Research On Domestic Securities Companies' Operational Risk Management

Domestic capital market has been connected much more closely with other global capital markets with trend of integrated globalization of world economy. Turbulences of world capital market are pushing domestic securities companies into a more risky situation than ever. Finance is core of a nation's economy and deemed to be of so great vitality as somehow called "National Defense of Economy". Risk of finance will seriously affect stability and development of a nation's economy in whole. Comparing with magnate international securities companies, domestic securities companies are of relatively small scale with humdrum products and are more vulnerable at risk protection. It is very urgent for securities companies to establish risk identity and prevention system.The securities companies generally trades financial capital with of intrinsic nature of higher risky. Risk and return are coexistent in business of securities and risk is inevitable to some extent. However, we can try to analyze and induce all kinds of risks in this business and work out some corresponding risk control and prevention measures. This will be very helpful to contain risks affecting company's performance and assist fulfillment of the comprehensive management goals of the securities company.Initiated from concept of operational risk management and through analysis on risks concerning two main securities business of underwriting and brokerage, this paper proposes strategy options and feasible suggestions for domestic securities companies' operational risk management at present stage taking advanced experience of foreign securities companies for reference. Furthermore, the paper also proposes concrete measures of risk prevention based on problems existing in underwriting and brokerages businesses of certain securities companies, which shall be valuable reference for domestic securities companies to defend against operational risks. Considering the focuses of domestic securities companies' operational risk management, an operational risk indicators system with value creation as its core is put forward. It shall be a common measurement for risk identity and appraisal within underwriting and brokerage business. Mean while, the paper advances a macro risk control idea which is based on integration of trading, liquidation, accounting and monitoring. A series of operational process and guidelines are also provided from aspects of organization re-built, information system establishment and regulations constitution. Finally, risks control measures are put forward in accordance to experiences of certain securities companies.