Study Of Risk Assessment And Early Warning System In China's Securities Companies

Securities industry is a relatively risky industry. After international investment banks experienced the devastating crash, how to build a risk management system has become a crucial important topic for the industry's healthy development. After 3 years of comprehensive treatment, Chinese security companies have started to establish long-term sustainable risk management mechanism. Still, there is the lack of firm foundations, risk senses need to be improved, risk assessment and early warning mechanism needs to be completed, risk management techniques need to be improved. Our economic and financial environment is getting more complicated, the early warning system will be applied not only within one company, that is, it will recognize the risks from inside and outside, measure them and manage them, but also in the industry, so that the risks within one financial product, one company will not evolve into systematic risk.This paper will deepen theory study about risks facing security companies, combined with real cases, will try to elaborate the classifications and characteristics of the risks facing our security companies. Based on this, we also did some exploratory work about security company's risk measurement and early warning system. Here, we have considered net capital as a risk factor, emphasized its importance. Also, the products related to index futures and margin trading are also considered.Initiatively, this paper has leveraged hierarchical analysis, so that the relative importance of different factors in different market situations can be measured, risk assessment model can be built. More than that, Cluster analysis method is used to give statistical objective judgment for expert panel results. One of the key techniques is to give each factor's safe threshold value, we have adopted the standard methods in markets, also adopted 3σmethod and noise-signal ratio to give safe threshold values.When it is used for early warning, we introduced gray prediction system that has better fitting effect to predict security companies'risks, so that problems can be found timely and be solved. We will use security company's historical data to do backward testing, to test the predictability, timeliness and operability, universality and effectiveness of the model.Based on our research of security company risk measurement and early warning model, this paper try to construct a complete early warning system. As a tentative research, it is hoped to be used a tool to management risks for security companies, also be used by monitoring authorities to appraise company risks, at the same time, used as reference for the construction of responsive efficient, safety monitoring system. Of course, a complete early warning system is more than doing some prediction by some parameters and then compare to threshold values.Last, based on the simulated application of this early warning system, we have six suggestions:improve risk monitoring database; implement highly efficient risk management structure; implement inside control system and management information system; pay attention to policy risks; construct capital supplement mechanism; construct market hedging mechanism.