Research On Improvement Of Risk Management System Of Trust Companies In China

The trusting industry is one of the fastest growing industries in China. In recent years, the trusting industry has been growing rapidly. Even in the tough financial environment, the trust companies turning a healthy profit and becoming one of the four main parts in financial industry. As a primary component of financial risks, the risks of trust institutions may bring great impact to the economic safety of a country. After the six industry rectification period, a series of laws and regulations was passed to regulate the trust system. But in many cases, the trust system in China appears to lack product innovation and loose risk management to meet the development of the nation’s financial market. The risk management system in trust companies is not perfect. And also, the organizations are not sound enough, which not only will hold back the development of the trust investment companies, but also make them malfunction in risk avoidance. With the changing of financial circumstance, the risks that trust companies will face are more and more complicated. Therefore, there is a great theoretical and practical significance to analysis these risks and management problems for trust industry.The existed research outcomes about trust companies’risk management in our country almost focused on business level, and the financial risk was treated as the most important factor. Research based on a whole company’s risk management system is relatively few. The mainly targets of this thesis is to examine risk management system of trust companies in China. Based on internal control and risk management theories and the existing achievements, the first part of this thesis will review the development process of comprehensive risk management, and introduce the achievement in the comprehensive risk management research completed by domestic and foreign scholars briefly. The thesis is based on the theoretical and practical analysis of the trust industry of China, the history of trust industry and the current situation of A Trust Company.In the second chapter, the writer will use questionnaire investigation, statistics analysis, interviews and quantitative analysis to find out trust companies and risk management situations in China with the purpose of providing effective models and policy making strategies to the related current risks and problems in the country.According to the analysis and the characteristics of risks faced by the trust companies, this thesis argues for the feasibility of using COSO-ERM. On the one hand, the characteristics of the COSO-ERM framework and the trust companies in risk management concept is in high degree of correspondence, and the framework is helpful for building good management culture and improve management technology. On the other hand, after several times of rectification, the trust companies in China have set up a system basis. The development of information technology provides a certain technical support for the use of the COSO-ERM framework, and at present, trust companies reserve of highly educated talents provide intelligence support for the COSO-ERM framework used in trust companies. Thus, the paper recommend to use COSO-ERM to build a three dimensional risk management system in trust company, in three aspects such as targets, levels, and components to discuss the three dimensions of risk management system of construction.The thesis especially introduces a live example of A Trust Company, in which the author has an internship experience, to illustrate the three-dimensional risk management system used in the company. We discuss the efficiency and affection of using3d risk management system. The case study explicates eight aspects of the COSO-ERM framework and makes several suggestions for A Trust Company, such as set up sound organization, complete the internal organization to build sound internal environment, give full play to the board of directors and each committee and so on.The main contribution lies in three points, first of all, the thesis put forward the COSO-ERM framework used in trust company risk management system, as a different approach, for risk management system of trust companies to improve the proposed the feasible suggestions. Second, the thesis collects plentiful first-hand material by questionnaire and interview to obtain the trust company risk management present situation. Based on the information collected, this paper analyzed the trust company risk management system in our country and find out the main problems. Third, the thesis makes suggestions to improve the risk management system of trust companies after the case study.