Risk Management Strategy Research Of The Entity Enterprise Participates In The Derivation Transaction

With the development of global economy, great changes have taken place in the field of international finance. International financial capital flowing rapidly and the trade between countries becoming more closely, the financial markets have made the rapid development. Financial derivatives are the inevitable outcome of the development of the financial market. With financial innovation and financial liberalization today, financial derivatives, characterized by its unique features, such as profitability, avoiding risks and short-term arbitrage, draw increasingly international attention. By the end of November in 2008, the futures contract value of Chinese central rate engaged in financial derivatives business is 125.00 billion Yuan. Developing financial derivatives is a necessary approach to improving Chinese enterprises'competitiveness in International market, avoiding and guard against risks.However, like a double-edged sword, financial derivatives play the role of avoiding risks and developing financial market for enterprises, while they also bring a series of disturbance to the world financial system. During the recent years, it is often seen that many entity enterprises involved in financial derivatives trades face huge losses and closedown. Why do financial derivatives, as a means of risk aversion, become the first of risk source? How should we make the most use of financial derivatives'positive function and manage their risks? These are thoughtful questions.China's financial derivatives are still at an initial stage. After the entrance of WTO, Chinese enterprises have more opportunities to participate in financial derivatives trades. As for their special functions and risk characteristics, we should utilize learn from the experiences of oversea financial derivatives, develop our financial derivatives markets with strategies and enable enterprises avoiding risks with the proper use of financial derivatives. Therefore, this article makes full analysis of financial derivatives and their risk management, studies the unsuccessful cases of financial derivatives trades, and plays a reference for Chinese enterprises engaged in financial derivatives trades.Structurally, this article is divided into five parts. The first chapter presents the background and purpose of this study. The second chapter gives an outline of financial derivatives and states the risk management. The third chapter points out the cause of failures in financial derivatives markets and existing problems based on the present situation of entity enterprises involved in financial derivatives. The fourth chapter proposes several strategies to improve Chinese entity enterprises in financial derivatives risk management. The last chapter is the conclusion part, which makes a comment on Chinese financial derivatives current and future development.