Enterprise-wide Risk Management During The Transition Period Of Financial Industry Mixed Operation

With the acceleration of the process of financial liberalization and integration and the development of financial transaction technology and information processing technology, the innovation of financial instruments and financial products has been promoted, thus, the boundary of various financial business has been increasingly blurred, and financial mixed operation has became the world's leading financial industry development trends. Financial mixed operation has enlarged the volatility of financial markets when it brings the benefits of economies of scale, the scope of economic, financial innovation and risk diversification, and financial risks show a complex and integrated trend. The ability of risk management embodies the core competitiveness of the country's financial industry and it is one of the core competencies for the financial enterprises' survival and development. And better ability of risk management can create key competition advantage. Since China has fully opening up her financial services sector by the end of 2006, and her financial industry has been in the transitional period of mixed operation, therefore, constituting advanced Enterprise-wide Risk Management system lays foundation for China's financial groups participating in furious competition in the international financial market.Through the reference of the experience of Enterprise-wide Risk Management and the comparison of the mode of mixed operation in some developed countries, this article that grounds on the basic theory of the mixed operation and its Enterprise-wide Risk Management, has expounded China's financial industry has been in the transitional period of mixed operations, and China's Enterprise-wide Risk Management has only been in the initial stage. Therefore, how to use the advanced risk management concepts and measurement technology to constitute a right and perfect Enterprise-wide Risk Management system is one of the significant problems which should be urgently solved in the current period. In this background of research, integrating the experience of Western developed countries and China's specific national conditions, this article has made a useful exploration and research on the above issues using the method of combining theory with practice and Integrating qualitative and quantitative.Firstly, this article divides the financial risk during the transition period of mixed operation into the conventional risk and the special risk. And it pointed out that in this particular period, the conventional risks include the credit risk, the market risk, the operational risk, the interest rate risk, the liquidity risk and financial derivatives risk, etc. The special Risks include the risk of moral hazard, the system risk, the monopoly risk, the transmission risks, the macroeconomic fluctuations risks and the management risk, and so on. Afterward, this article has made a brief analysis of the representative form and new features of various risks during the transition period of mixed operation, and educed a Enterprise-wide Risk Management framework of financial mixed operation.Secondly, on the theory basis of VaR and making Copula function as research methods, this article briefly introduced the measurement methods of the financial risk during the transition period of mixed operation. Then selecting t-GRACH (1,1), the weibull distribution of three parameters, spline interpolation function, GRACH, GRACH (1,1) and g-h distribution to respectively character the marginal distribution of the market risk, the credit risk, the operational risk, the interest rate risk , the liquidity risk and financial derivative risk, a Copula-VaR model has been constituted with the t-multi-Copula function, and the joint distribution of financial risks has determined. Cross-risk and the correlation among various risks are the difficult problems of Enterprise-wide Risk Management which must be first solved, and the application of making Enterprise-wide Risk Management with the Copula-VaR model has been expatiated.Finally, how to improve and perfect China's Enterprise-wide Risk Management system during the transitional period of financial mixed operation has been conducted in-depth analysis. On the basis of briefly analyzing the status quo of china's financial mixed operation, how to constitute efficient Enterprise-wide Risk Management system has been proposed. Furthermore, the risk supervision is a important supplementary means of Enterprise-wide Risk Management, and some concrete proposals and measures on how to optimize the financial markets environment in the inside and external and comprehensively improve the level of risk supervision has been put forward.