Diversification Of Financial Risk Control Problems Of China’s Financial Holding Company

With the development of economic and financial globalization, a new form of organization-financial holding company comes into existence, which is also an important way for financial organizations to increase their competitive abilities. However, financial holding company is a sword with two sides. It will exert its advantages such as "economies of scope" and "economies of scale" if it develops well, otherwise, it will cause new and huge risks even to affect the whole nation’s safety. There are kinds of financial holding companies (to be) in our country, the academic circle has made sure that financial holding company will be the main model for China to realize mixed operation."The Eleven Five-year Plan" of China also put forward the idea of gradually making experiments on mixed operation in financial industry, which signifies the coming wave of forming Chinese financial holding companies. However, Chinese financial holding companies may meet with certain risks during the developing process because of internal risk management system building at an early stage as well as external factors lagging behind such as the relative laws and inspection system. Because the difference between financial holding company’ internal structure and general internal corporate governance, leading to the ways and means of risk control is unsimilar to the general companies, especially to financial risk. Lehman, represented by the collapse of financial holding groups from the financial crisis, fundamentally speaking, it is the lack of internal financial risk control which is set for the unique characteristics of the financial holding company. With reference to successful risk management experience from foreign financial holding companies combined with the current developing status of Chinese financial holding companies, to build a Chinese_featured risk management system will be helpful for Chinese financial industry to develop more stably.By other’s faults, wise men correct their own.To promote the development of financial holding companies in China,we need to improve their internal governance, and an urgent need for risk management to control, and the control mechanisms establishment of a full range of risk management, with the improvement of the supervision system of the operator to eliminate "internalcontrol "phenomenon, we also need the establishment of the executive incentive system linked with the interests of various stakeholders.The body of the paper is divided into six parts, the first one contain the financial risk overview theory of financial holding company’s diversification,including the definition and types of financial holding companies, the related definition of financial holding company’s diversification financial risk.Second part is combined with the specific described of the China’s financial holding company diversification, analysis the major categories of financial holding companies in China as well as business accounted for, but also the characteristics of the financial holding company’s diversification in China, mainly, the financial holding company’s diversified business advantage is not obvious, the low efficiency of operation and management, the control proportion of holding company is different, amounting to less than a reasonable level of holding.In the third part, analyzes the problems of the financial holding company’s diversification financial risk management, including the existence of irrational financing structure of the financial holding company’s diversification, financial leverage imbalances; Subsidiaries’own capital is lacking and the ability of solvency is not strong; internal conflicts of interestthe overall financial synergies; financial risk transfer between the subsidiaries, the overall risk to expand. Five aspects above described separately.In the fourth part, analyzes the causes of the financial holding company’s diversification financial risks in China, including lacking the financial risk control awareness of financial holding companies’s diversification; complexed and imbalanced financial holding company structure; The financial risk control mechanisms of financial holding company’s operationare is inadequate, the lack of scientific risk measure, the lack of a "firewall" risk control, financial risk information feedback system is imperfect,besides, Lack of financial supervision also contributed to.The fifth part, by drawing on the Credit Suisse Group and Japan’s Mizuho Group,and learn some experiences from the failure "Delong" case, such as strengthening internal coordination, improve the efficiency of financial risk management; establish a comprehensive risk management awareness; perfecting internal audit for the core of the risk of regulatory mechanismsThe sixth part, In the view of financial holding company’s diversified risk factors in China,Find out financial risk management strategies to control financial holding company’s diversification, including enhancing financial risk management awareness of diversification, innovate the risk management model; improve the governance structureclear diversification of risk management responsibilities; improve the financial risk control mechanism (the metric system to establish the identification systems of investment risk, to establish the "firewall" against risk, improve financial risk information and early warning to the detection of risks timely); improve the financial risk of the financial holding company’s diversificationthe monitoring system, the incentive system and the specific proposed countermeasures...