enterprise annuity has wider investment area and more tools, therefore, more complex investment decisions. Investment faces risk, however, it is impossible to avoid investment risks completely. To some extent, the level of risk management determines the role of enterprise annuity. Although enterprise annuity of China is still in early stage, recognizing the importance of enterprise annuity risk management is impetus for enterprise annuity fund institutions standing out in the fierce market competition and protecting the interests of the beneficiaries.In ongoing rapid development of economic globalization and financial integration, the risks faced by enterprise annuity are increasing and influencing with each other. At the same time, the risks cover a wider field and exceed boundaries. Since the second half of 2007, financial crisis triggered by subprime mortgage of America has brought a great impact on global pension. The financial crisis shows that loss is no longer caused by a single risk, but by various risks. Under the context of post-crisis, it is inaccurate to measure the total risk using a simple summation of different types of risks, because it ignores risk interactions. Generally, risk interactions show some correlations. These correlations are usually not simple linear, but dynamic nonlinear. How to measure risk correlations is the key to manage the risks. However, subject to the lagged situations of theories and applications, enterprise annuity risk management has not formed scientific standards and sound system.ERM emphasizes risk correlations on the basis of managing market risk, credit risk, and operational risk separately. ERM has made some progresses in foreign countries and causes our attention, but few people in China study ERM systematically and the application of ERM in enterprise annuity of China is still in early stage. This paper tries to construct enterprise annuity ERM of China according to the characteristics of enterprise annuity and national conditions.Based on the detailed interpretations of ERM theories, this paper constructs preliminarily Chinese enterprise annuity ERM framework according to the situations of enterprise annuity risk management. Then, this paper goes into the core of enterprise annuity ERM which is risk measurement and risk integration. Finally, this paper constructs the implementation mechanism of enterprise annuity ERM, including institutions, government supervision, and market discipline.The main innovations of this paper are as follows:First, drawing on the current mainstream of international ERM theories, aiming at the defects of enterprise annuity risk management of China, this paper constructs preliminarily an enterprise annuity ERM framework of China. Enterprise annuity is a new thing no matter for the supervision authority, the enterprises having established enterprise annuity plans, or enterprise annuity fund management institutions. Therefore, at the early stage of the development of enterprise annuity, it is important to establish a relatively complete enterprise annuity ERM framework.Second, this paper merges enterprise annuity ERM, governance and internal control. Enterprise annuity ERM has inseparable link with governance and internal control, therefore, reasonable relationship definition is the right research basis for enterprise annuity ERM. The paper holds that enterprise annuity governance includes enterprise annuity ERM, while enterprise annuity ERM includes enterprise annuity internal control. This paper argues that enterprise annuity governance structure deficiencies restrict the exertion of enterprise annuity ERM level. Therefore, complete enterprise annuity ERM first needs define the responsibilities of the parties in the governance structure. Enterprise annuity governance is very important for enterprise risk ERM. Only enterprise annuity governance is relatively complete that enterprise annuity ERM can develop healthily.Third, under the unified framework of correlation measurement and integration model construction, this paper analyzes risk measurement and risk integration together. Enterprise annuity risk measurement and integration covers two different layers of portfolio. First is between the same risks, while second is between different types of risks. Risk measurement and risk integration both involve correlation measurement and integration model construction. On the basis of measuring enterprise annuity market risk and credit risk, this paper integrates both of them.Fourth, analyze the application of enterprise annuity ERM in China in the unified framework of institution, technique and culture. From the development state of Chinese enterprise annuity, although the implementation conditions are not yet mature, recognizing ERM as an advanced management concepts, rather than specific risk management methods or techniques points out the application direction. Culture is important than institution, while institution is important than technique. This development idea tells us that when drawing on western ERM institution and technique, we should not ignore culture soil relied by institution and technique.
Keywords/Search Tags:Enterprise Annuity, ERM, Framework, Risk Integration
PDF Full Text Request
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